Interest in renting has increased as the value we place on home ownership changes. But what will disrupt rentals?
This is an invitation to have a big think about how the new sharing economy will impact the costliest item most people will ever contend with: their home. As baby boomers age and downsize, as new homebuyers enter the market and as new families form, questions about housing never seem to be too far from anyone’s mind.
Here’s something I’ve observed: for all kinds of reasons, cost being just one, the value we place on home ownership is changing. Admitting in polite company that you rent your home doesn’t mark you as an underachiever as much as it once did, because it’s the only affordable option left for an increasing number of people. As a result, there’s renewed interest in purpose-built rentals, both in constructing them and in living in them.
The most recent Canada Mortgage and Housing Corp. report available shows that Metro Vancouver’s renter rate increased to 36.3 percent in 2016 from 34.5 percent in 2011. Although the stats are a couple of years old, it’s a fairly simple matter to connect the dots. Home ownership has gotten expensive, so renting has become more alluring.
But rental housing is an old idea that is ripe for disruption. What comes next?
Other industries may provide some interesting clues. I’ve been noticing the following trends, and the threads that connect them:
1. Car rental companies have been around for a long time. Along come car-sharing and car memberships. For slightly more than the cost of a taxi, you can jump in a vehicle from a car-sharing company; most cities have at least one. Manufacturers are experimenting with how to get into the game, too. For example, Cadillac has a monthly-fee model that entitles you to trade in your sports car for an SUV whenever the whim strikes you.
2. Annual software leasing or rental fees, let alone outright purchase of rapidly outdated programs, are being challenged by software-as-a-service (SaaS) startups. Why pay to rent or buy a copy of Photoshop when you just need a few features and can get them for $10 a month?
3. Why lease your office space under the arcane terms and conditions of a fixed five-year-lease when WeWork lets you have as much (or as little) office as you need, whenever and wherever your business shrinks or grows?
4. The so-called gig economy is about not owning employees but swapping them in and out as needed. It might seem like the ravings of a cartoon capitalist devil, but you could argue that the gig economy is about renting your workforce.
5. Airbnb is an alternative rental channel for business and leisure travellers, much to the consternation of hotels and old-fashioned bed-and-breakfasts. And with good reason: short-term rental operations pay fewer taxes, which is why municipalities are starting to regulate them. However, an inside source has told me to watch for a new idea in this space: a purpose-built structure designed to be entirely Airbnb rental units. The lines between typologies are blurring.
6. There’s more line-blurring going on between hotels and apartments, with apartment-asset owners taking cues from hotel operations manuals; including extras and amenities that would have been unheard of a few years ago. Some rental apartments are providing fully furnished, concierge-equipped, housekeeping-included places to live month-by-month, collecting the fees that make these extra services possible.
What can we learn from these disruptive leanings?
Here are a couple of thought starters:
Maybe it’s time to look at rejuvenating the timeshare model? They’ve been much maligned, but perhaps with a fresh coat of paint (a new name, to start), timeshares could be the next next big thing in housing? If you strip away the reputational baggage of the timeshare industry (sleazy operators, misleading contracts, booze-soaked free-weekends with never-ending sales pitches, and so on), the basic idea of this model seems on trend—toss some money in the hat, and use a place whenever/wherever you want. Timeshares and the sharing economy seem made for each other.
I was recently a keynote speaker at a conference for RV dealers in Las Vegas. Like the timeshare industry, RV’s have a cumbersome reputation. But consider this: for about the same as a down payment on a condo in many North American cities, you could own a contemporary condo on wheels. Think outside the stereotype of clunky old mobile homes in trailer parks, and instead imagine a sleek and cool highway-yacht, or a retro hip airstream, and temporarily putting down (very shallow) roots anywhere you like, anytime you want. If I were a recent university graduate and part of the tech industry, working remotely on gigs whenever and wherever I felt the urge to go, why not literally bring my home along for the ride?
Co-housing is an idea that has tried recently to gain a foothold in some cities, but hasn’t really seemed to take off with a large measure of success. At a dinner party this evening, it was suggested that we consider buying up big old homes on the West Side of Vancouver and creating our own places to live among friends while splitting the cost of assisted living services, instead of relying on institutions or corporations to provide what we still euphemistically refer to as retirement living.
Of course, we’d have other changes to sort out if any of these ideas actually gain some traction. We’d need to rethink issues around financing, lost opportunity for equity growth, lost jobs, retraining for new jobs, replacing the tax-based housing industry economic contribution to the health of cities, notions of alienation and loss of community, et cetera.
But disruption is inevitable, I believe, as the much-ballyhooed exponential rate of technological advancement leaps off our desktops and phones and into every corner of our lives
So, to end with a tidy circular reference back to my opening sentence, we have a choice. We can have a big think about what comes next after rental housing right now, even if the answers aren’t all immediately apparent. Or we can have a big think about it later.
Either way, we’ll be thinking about this at some point. My vote is we start now.
David Allison is a Vancouver author, researcher and consumer behaviour expert. He speaks internationally about his pioneering research with Valuegraphics, the first database that profiles shared audience values. His best-selling book, We Are All the Same Age Now, was chosen by Inc. magazine as one of the top leadership books of the year. Find out more at Valuegraphics.com, or send story suggestions to email@example.com.