“I love co-living,” said Jessica Bruno, 28, a tech saleswoman who moved into the six-bedroom house when it opened in August. “It’s great having people here when I come home.”
Her home, run by the 2-year-old San Francisco company Bungalow, embodies a trend that’s spreading rapidly across pricey cities: co-living, in which unrelated people share spaces and split costs.
The notion of co-living is hardly new, housing expert Richard K. Green said, but there may be a market for the upscale version of it emerging now.
“A hundred years ago, people commonly lived in boarding houses, sharing a kitchen and a bathroom down the hall,” said Green, director of the USC Lusk Center for Real Estate.
But the current crop of startups pushing co-living—including Starcity, Common, California Landmark Group, and WeLive (a division of co-working company WeWork) as well as Bungalow—reflect a surge of interest in the housing market, which is particularly adept at bringing Millennials into the market.
“Co-living is growing like wildfire,” said Robert Boyer, an urban planner and sustainability researcher.
The concept’s rise springs from several trends, including soaring rents and the housing shortage; the comfort with strangers engendered by Airbnb, Uber and other on-demand services; and Millennials’ interest in experiences over possessions.
Florida found that 109 co-living and co-working startups drew $6.4 billion in venture backing from 2016 to 2018. Bungalow, which operates more than 300 homes with more than 1,300 residents in 10 cities, has $14 million in investor funding plus a $50 million line of credit.
At Bungalow, as at most co-living communities, residents rent private bedrooms and share the kitchen, living room and dining room, which sport Instagram-worthy furnishings and amenities including big-screen TVs.
“We’re creating rich and vibrant communities,” said Andrew Collins, Bungalow CEO and founder. The idea grew out of his struggles to find housing and friends when he moved to the Bay Area after college.
The company makes an effort to match compatible roommates, doing reference and background checks, qualitative and quantitative interviews.
Transforming Existing Properties
Many co-living startups extensively rehab existing properties or build new ones. They often have a dozen or more residents, sometimes with on-site community managers, which has given rise to the sobriquet “dorms for grown-ups.”
By contrast, Bungalow rents existing single-family homes, generally four bedrooms or more, which are move-in ready or just need painting. That approach, the company said, allows it to grow rapidly and to keep costs down. Los Altos’ HubHaus and Berkeley’s OpenDoor have similar approaches.
“We’re not reinventing the wheel; we’re leveraging existing housing stock,” Bungalow’s Collins said. “There just aren’t that many large families anymore to rent five-bedroom houses.”
While Bungalow pays property owners market rate or a little less, it guarantees stability for two or three years, eliminates the need to hire a property manager, and handles all repairs during its tenure, making it a good deal for owners, he said.
Bungalow residents said they pay between $1,100 and $1,250 a month (larger rooms with private bathrooms cost more). That includes utilities, Wi-Fi, a biweekly house cleaner, and monthly recreational outings, which are open to all the residents. “A one-bedroom apartment around here would cost twice as much,” Jordan said.
Zoning Laws Impose Limits
Some cities have zoning rules that limit how many unrelated adults can share a house. Another potential issue is rent control. Not wanting to tangle with those regulations is largely why Bungalow has stayed out of San Francisco, Collins said.
Then there’s the potential for backlash from housing advocates.
Peter Cohen, co-director of the Council of Community Housing Organizations in San Francisco, said turning big single-family homes into modern-day boardinghouses seems fine, but converting existing apartment buildings or single-room occupancy hotels—as some co-living companies do—“is, effectively, shifting precious existing housing supply from one clientele to another. It’s the robbing Peter to pay Paul effect.” With such conversions, he thinks that requirements for below-market housing should apply.
Like other co-living companies, Bungalow focuses on expensive areas with lots of tech workers, including Los Angeles, Seattle, Chicago, Boston, San Diego, New York and Washington, D.C.