Airbnb Co-Founder’s New Business Is Building Small Homes in Backyards
The startup is launching in California, one of the states trying to boost its housing supply
2 min
Joe Gebbia co-founded Airbnb Inc. as a company that helped people rent out their homes to guests. His new venture is about adding small homes to people’s backyards.
The new startup, known as Samara, plans to sell factory-produced studio and one-bedroom units to homeowners. The company is looking to capitalise on laxer laws and rising demand for affordable housing spurred by surging home prices and ballooning rents.
Samara is initially launching in California, which is one of the states trying to boost its housing supply by easing restrictions on accessory dwelling units. The modest residences are located on the same lot as a single-family home and in California can be as small as 150 square feet. The state now allows homeowners to build ADUs in their backyard even if the homeowners association prohibits it.
The company, which takes its name from the samara fruit, hopes eventually to expand beyond California. It is betting that worsening housing shortages and the rising popularity of remote work will increase the need for ADUs.
Unable to afford houses of their own, more Americans are moving into converted garages or guesthouses and multigenerational households are on the rise. Meanwhile, people working from home are more likely to need additional space away from noisy children and other distractions.
“Work from home at least once per week has fundamentally changed people’s relationship to their home,” Mr. Gebbia said.
Starting prices for Samara’s ADU line, dubbed Backyard, will range from $299,000 for 430-square-foot studios to $339,000 for 550-square-foot one-bedroom units in the San Francisco Bay Area, with slightly lower prices for homes in Southern California, the company said.
Mr. Gebbia, who co-founded the company with Mike McNamara, the former chief executive of electronics manufacturer Flex Ltd., said the units will be built in factories by a modular construction company. Samara will design and market them. It will also handle applications for building permits and the installation. The customisable homes come with solar panels on the roof designed to meet all the unit’s electricity needs.
Samara isn’t the first company to roll out these small homes, and faces competition especially in California. The state issued nearly 20,000 building permits for ADUs in 2021, up from 12,520 in 2019 and just 1,160 in 2016, according to the California Department of Housing and Community Development.
Samara also faces a challenging economic environment. Construction costs are high by historical standards while inflation, rising interest rates and a weakening housing market are eating into homeowners’ spending power.
Mr. Gebbia, 41 years old, graduated from the Rhode Island School of Design before becoming roommates with fellow Airbnb co-founder Brian Chesky in San Francisco in 2007. The roommates quit their jobs that year and launched the short-term rental company in 2008.
Mr. Gebbia became interested in ADUs when he wanted to build one on his land but found the options underwhelming. “That was a tiny seed that was planted, you can say, by personal frustration,” he said.
Samara started off in 2016 as a research and design unit of Airbnb. Mr. Gebbia said he began working on the ADU concept with Mr. McNamara while still at the short-term rental company. “It got to the point where we both realized this needs to be an independent company. So earlier this year, we moved out of Airbnb,” he said.
In July, Mr. Gebbia announced that he would leave his full-time role at Airbnb. Samara is now an independent startup, although Airbnb owns a minority stake, according to Mr. Gebbia.
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Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Philip Lowe’s comments come amid property industry concerns about pressures on mortgage holders and rising rents
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Leaders in Australia’s property industry are calling on the RBA to hit the pause button on further interest rate rises following yesterday’s announcement to raise the cash rate to 4.1 percent.
CEO of the REINSW, Tim McKibbin, said it was time to let the 12 interest rate rises since May last year take effect.
“The REINSW would like to see the RBA hit pause and allow the 12 rate rises to date work their way through the economy. Property prices have rebounded because of supply and demand. I think that will continue with the rate rise,” said Mr McKibbin.
The Real Estate Institute of Australia today released its Housing Affordability Report for the March 2023 quarter which showed that in NSW, the proportion of family income required to meet the average loan repayments has risen to 55 percent, up from 44.5 percent a year ago.
Chief economist at Ray White, Nerida Conisbee, said while this latest increase would probably not push Australia into a recession, it had major implications for the housing market and the needs of ordinary Australians.
“As more countries head into recession, at this point, it does look like the RBA’s “narrow path” will get us through while taming inflation,” she said.
“In the meantime however, it is creating a headache for renters, buyers and new housing supply that is going to take many years to resolve.
“And every interest rate rise is extending that pain.”
In a speech to guests at Morgan Stanley’s Australia Summit released today, Governor Philip Lowe addressed the RBA board’s ‘narrow path’ approach, navigating continued economic growth while pushing inflation from its current level of 6.8 percent down to a more acceptable level of 2 to 3 percent.
“It is still possible to navigate this path and our ambition is to do so,” Mr Lowe said. “But it is a narrow path and likely to be a bumpy one, with risks on both sides.”
However, he said the alternative is persistent high inflation, which would do the national economy more damage in the longer term.
“If inflation stays high for too long, it will become ingrained in people’s expectations and high inflation will then be self-perpetuating,” he said. “As the historical experiences shows, the inevitable result of this would be even higher interest rates and, at some point, a larger increase in unemployment to get rid of the ingrained inflation.
“The Board’s priority is to do what it can to avoid this.”
While acknowledging that another rate rise would adversely affect many households, Mr Lowe said it was unavoidable if inflation was to be tamed.
“It is certainly true that if the Board had not lifted interest rates as it has done, some households would have avoided, for a short period, the financial pressures that come with higher mortgage rates,” he said.
“But this short-term gain would have been at a much higher medium-term cost. If we had not tightened monetary policy, the cost of living would be higher for longer. This would hurt all Australians and the functioning of our economy and would ultimately require even higher interest rates to bring inflation back down.
“So, as difficult as it is, the rise in interest rates is necessary to bring inflation back to target in a reasonable timeframe.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
