Dive Brief:
-
Shared-housing provider HubHaus has secured $1.4 million in first-round funding led by General Catalyst for its co-living space operations, according to TechCrunch.
-
The startup, which currently operates in the San Francisco Bay Area and Los Angeles, is one of several co-living companies trying to make the idea of shared living spaces attractive to young urban professionals.
-
Common, another such startup, has so far raised $23.3 million in investor financing and last year got nearly 10,000 applications for nine living spaces across three U.S. cities, Business Insider reported.
Dive Insight:
HubHaus and Common aren’t alone. Other such companies include Property Markets Group, OpenDoor and WeLive, a branch of the co-working business WeWork. They are all trying to make co-living a major market segment. The resulting projects, which minimize private space in favor of communal areas, are springing up in major U.S. metros such as San Francisco, Chicago and New York City, where affordable rentals can be difficult to find and young professionals may not be interested in sticking around long enough to make buying worthwhile.
The practice of renting a room in a house full of strangers and sharing common areas like a kitchen, bathroom and living room is hardly uncommon among young professionals in big cities, where high rents come up against elevated student debt levels and relatively slow wage growth. Nationwide, rental rate increases are outpacing income growth in major metros, and even suburban rents aren't immune. A recent study by Zillow found renters would need to earn an extra $168 each year to match rent growth. For young renters who could afford a modest down payment and mortgage, low levels of starter-home inventory will likely continue to be a barrier for them.
Though co-living spaces could help ease inventory strain in cities, the rental units are only a short-term solution to broader metropolitan housing shortages. After all, such units aren't immune to rising rents, contributing to a growing sense of “rent fatigue” among the populations they're geared toward.