Is equity sharing the next big disruptor? In certain housing markets, yes. Marin, San Francisco and Silicon Valley in California. New York, D.C. and Miami on the East Coast. These are markets with unique real estate dynamics that have forced a decoupling of traditional loan to value ratios.
Home equity financing without monthly payments is going to be very attractive to Gen Z, Millennials and Generation X. Baby Boomers will likely be more cautious recalling the direction of home values headed in 2008. Finding the right marketing channels, whether traditional realtors, Zillow, etc., will be key.
CNBC reported that the sharp drop in early 2018 home sales was not due to a shortage of homes for sale. It was due to a shortage of affordable homes for sale. Equity sharing could help with this affordability crisis in markets where prices continue to march upward.
I’m not sure any of the players have gotten it right just yet, but equity sharing is here to stay, growing and establishing itself in the financial services industry.