Why we invested in Summer
We started 1Sharpe Ventures to invest in founders that look at glaring inefficiencies in real estate and financial services and say “we can do better.” The Summer team believes in reshaping how we define, buy, and access one of the most inefficient yet beloved real estate markets of all — vacation homes.
As technology matches supply to demand in nearly every vertical, real estate remains massively imbalanced. Our homes sit idle much of the time despite tremendous value others would find in that space. Airbnb developed one of the first elegant solutions to bridging this divide in residential real estate and has since proven-out the demand side: we can foster trust between strangers and intimate spaces. Yet, despite the influx of vacation rental platforms and managers built around Airbnb principles, the supply side remains constrained and locked up by individual homeowners. We still seem to find it annoying and inconvenient to rent out our spaces.
These concerns make sense in the primary home market, but you would think we would have conquered them for second homes, where someone is already often paying a remote property manager and may hardly even spend time in the home…unfortunately, not the case. The average second home utilization rate remains flat around 11%.
Owning a second home has been a dream for many but a reality to few. It has been a luxury reserved for the ultra affluent or a meticulous decision based on years of renting in your favorite vacation spot. But with second home sales surging in recent years, up 13% from pre-pandemic levels, the calculus for consumers is clearly changing.
Fueled by flexible working arrangements and rising affordability issues in the major metros, Millenials and Gen Z have been buying vacation homes before they buy their primary residence while they rent in urban metros. According to NAR, the average age of a second home owner is younger every year — 43 compared to 61 over a decade ago. This younger segment wants the opportunity to build wealth through home equity but in an extraordinarily tight housing market, have looked to other avenues to enter into home ownership. And with rates rising and the risk of discretionary income softening during a downturn, we believe buyers will have to get even more practical in how they purchase and utilize these assets.
Enter Summer. Started by two Airbnb alums, Summer recognizes the value locked-up in idle second home supply, and sees the headwinds facing aspirational second home owners. They are building a different path to ownership that makes it more affordable and practical for buyers, and maximizes utilization and value of the home to the rental market along the way.
Here’s how it works (today):
- You choose your dream vacation home in a Summer market
- Decide to either buy the home today or enter a trial period with the locked-in option to buy within three years
- Choose how much or how little you aim to stay in your home
- Summer takes care of renting out and managing your property when you’re away
- Access other Summer homes and perks as a member of the network
When you think about what Summer can offer, it almost feels shocking that someone would buy a second home any other way: the option to purchase with less friction — or “try before you buy”, generate consistent incremental income (or discounts on monthly payments), access on-demand, personalize (vs. co-ownership models), and offload the headache of management, listing, and oversight to professionals hyper-obsessed with quality and reputation. And that’s exactly what they want to create — the avenue to vacation home ownership preferred by every aspirational buyer, existing owner, broker, and affiliate.
We get excited about platforms like Summer that can reshape hundred-billion-dollar industries with sticky consumer demand despite massive headaches. As Summer amasses scale, the value of the network becomes more interesting — lower-cost, efficient management, higher asset utilization and rental fees, and additional services and financial products tailored to owners. We also see value on the real estate side of the platform. We’ve built businesses riding the institutionalization of the single family rental asset class and we see this same wave of value creation coming into the short term rental market. It’s still early innings but we believe Summer’s ability to unlock and aggregate supply in this high-yielding asset class will not only create more liquidity and availability for consumers, but appeal to a wide range of investors.
We are excited to partner with the Summer team as they redefine the dream of vacation home ownership.
Check it out for yourself — and they’re hiring! gosummer.com