Innovative Co-Ownership Models Offer Promising Solution to California’s Housing Crisis
With California’s housing affordability crisis continuing to strain families and communities and median home prices exceeding $1 million in many markets, a report released today (March 18) by the Bay Area Council Economic Institute examines how new and innovative co-ownership models are emerging as a viable solution to address the state’s housing challenges.
“Co-ownership offers a creative pathway to make homeownership more accessible while optimizing housing stock and fostering long-term community investment,” said Jeff Bellisario, Executive Director of the Economic Institute, the research arm of the Bay Area Council.
Co-Ownership: A Rising Trend in Housing Innovation
The report identifies co-ownership as a rapidly growing trend, with platforms such as Pacaso, CoBuy, and Nestment leading the charge. These models allow multiple buyers to pool resources to purchase homes, reducing costs and enabling access to properties that might otherwise be unattainable. Key findings show that 14% of homebuyers purchased homes with friends in 2024, up from just 4% in 2022. Additionally, searches for co-ownership have increased by 63% over the past decade.
Unlike short-term rentals or timeshares, co-ownership provides true equity stakes and long-term community investment. For example, Pacaso’s model ensures properties are utilized nearly 90% of the year—compared to just 39% for traditional second homes—while generating significant local tax revenue and economic activity.
Economic and Policy Impacts
The study underscores the economic benefits of co-ownership. Pacaso homeowners spend an average of $42,555 annually in local economies—more than double the spending of traditional second-home owners—while contributing an additional $1,233 in local tax revenue and $1,076 in state tax revenue per property. By consolidating demand into fewer homes, co-ownership also frees up inventory for middle-income buyers, easing pressure on the broader housing market.
To support these models, the report outlines key policy recommendations:
- Regulatory Clarity: Local governments should differentiate co-ownership from short-term rentals and timeshares to avoid unnecessary restrictions.
- Tax Incentives: Providing tax credits for primary residence co-ownership could expand accessibility beyond vacation markets.
- Downtown Revitalization: Co-ownership could play a pivotal role in converting vacant commercial properties into residential units, boosting urban economies.
A Collaborative Path Forward
The findings build on BACEI’s history of addressing critical regional issues like racial wage equity and business tax competitiveness. As Bellisario noted: “California’s housing market demands bold solutions that balance affordability with economic growth. Co-ownership represents one such solution that can deliver meaningful results for families and communities alike.”
With California facing mounting affordability challenges, innovative approaches like co-ownership offer hope for creating a more inclusive and sustainable housing market. To learn more about this report and its implications for policymakers, visit the Bay Area Council Economic Institute’s website.
