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Is “Fractional Homeownership” The Future Of Timeshares?

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A co-founder of real estate company Zillow and some of its former executives launched Pacaso in October.

Its model is to buy up homes in popular getaway destinations like Palm Springs, Napa Valley, and Lake Tahoe, renovate them, and then sell them back in shares. It’s called “fractional homeownership.” The homes are marketed to people who want a second home but only plan on using it several weeks out of the year.

I took a look at some of the listings on their website. They have names like "Chardonnay" and "Jade." Right now, you can buy one eighth of a mansion in Palm Springs with a tennis court and a waterfall pool for $725,000. You’d get to use that home about 45 days out of the year.

The concept is popular with investors. Pacaso has been valued at $1 billion, but it’s also controversial. For example, the city of St. Helena banned timeshares long ago, and Pacaso has filed a lawsuit saying that shouldn’t apply to them. But residents are protesting the company’s presence. They, and others, say fractional homeownership can make neighborhoods feel less like communities, and they can prevent locals from finding much needed housing.

Despite the backlash, Pacaso plans to expand to more cities in the U.S. and abroad.