A decade ago, people were buying homes with impunity with money they didn’t have just to use price appreciation to flip into a bigger, better home. Then, rinse and repeat.
In the post-recession recovery period, though, the trend among American homeowners is to stay put for longer in homes they buy, and we’ve talked about the reasons for that here, and here.
Oddly, when we Americans discovered that we had to use money we have rather than money we think we might have someday if everything goes well, we began to think differently about a home we buy. (But, give us credit for good, healthy magical thinking so widespread until the bubble burst in 2006 or 2007 or so).
Yesterday, Airbnb announced it’s teaming up with Fannie Mae and three lenders in a way that may just serve as an adrenaline boost in the way we think about, and, for now, refinance, a home we live in.
Essentially, the new program–with fintech leaders Quicken Loans, Citizens Bank, and Better Mortgage as partners–allows refinance loan applicants to count Airbnb income as part of their income when balanced against PITI (principle, interest, taxes, and insurance) factors in the loan equation. Nathan Blecharczyk, Airbnb co-founder and chief strategy officer drives home the point that this initiative reflects a profound change in how American homeowners regard their real estate investment. Blecharczyk says:
At Airbnb, we’ve been able to help many reimagine the home as an asset, a destination, and a contributor to the community. Today, some of the nation’s largest financial institutions understand that Airbnb is an economic empowerment tool that can generate important income for families, and they are working to recognize this.
The initative illustrates partnership that fuses around the convergence of consumer household behavior, technology, and finance.
Clearly, in the long tail of fundamental household behaviors that both preceded and came after the Great Recession, we find that conventional composition patterns of households are changing. We’ve written here often that our go-to mental image of an average American household–the married-with-young-children “nuclear” family–is, increasingly, a relic of our social and cultural history.
Just last week, Pew Research released a fresh new download of data points on the phenomenon of “shared living,” defined as adults sharing a home with other adults “with whom they’re not romantically involved.”
Now, as Pew analyst Richard Fry notes here, there’s an overlap here with multigenerational homes, but the difference between multigenerational and “shared households” is an important distinction, and it has statistical relevance when it comes to designing floorplans and functional living areas of new homes.
In 2017, nearly 79 million adults (31.9% of the adult population) lived in a shared household – that is, a household with at least one “extra adult” who is not the household head, the spouse or unmarried partner of the head, or an 18- to 24-year-old student. In 1995, the earliest year with comparable data, 55 million adults (28.8%) lived in a shared household. In 2004, at the peak of homeownership and before the onset of the home foreclosure crisis, 27.4% of adults shared a household.
A shared household is defined somewhat differently from a multigenerational household (although the two can overlap), as shared households can include unrelated adults and adult siblings. More adults live in shared households than multigenerational households: In 2014, 61 million Americans (including children) resided in multigenerational households.
Now, demographic household composition patterns are a force of nature that should be weighing on the minds of architects, developers, engineers, product manufacturers, and construction players as they road-map product and community design evolution in the 12-, and 24-, and 36-month periods ahead.
Add to that force, the exponential, algorithmic impact of technology that materially impacts product development of another stripe–mortgage finance–that can leverage this glacially-evolving demographic shift into a major implication for home and real estate valuation.
Four years ago, we began to explore in earnest the dawn of home design’s “flex” era as we partnered with TRI Pointe Group’s Pardee Homes, Bassenian Lagoni, Bobby Berk, Anderson Baron, and Western Window Systems to break a bunch of rules about how nimble floor plans and indoor-outdoor living could be, with revenue units and multigenerational options fully realized.
This was the Responsive Home.
Kip Dawkins
This past year, working with Meritage Homes, BSB Design, and the Intermark Group, we pushed that envelope further (literally), with the Meritage reNEWable Living Home, that fully envisions revenue unit possibilities and multigenerational living under the same roof.
Flex time is here now, and this Airbnb deal with Fannie Mae and three lenders is only the start of how technology will further merge with people patterns and values to change how homes and communities need to be designed, developed, and built.
Jay Farner, chief executive of Quicken Loans, said technology allows lenders to gather reliable income data directly from Airbnb.
“If you were collecting rental income, in some cases you didn’t have to show it. In other cases you provided handwritten tax returns. Today, data allows us to see the real patterns,” Mr. Farner said.
He added the company has seen demand from homeowners who have been renting a room out on Airbnb and want to refinance and use the money to upgrade the guest quarters.
