An Affordable Housing Crisis
From 1985 to 2020, median rent prices increased by nearly 150 percent despite overall household income growing just 35 percent — and this spike shows no sign of slowing any time soon. In May, the median monthly rent in Manhattan hit a historic high of $4,000, representing a year-over-year increase of more than 25 percent. This rise in rental price has been driven by various factors, from an increase in inflation rates to pandemic-related drivers, including remote work, the expiration of rent freezes and a general return to major metro markets.
This rental environment points to a larger affordability issue in the sector, which ultimately places many renters in a precarious position financially and, for many of them, makes homeownership virtually unattainable. A study released earlier this year found that 61 percent of renters across the country’s largest metropolitan markets could not afford to purchase a home in the area they’re residing in, even if they spent years saving for a down payment.
Wealth Building for Renters
As this dynamic persists and rent prices remain at or near record highs, it is more important than ever for renters to consider impactful pathways to building their savings.. At RET Ventures, we’re committed to supporting this journey, driving our most recent investment in Stake. The platform, which sits at the intersection of proptech and fintech, is one of the first companies to receive funding from our recently-launched, ESG-centric ‘Housing Impact Fund.’
Leveraging behavioral science, Stake empowers renters by providing them with Cash Back on their rent, rewarding them for taking positive actions like signing a lease and paying rent on time while also offering no-fee banking services with cashback on spend to build savings. The solution also mitigates pain points for building owners and saves them money by increasing lease-ups, reducing economic vacancy, and decreasing delinquencies.
Using the platform, property managers receive a 130 percent return on every dollar spent, while renters earn an average of four percent Cash Back on their rent. In the simplest terms, Stake has reimagined the classic ‘rainy day fund’ for renters to build wealth traditionally associated with home ownership. Now, their largest expense is also a significant source of savings.
This Cash Back model also uniquely positions Stake against the other fintech solutions for renters that we have reviewed in the past, all of which are credit- or debt-based and ultimately encourage dangerous behavior as part of their proposed solution.
A Brighter Future for Renters
With Stake, renters have a risk-free, accessible and maintainable roadmap to building meaningful savings. Across the $385 million in annual leases currently connected to the Stake platform, 65 percent of renters have more money in their Stake account than any other banking account. And in the past year, the number of residences that offer Cash Back with Stake has grown by 10x as the mutual benefit that the platform provides for owners is clear; on average, renewals at Stake properties have been 30 percent higher than the rest of the market.
While renters’ current financial landscape has heightened the immediate demand for affordable housing solutions, Stake’s unique offering has immense potential to become a long-term resource in renters’ financial toolkit. We look forward to working in partnership with Stake, leveraging the symbiotic renter-owner relationship to actively combat the growing affordability crisis while creating a healthier financial future for renters and owners alike.