Mike Schneider of Acre Homes: The Generational Housing Question, the Broken Affordability Math, and Shared Ownership

Name: Mike Schneider of Acre Homes: The Generational Housing Question, the Broken Affordability Math, and Shared Ownership
Uploaded: 2026-06-08
Duration: 32 min 40 s
Description: The affordability math that built the American middle class is broken.

Summary

The affordability math that built the American middle class is broken.

Mike Schneider co-founded First in 2012, using machine learning to predict who would sell their home, sold it, and now runs Acre Homes, a shared-appreciation model that lets people own without a six-figure mortgage. Two Durham millennials, Mike and host Ryan Vet, walk through how home ownership got this expensive and what a generation of would-be buyers needs next.

They cover why income-to-price multiples jumped from about 2x to 6x or more, why blaming Wall Street misses the real story, how shared ownership works in the UK, and what the Acre model looks like. Underneath the doom headlines, they find a more complicated picture: ownership rates near 65 percent and 83 percent of Americans still wanting to own.

Key takeaways

Home affordability broke on the math: income-to-price multiples went from about 2x to 6x or higher in the average market, and 10x in San Francisco and New York.

The crisis has three primary drivers: broken affordability math, delayed household formation, and the disappearing starter home.

Blaming Wall Street misses the story. Institutional investors bought less than 1.6 percent of homes.

Transaction costs are the hidden trap: you can walk into a new $500,000 home already underwater until it appreciates 6 to 8 percent.

Despite the headlines, ownership sits around 65 to 66 percent and 83 percent of Americans still prefer to own over rent (Lending Tree, October 2024).

Terms defined

Plain-language definitions for the ideas in this episode. Structured for search and AI answers.

shared ownership noun · housing

A model where a buyer puts a small amount down and shares the home's future appreciation with an investor instead of carrying a full mortgage.

In this episode: The Acre Homes model: 5 percent down for 50 percent of the appreciation.

delayed household formation noun · economics

Millennials marry, form households, and buy at rates similar to prior generations, just later, which reshapes housing demand.

In this episode: One of the three drivers of the affordability crisis.

the starter home problem noun · housing

As builders built bigger and bigger homes, the affordable entry point into ownership largely disappeared.

In this episode: A structural reason first-time buyers are locked out.

the Costco effect noun · Mike Schneider

Lowering the total cost of ownership by removing upfront transaction costs and friction, the way a membership model changes the math.

In this episode: How Mike frames Acre's lower total cost of ownership.

The guest

MS Headshot pending

Mike Schneider

Founder, Acre Homes

Mike Schneider is the founder of Acre Homes and a longtime real estate operator. He works on shared-ownership models aimed at the broken affordability math facing younger generations.

Profile & episodes

Transcript

00:00 From predicting home sellers to reinventing ownership

Ryan Vet · Welcome to another episode of The Ryan Vet Show. I am excited to interview a good friend and someone I've known for many years, who has been really instrumental in revolutionizing real estate in different facets, Mike Schneider. Mike, welcome to the show.

Mike Schneider · Thanks, Ryan. Excited to be here.

Ryan Vet · Now, before we get into housing prices and the market and how different generations have bought houses, I have to tell a story. We're both in Durham, North Carolina, and a couple months ago I saw you walking down the street, and you had headphones with cords in your ears, not AirPods, nothing trendy. I shot you a text, and we started talking about how we're going back to traditional ways, even as millennials. You even mentioned a family member moving to the home phone and dumb phone model, so I love that. So you've got a foot anchored in the past, but you're also trying to figure out how to make homes more affordable to different generations that aren't necessarily buying homes today. Could you tell me a little about your journey, from first figuring out who might want to sell homes in some of your early ventures, to where you are today? And then we'll get into what's going on in our economy from a housing standpoint here in the United States.

Mike Schneider · Yeah, happy to, and excited to be on. I love that you're shining a light on some of the differences across generations. My story from a housing perspective starts with the last company I co-founded, called First, where we were in that first wave of machine learning and AI, and we were predicting who was going to sell their home. We were tracking every homeowner, every family member within those homes, and what led them to sell. We had a very accurate model around that, and it was fascinating. The primary product was for real estate agents. I loved leveraging AI to do things we couldn't do before without a lot of manual process. It obviously has taken off since, but this was back in 2012 when we were building that company. I ended up growing that and selling it. I really felt there was a huge gap we had identified. Thirty percent of people, and last year it was 28%, a little lower than previous years, but 28% of people last year when they sold their home had lived in it for less than five years. And if you look at younger generations, 40 and below, it's closer to 40 to 50% who will sell within the first five years. So I felt there was a huge gap between renting and not building any wealth, versus having to take a $670,000 loan and really get hammered on the 6, 8, 10% transaction costs when you're only going to be there for four or five years. It's just not a great deal. So that's part of what our company now does. We've created a model where you can still have the benefits of homeownership, which I'm sure we'll talk about, and build wealth without having to take on a loan or all the transaction costs, and have more flexibility. That's what we see as a big gap in the market right now.

