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Pacaso 1.0 attempts to define a new market and provide high-income earners with access to paradise. But this has not really “democratized” second home ownership for the masses.
Enter Pacasso 2.0.
In March, the company, which leads the second-home market, announced it was growing. It will begin issuing one-eighth home shares at a lower price than before. In addition to offering typical Pacasaw products in markets like Lake Tahoe, Park City and Jackson Hole, the company has plans to expand to Chicago, Detroit, Milwaukee and more.
It relies on powerful algorithms to more accurately measure buyer demand and guide it to more transactions in more markets and at a wider range of price points.
Now that the world is witnessing Pacasso’s second chapter, Allison sat down at the Inman Connect conference in Las Vegas to reveal how the company got here and where it’s going next.
INMAN: In March, Pacaso announced that you were expanding the buy box to a new, lower price point. Can you walk me through the decision-making process and let me know how things go?
Allison: It has always been our goal to make it possible for more people to own a second home. When we launched the company in 2020, we had to start somewhere and we decided to start with the ultra-luxury end and ultra-luxury market.
Price points are going to go down because when you diversify the number of markets you serve, you have a wider range of price points. So we’re excited to offer consumers more choices. One day we hope to be able to offer second homes around the world at lower prices than what we offer on our website today.
I was surprised to see Pacasso popping up in Chicago, Milwaukee, Detroit, and other cities across the country. It made me realize, even though I didn’t notice it, that you guys were expanding everywhere. Can you tell me about the strategy behind which markets you enter? I noticed that New York City doesn’t have one. This must be a regulatory matter. But talk to me about your timeline and strategic process for the market you’re in today.
We view our business as a technology-enabled marketplace that connects aspiring homeowners with vacant second homes. One of the big things we launched in March is a new product experience that allows us to make inventory available in many different markets. What this does is it really empowers consumers to tell us which markets they are most interested in.
When you go to Pacasso today, you’ll see houses from most of the United States as well as Paris, London, and Mexico. When we see enough buyers interested in a particular market, we step in, work with the listing agent, acquire the home under contract and turn it into a Pacso. If there is not enough demand in a particular market, then we will not trade in that market until there is sufficient demand.
This is largely a buyer-led, consumer-first market expansion strategy.
Let me ask you something. You are expanding your footprint across the country. We call it Pacasso 2.0. Is it harder than before to sell this to real estate agents and the public?
I describe Pacaso 1.0 as a more asset-heavy business model. We buy homes before there is demand, and that model is largely limited to very wealthy buyers at the very high end of the market.
Pacaso 2.0 is a more asset-light model where we aggregate demand before making a home transaction. This model can serve a wider audience in more markets and at more price points.
To some extent, it is true that more markets add more complexity and more work. But we’ve been doing this for almost four years. We have an incredible team, an incredible technology platform. We’ve learned a lot over the past four years, allowing us to build a product that scales well into new markets. The way we curate our lists is more sophisticated than ever. The signals we get from buyers are stronger than before because we have a larger audience and higher brand awareness.
Are we still in Pacaso 2.0? So what is Pacaso 3.0?
We are in the early stages of Pacaso 2.0. I think of them as chapters. 1.0 is the first chapter. This situation lasted for three and a half years. In March, we turned to Chapter Two.
I don’t know how long this chapter is going to last before we turn to the next chapter, but there’s a lot of opportunity to get this product to more people, to more markets, to more price points. I feel like we’ve only scratched the surface. We are definitely still several years away from the 2.0 era.
That being said, you can still expect plenty of innovation from us. We’re always looking for ways to provide more value to our customers. We are rolling out services such as the Pacaso service, which we are seeing not only in second home use cases, but we are seeing primary homeowners resorting to co-ownership as a solution to housing affordability issues.
You’ve also started offering services to the public to help them turn their homes into Pacosos in a way. What’s the point?
The biggest reason is probably that people can no longer afford homes. This problem is only getting worse, not better. So the ability for people to pool their resources to buy homes they couldn’t afford is an inevitable innovation that will continue to work.
But it’s hard. It’s hard to do it on your own. Managing a property is difficult, as is establishing the correct ownership structure and operating agreements and rules. Financing Difficulties. Resale is hard. All of these things are very difficult if you want to do them yourself. But we have invested millions of dollars to perfect these processes. Why not offer it to others?
The more co-ownership thrives as a category, the better off we will be as a country in the context of providing housing solutions for consumers. It is clear that Pacasaw will benefit from this and become a global leader in second or holiday home co-ownership.
Email Tyler Anderson
