HomeFundMe wants your friends and family to help you with the downpayment on your dream house. But what if your friends aren’t super rich and you feel, I don’t know, uncomfortable asking for their money?
If you’re reading this right now, there’s a pretty good chance that the idea of owning a home one day has crossed your mind. Nine out of 10 individuals under the age of 30 expect that they’ll one day own a home, according to a number of surveys conducted by Harvard’s Joint Center for Housing.
There’s also a pretty good chance that you’re sitting in a rented apartment that’s more expensive than you can afford, eating your second helping of Top Ramen, and pshaw-ing the idea of actually buying a home.
Student loan debt haunts this generation like no other before it, the economic crash of 2009 messed up our financial confidence pretty good, and wages really haven’t even come close to keeping pace with housing prices.
While experts remain divided as to whether it’s primarily economic factors or a more fundamental shift in the way young people think about homeownership that’s responsible for the decline, the percentage of homebuyers under the age of 35 has dropped from 42 percent a decade ago, to a little over a third.
But a new startup has emerged that’s looking to change that. HomeFundMe is the result of some astute real-estate minds coming to the realization that a.) pretty much anyone who’s not a trust fund baby is having a helluva time affording a house right now, and b.) millennials love them a crowdfunding platform.
Downpayments for digital natives
If you’ve ever set up a Kickstarter or IndieGoGo campaign, you already know how this dog and pony show goes. The process of setting up a HomeFundMe (which is backed by mortgage-banking firm CMG Financial) campaign likewise implores you to “build a campaign” with “visual content” and storytelling around your “dream home” that you’ll then share on social media.
Once your campaign is underway and you receive your first contribution, you have a year to close on your home. And if you don’t, the money is returned to your donors.
But GoFundMe has a couple of additional notable features: CMG Financial offers to match $2 for every $1 raised; up to $2,500, depending on your income and how it stacks up against the median in your area. The platform also recently integrated the “Affinity Portal,” which allows employers to offer HomeFundMe contributions as a job benefit, a move designed to enable employers to “retain and attract the best and brightest talent and millennials are looking for the lifestyle perks that will help them achieve their goals,” according to CMG president Chris George in a statement.
All of which sounds pretty slick on the surface. But is asking friends and family—and even strangers, potentially—to chip in to help cover cost of a home deposit realistic? And beyond that, does it completely reek of privilege?
Free money, strings attached
Dottie Herman, CEO of real estate brokerage firm Douglas Elliman, notes that this is all gravy for individuals with well-off relatives and friends—but they’re probably the least likely to need assistance in the first place. For everyone else, she notes that “this could be rather difficult, because it would potentially require a large number of individuals to fund the whole down payment of a house, especially a higher priced home. Unless one has a great deal of wealthy friends and family members that would be willing to donate, this isn’t really an ideal path.”
It’s worth noting that HomeFundMe isn’t an all-or-nothing. Even if you don’t reach you goal amount, you can still use the money to help fund your downpayment so long as it’s used within that initial 12-month period.
But Madhi Chaney, co-founder of Millennial Properties, a company that focuses on residential development in emerging communities, has concerns that a successful campaign could potentially enable individuals to enter the market before they understand what they’re getting into.
“Budgeting is not something that is ever taught in school,” he says, and if a downpayment is handed over to someone without the understanding of how large a financial undertaking buying a home is, it’s like “buying a car for a 16-year-old that hasn’t passed driver’s ed yet, or giving a law degree to a student that hasn’t finished law school.”
HomeFundMe does indeed integrate an educational component as part of setting up a campaign, but as Chaney points out, even an understanding of the home buying process is only part and parcel to the bigger picture: “Once it comes time to buy up or purchase up to a better home, a lack of savings or [poor] budgeting won’t miraculously change if the habits aren’t learned.”
At the very least, we can take some comfort in the fact that the rental boom appears to be chilling out a tad, and even if you’re not down with crowdfunding your downpayment, you can always start brushing up on those financial skills that’ll set you up for when you are ready.
HomeFundMe has been contacted for comment.