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Is it time to rethink the traditional model for buying a home?


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When turning on the news over the last year, the information we are faced with is overwhelming. Rents are high, home inventory is low, and mortgage rates are climbing. In 2021, home prices rose on average almost 19%, and at the end of the year the number of houses for sale hit a record low. Rent in some cities has seen a 40% increase over the last year causing many to use 30% -50% of their take home pay towards rent alone. (Financial planners will tell you to keep your housing cost to 20-25% of your income). A Pew Research survey shows that half of Americans think the lack of affordable housing is a major issue. With increasing mortgage rates, a market, and select choices, more Americans are worried they will never be able to afford a home.

Buying a home is the cornerstone of the American dream. Housing investments should appreciate in value but shouldn't appreciate above the rate of inflation. When you decide to purchase a home, there are great risks that you will take however these also come with great rewards. One aspect to consider when purchasing is a home is to make sure that the home is not appreciating above the rate of inflation. If it does, it will become harder for future generations to afford home ownership and there will not be enough homes to supply the demand.

So what options can we look at for a new way to own a home? Here are two different ideas that could be the next trend in home ownership.

Co-Living Units

Co-Working spaces have been around for a long time and the same concept can be an affordable housing option. This would be an ownership option where your private living space would be clustered around a shared area of small units where you would give up some private space for access to affordability. There are currently start-up companies that are building these small cluster homes that typically have monthly costs for 20% less than a studio apartment in the same area. There are still challenges with this concept, as the buyer would still need to come up with a down payment, but it should be at an affordable, reduced amount.

Public-Ownership Rental

An early-stage idea is Public-Ownership Rental. Public-Ownership Rentals are run by a non-profit, where you would get a share of ownership from your rent, without having to buy it on your own. This system does not require you to come up with a down payment or save for ten years before you could make a purchase, appealing to middle-class Americans who don't make enough to own, but make too little to be eligible for subsidies. This program would not compete for funds that go to extremely low-income housing individuals. With this option remaining in its early stages, there are still unknowns to this concept. What happens to your small ownership stake if you must move?

Ultimately your living situation can be whatever you are comfortable with. Whether that is renting, co-living units or purchasing a home as long as you feel safe and good about your decision, Co-Living units and public-ownership rentals are just two options to consider if you are wanting to purchase a home but stray from the traditional process.


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About the author

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Van Pappas

Vice President, Private CFO®

Van Pappas, CFP® - Van is a native of Atlanta. He holds his undergraduate degree in Finance with an emphasis in Real Estate. As a planner for 15 years, he earned his CFP designation from Kaplan University. He is currently the Chairman and founder of the Chamblee Chamber of Commerce and sits on the Downtown Development Authority for the City of Chamblee. In 2012, he noticed the value of helping the X-Y Generations and decided to merge his practice with oXYGen Financial.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Background and qualification information is available at FINRA's BrokerCheck website.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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