03:21 Three forces breaking the housing market

Ryan Vet · That's great, Mike, and I love that you referenced using AI in 2012. It's always a good reminder for listeners that AI didn't come out in 2022, in November, when ChatGPT became free. It's powered a lot of technology for a long time, and you were on the forefront of some of that in real estate. But what got me into generations back in 2009 was a real estate group approaching me and asking, why aren't millennials buying houses? They wanted me to come speak on it, because I had a certain number of Twitter followers at the time that made me seem authoritative enough, which I still have the same number, or a couple less. But the reality is, that's always been a question for every new generation. And I think we're asking it about Gen Z now, partly prematurely, because not all of Gen Z is old enough to buy houses. But we're also in a unique time where affordability is more challenging than ever. So could we walk back in history a little, to the 50s, and talk about some major shifts that happened then that allowed people to buy houses, and then how affordability and inventory have changed? Can you walk us through the history of mortgages and homeownership?

Mike Schneider · Yeah. I think, and you may have covered this great on stage, but there are really three primary drivers. Affordability is the biggest, white-hot one right now. The affordability math from the 50s, 70s, 80s, even 90s, is broken right now for a lot of folks, and we can walk through how we got there. The other is that homeownership is really being delayed. An economist I've gotten to know who focuses on housing, Aziz Sunderji, does a lot of phenomenal analysis, and he really showed how household formation is the primary driver of buying homes. Millennials, when they get married and are forming households, are actually buying at the same rates as previous generations, but that's being delayed. So it's a very interesting demographic and behavioral shift in terms of household formation. The affordability math is really broken, we'll talk a lot about that. And then lastly, we've also changed what we're building. The starter home has really been disappearing. We've continued to build larger and larger homes, and those starter homes just have not been built over the last 20 years. We've underbuilt the country in general, but those homes especially have not been built. What makes that worse is that now downsizers are also competing for those smaller homes. So if you compound all three of those things, it makes it really, really hard to get started. But to answer your question on affordability, I do think that's the biggest problem facing households today. I'll give you a couple of quick numbers. Let's take the seventies. The average home cost about 1.9 times the average household income. So yes, you're taking out a loan and paying transaction costs, but it was really under two times your household income to buy the average home. It depends on the market, it could be two and a half times. But today, the average home versus the average household income is five and a half to six and a half times in the average market. If we talk about San Francisco, New York, it could be 10 times. So it's a very different proposition when you're going to lever your family up that much with debt. Same mortgage structure, same 15-year, same 30-year. We're actually back at more normal interest rates right now, but it's just so much more debt, because home price growth has outstripped income growth that much. So we're asking families to take two, three times the debt load that we did back in the 70s, and that's a much more risky proposition. The other thing driving that affordability challenge is that it's not just home prices, it's all the additional homeownership costs, which have scaled up with housing too. Your transaction costs here in the US are a percentage of the home. You can pay 6, 8, 10% on the front end and the back end if you're buying and selling. So if home prices aren't growing 3, 5, 8% a year, you can end up in a situation where you buy that home and four or five years later you're flat, or behind, if home prices aren't really skyrocketing. And people are now seeing insurance costs really going up too, so the total cost of ownership keeps climbing.

08:16 Marriage, delay, and who's actually buying

Ryan Vet · You covered so many good things there, and I want to dive into a couple of them. One of the first things you said was the idea of millennials and the slow-life model. They're later to get married, and we're seeing the same with Gen Z. When you look at the seven main factors that drive any generational movement, marriage and family dynamics is one of the big ones. Cohabitation is up significantly within the millennial generation. Are you seeing people who are cohabitating but maybe not married in the traditional sense also buying houses, and is that accelerating? Or are they still standing off to the side, maybe renting, doing something else?

Mike Schneider · They're definitely more frequently renters. But I also think that's part of where new models will be a better fit, right? It's easier if you then end up going in different directions to figure out what to do, rather than both being on a deed. So yeah, they're definitely more likely renters. But just to give some numbers, and you have all this data too, in the eighties the median age of first marriage was right around 23, and now that's over 30. So it very much tracks with this delay of purchasing homes seven to 10 years later.

Ryan Vet · That's great. One of the things I think is so important when using labels, because labels are risky with generations, is you have to look at the moment in history we're in and the age. You just called out a really clear differentiator: once they get married, even though that's seven years delayed, are you seeing similar patterns with younger generations buying houses? It seems like you are.

