“More and more buyers are simply locked out of the market.”
“Mortgage rates rise to levels not seen since before the pandemic”
“Average prices for US homes hit record highs.”
The above are only a few examples of recent headlines. You only need to glance at the news to understand what is happening in the US housing market. Buying a home has become difficult if not impossible for most Millennials and Gen Zers.
This is leading to many Millennials and Gen Zers to pool finances with roommates, friends, or partners as a new path to homeownership. And many are exploring co-ownership—so much so that the Wall Street Journal reported the number of co-buyers with different last names increased by 771% between 2014 and 2021. The pandemic only accelerated this trend.
As co-buying continues to take hold of the market, three trends are driving how and where millennials and Gen Zers are co-buying homes.
- Location, location, location
After spending years in the hustle and bustle of major cities and with the rising acceptance of remote work, many cobuy groups are increasingly targeting homes outside of major metro areas. These urban escapists target homes within a 2 to 3-hour drive of major metro areas.
Plus, rising mortgage rates and steep home prices have been particularly challenging for first-time buyers like Millennials and Gen Zers. Hence, many look outside expensive metro areas to find more affordable homes in midsize cities or vacation areas. Some areas Nestment sees groups target include Sonoma County, California, Hudson Valley, New York, and Asheville, North Carolina.
These areas are not only good places to relax and rewind but there is also strong demand on Airbnb.
- All about the amenities and furnishings
When co-buying a home, many groups want to maximize their return on investment by renting the property on Airbnb or VRBO. An overwhelming 97 percent of US travelers surveyed by Airbnb say amenities impact their travel experience. Amenities even rank ahead of shopping/dining, location, culture, and family/friends.
Some of the most searched for amenities on Airbnb include:
- Pet-friendly pads.
- Workspaces for remote workers.
- Private patios or outdoor areas, including pools.
- Fully stocked kitchens with cookware.
- Self-check-in via a key lock box, smart lock, keypad, or building staff.
In addition to amenities, having attractive and comfortable furnishings is another major factor on your rental prices. The interior design and furniture quality in a guest’s accommodation can take their whole experience up a notch. Not only that but many successful short-term stay companies like OneFineStay and Sonder have shown that Airbnb guests will pay more for nicely designed homes when on vacation.
By incorporating the most in-demand amenities and nice furnishings into their vacation homes, groups can charge a higher daily rental rate. In turn, that means a higher return on investment.
- Is the area short-term rental friendly?
Airbnb continues to take an increasing share of the accommodation market. In 2020, Airbnb accounted for 18% of the total US lodging revenue, up from 11.5% in 2019.
Vacation rental hosts can earn an incredible income from their short-term rentals (STR). However, they need to comply with their region’s legislation and their city ordinance to ensure they do not face unpleasant consequences, such as fines.
While one city may only have one or two rules at most, hosts in other cities may not only have to apply for multiple licenses for their vacation homes, but they may also limit the number of rentable nights.
Cobuy groups should pay close attention to short-term rental legislation and regulations in their targeted areas before buying a home, should they hope to rent it out for some extra income.
Increasingly frustrated with rising real estate prices across the United States, many first-time buyers are pooling their finances to improve their chances of buying a desirable home. Not only will it provide more space but also, hopefully, a healthy return on investment. Cobuy groups are increasingly focusing on location, amenities and short-term rental friendly areas as they explore a different, but growing, path to homeownership.
About Nestment: With skyrocketing real estate prices and mortgage rates, people are looking for alternative ways to purchase property. Co-buying is an attractive alternative but it involves a lot of moving pieces, coordination, and communication. To keep everyone on the same page and streamline the process, Nestment provides a clear path to co-buying investment property with friends and family. Learn more at www.nestment.com.