Setups in which the occupant never attains full ownership amount to a new way of financing shelter — an owner-renter hybrid. The occupant of the home, without fully owning the property, simultaneously enjoys some of the benefits of homeownership and rental living. Specifically, occupants have some of the security of a homeowner. They need not worry about the landlord’s renewal of the rental contract or about rising rents for an extended period — nor must they come up with funds to ultimately acquire ownership, such as principal payments on a mortgage.

The idea of an owner-renter hybrid isn’t entirely novel. It resembles rent-to-own arrangements, including those of some high-profile new start-ups, as well as some more esoteric financial arrangements for shelter that have cropped up in the past, such as shared appreciation mortgages. In fact, if occupants keep their ownership share steady, it achieves the same end as a very long-term rental contract.

This hybrid also has much in common with rent control. Like rent control, it guarantees a predictable flow of housing costs for the long run and affords the resident protections — from eviction, for example — that provide a degree of permanence.

That’s no coincidence. The recent resurgence of rent control and the own-rent hybrid both address people’s need to replace homeownership with more affordable forms of secure shelter.

Things could get ugly

Enter the pandemic, and the owner-renter hybrid may suddenly appeal to people well beyond the expensive coastal cities. Many homeowners without work may have to sell their homes, even on unfavorable terms. The hybrid arrangement would grant such a homeowner the option of selling equity in the home piecemeal to co-investors for cash, while continuing to reside in it. For many, that would be a much better outcome than the alternative.

It’s also one that would leave investors pleased, with a previously unimaginable stake in owner-occupied housing, acquired on favorable terms. If investors execute their business wisely, they could even pose as saviors, having offered desperate homeowners a lifeline that spared them from catastrophe. But can any such profiting in the aftermath of a pandemic avoid ultimately being judged as predatory? The hybrid arrangement could easily devolve into taking advantage of homeowners in distress, and even the most ethical investors may feel compelled to participate for fear of missing out on a land grab.

Easing the pressure on some buyers

Fast forward past the pandemic and its aftermath: Is the new hybrid the solution for the housing affordability crisis in America’s expensive coastal cities?