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 this week (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.

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.

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.

Read the full report >>