Innovators respond to market inefficiencies. As affordability has become more of an issue in the housing market, we’re seeing entrepreneurs offering creative options. Heard of Divvy?

Born in a Bay Area tech incubator and launched in January of this year, Divvy raised $7M in funding for the purpose of “giving customers the flexibility of renting with the financial benefits of homeownership.” The renter selects any home on the market and Divvy purchases it. The renter puts 2% down; their monthly payment includes both rental and equity payments designed to build 10% equity over the next three years. At that point, the renter can buy the home using their already saved 10% down payment or, if they’re in a position to buy sooner, they can. This “tech enabled rent-to-own business” is currently available in Atlanta, Cleveland and Memphis.

A Wall Street Journal article with the (alarming to me) title “No Savings? No Problem” caught my attention. It mentioned other creative options:

Loftium, started by a Seattle entrepreneur and only available in that city for now, fronts homebuyers up to $50,000 for their down payment with a promise that the homeowner will rent out a spare room through Airbnb and share that income with Loftium for the next 1 to 3 years.

HomeFundMe, launched last year by mortgage lender CMG Financial, facilitates asking family, friends and acquaintances to contribute to the down payment you haven’t saved. The article reported that about 400 borrowers have used this method and raised an average of $2500.

Bank of America and Morgan Stanley apparently have programs that use the buyer’s parent’s investments as collateral for the down payment.

A more old-school response to the issue is spending less on the home in the first place which has given rise to the tiny home movement. In our very own Vail School District, 24 tiny homes are being built to accommodate teachers who make regrettably low salaries. These homes aren’t as tiny as some, they range from 400 to 600sf, but their rent including utilities is affordable at $550 per month. And Pyramid Federal Credit Union has offered financing if teachers prefer to buy.

The tech enabled rent-to-own concept seems to me the least risky of these workarounds. Relying on Airbnb income, crowd funding from friends or using your parent’s investments as collateral risks personal relationships and makes the homebuyer extra vulnerable to changes in the housing market. I like old-school…