![]() ![]() Those are two pain points that a fractional homeownership approach mitigates right off the bat because the buyer of the home isn’t the consumer - it’s Divvy. It’s that down payment aspect that often causes the first pain point in the transaction. Consumers don’t necessarily - as is sometimes thought - have to pay 20 percent upfront, but even the 3.5 percent and 5 percent that is typical for Federal Housing Administration (FHA) loans can be a stretch, depending on a home’s cost. Their credit scores can also be a gating factor. When a consumer wants to buy a home under the standard method, Hefets noted, the bank typically looks at three things: a customer's debt-to-income ratio, their credit score and their down payment. ![]() “We are a fractional ownership platform that gives customers the option of with us to put down less, and then work within a specialized rental product that allows them to embark on the path to homeownership via a mortgage,” Ma explained. Its chosen tool for that is a technologically enabled, phased homeownership model that - Divvy Co-founders, CEO Brian Ma and COO Adena Hefets, told Karen Webster in a new PYMNTS Matchmakers podcast - is designed to help consumers wade into the homeownership process and more easily navigate barriers to entry that down payments represent, particularly for first-time buyers. However, that saving is difficult because those millennials pay 30 percent of their income or more in rental payments.ĭivvy, a San Francisco-based startup, wants to take on that problem by fundamentally changing the path consumers embark on when they want to buy a home. That same Bank of America study also shows that the majority of millennials are waiting until they’ve saved up enough money for a down payment. Millennials want to buy homes, but getting onto the launch pad with a down payment can be extremely challenging and creates a gap that many -otherwise enthusiastic - potential homeowners can’t get across. Recent data from Bank of America indicated that 72 percent of millennials rank homeownership as their top life priority - ahead of getting married (50 percent), traveling (61 percent) and having children (40 percent). ![]() According to the National Federation of Retailers, 81 pe rcent of millennials reported at least aspiring to become homeowners. Moreover, data began to consistently show that, far from being scared away from real estate markets, young consumers are, in fact, incredibly enthusiastic about them, even if they do not perceive themselves as financially ready for participation. According to TransUnion, 13 million to 17 million millennial consumers are expected to come crashing into the homeownership market by 2022. Specifically, they started buying houses in greater than expected numbers - and, suddenly, the dearth of millennial buyers turned into a new trend. However, 18 to 24 months ago, that conventional wisdom changed quickly when older millennials - the group PYMNTS has classified as Bridge Millennials - began aging deeper into their thirties and behaving differently than expected. Many reasons were given (fear of default spurred by the Great Recessions, limited access to credit, generational preference for renting), but the upshot prediction was the same. For much of the early 2010s, there was an emerging piece of conventional wisdom that millennials were on the verge of radically breaking from the behavior of their older siblings, parents and grandparents and eschewing homeownership en masse. ![]()
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