Luxury holiday home co-ownership platform Pacaso is trying to appeal to the masses, as it grows its business during an expensive and competitive phase in the housing market.
The company, which launched in 2020 with multi-million-dollar homes listed for shared ownership, now offers thousands more listings with stock prices starting in the $200,000s. Previously, shares were closer to half a million dollars, or higher.
Pacasso lists shares of vacation homes, generally one-eighth but sometimes larger, and then facilitates the purchase, including financing if necessary. It also furnishes and manages the home, dividing the owners' time in the home through the app. It requires fees for both purchasing and management.
“You can buy more homes when you buy one or a quarter of it than you can when you buy the whole house, and we live in an environment where housing affordability is an issue,” project participant Austin Allison said. Founder and CEO of Pacasso. “House prices are high, interest rates are high, so it's really difficult for people to buy the home of their dreams.”
Unlike resort timeshares, where consumers buy the time, not the property, Pacasso owners can benefit from the value of the home, which typically increases over time.
“Our resale owners have benefited from about a 10% appreciation beyond what they paid for the primary home previously. So Pacaso shares generally track the underlying properties,” Allison said.
Wealthy buyers have been snapping up ski homes in Colorado and beach homes in Hawaii, paying hundreds of thousands of dollars for their equity. Pacaso charges hefty fees — between 10% and 15% of the home's value on the front end — associated with assembling the group of owners, facilitating the transaction, and creating the shared ownership structure.
Pacaso's revenue reached more than $1 billion last year, the company said.
However, the company has seen some backlash from communities that likened it to… Airbnb On steroids. There's even a website dedicated to fighting the company called “Stop Pacaso Now.”
The residents of Sonoma, California, passed an ordinance prohibiting Pacasso from working in that city. In St. Helena, California, which bans timeshares, Pacasso reached a settlement that protects its four existing homes, but the company is not allowed to expand to other properties.
“We operate in more than 40 markets nationwide, and we are only misunderstood in a few of them,” Allison said. “Our approach is to work with policymakers and educate them on the facts and benefits. Our belief is that this will prevail over time. This has not worked in Sonoma yet and a small handful of communities have passed ordinances to resist the model.”
Pacaso is also adding a new suite of services to help primary homebuyers access the home sharing model. Nearly a fifth of primary homebuyers last year bought with either a friend or relative, according to a real estate website Zillow.
“People are now using shared ownership as a way to be able to buy homes that they wouldn't otherwise be able to afford. So, this isn't just happening in the holiday home space,” Allison said.