Mike Schneider · Almost identical rates of buying homes once they reach household formation. Aziz Sunderji has really called this out from his deep analysis. So that's one of the interesting alternative perspectives. We've been saying not buying, not buying, not buying, but when you look at the actual household formation, they're buying at almost the same rates as boomers.

10:16 Do parents' expectations shrink the starter home?

Ryan Vet · That's fascinating. So let's talk about boomers. Fifty percent of millennial parents are boomers, 50% are Gen X, the first generation with that unique crossover, because boomers delayed childbirth so much. So let's depart from data and theorize a little. One of the interesting things I think boomers generally expect of their children, and I use the word expect on purpose, is that they have a certain house and a certain level of sophistication. They always wanted their kids to have more material things, which was a characteristic trait of many boomer parents. When you talk about the starter home disappearing, do you find that some younger generations, millennials or Gen Z, might be afraid to even purchase a starter home because of disapproval from their parents? I know there's not a lot of data on that, it's more anecdotal, but any theories?

Mike Schneider · You know, I think that's really interesting. Another way of saying it is, is there less demand for a starter home because our expectation is we're going to buy a home like the one we grew up in, which may have been our parents' second or third home, not the starter home? Yeah, I think it's really interesting. We see some of both. We definitely see people buying that townhouse and getting started, and then hoping to move up. I don't have good data, but my instinct is that there definitely is something there, that people are staying with their parents longer to build up more. Maybe one data point that's interesting in that regard is how many homes were purchased with parental assistance. That has been going up significantly over the last five years. So younger generations who are buying homes are getting a lot of that down payment or other assistance from the bank of mom and dad. I think that could be another way of looking at this: maybe that's the leg up that lets them get a little better house than they otherwise would have.

12:12 Why homeownership matters

Ryan Vet · Okay. Do you see any correlation, and I've not run the numbers on this, I don't know if you have, but any correlation on whether a child who's an adult now, who comes from a household that owned a home, is more likely to own a home in the future?

Mike Schneider · Yeah. I think there is a strong correlation. What's interesting, and I probably should have started here at the top of the podcast, is that I truly believe homeownership is actually very, very good for our country, and there is a strong drive to own. There was a study in October of last year that LendingTree did on people's aspirations to own versus rent, and 83% of people in that study, across generations but primarily focusing on younger generations, aspired to own rather than just rent. So I think there's a really powerful drive to own, and I think it's a great instinct. There's a lot of study on how ownership increases civic participation, you have better educational outcomes, so many different benefits. I think it's partly because we're participating in the wealth creation, we're bought into the neighborhoods we call home. Or, as Charlie Munger put the opposite, the renter never washes the rental car. So there's something really valuable in being owners, whether that's full owners or part owners, and I think that's one of the things we should start debating. Because I don't think ownership has to equal taking out a full $670,000 mortgage, which may not even make sense for how long you're going to be there. But I want more and more people to have real participation in ownership of these communities. I think that really changes mentality, how we live, how we treat and steward our home, and there are lots of studies on how that ripples through our communities.

14:10 Shared ownership: what the US is missing

Ryan Vet · Let's talk about shared ownership for a moment, because I know that's something you're passionate about. For both of us, having backgrounds in the startup world, shared ownership is what a lot of the startup economy was built on, stock options and other grants. That was a huge part of getting people bought in to work those long hours and stay up all night until you hit the deadlines. So there's absolutely something to shared ownership. And as we were talking before we hopped on, one of the things you said is the United States might actually be behind, or at least not as innovative, in some of these shared models. So first, can we talk about what you're seeing in other parts of the world, and then what's happening here in the US to potentially introduce a third model?

Mike Schneider · Yeah, it's very interesting. As we started looking across the pond, specifically in the UK, if you go search on the equivalent of Zillow in the UK, you'll see you can filter by for sale, for rent, or shared ownership. That's not even a concept here in the US. We assume ownership equals a mortgage. There are a lot of companies helping people aspiring to get into homeownership, and generally that means helping you either qualify for a mortgage or get enough down payment to get a mortgage. But you and I know this from all the companies we've built. For a lot of people, having 10% or half of a home would be a huge step forward and really remove a lot of friction about getting started. So I think it's time for us to be the best in the US. Right now it's either rent or own. We talked about how broken affordability is, owning is so much more expensive, that a lot of people are just throwing up their hands or having to wait. I think this is going to cause a lot of pressure for new models, either rentals starting to provide some participation, or new structures where people can still get the benefits of ownership without taking on all of the maintenance, all the transaction costs, and a huge mortgage, which, as we saw in the last financial crisis, you can be upside down on.

16:24 How Acre's shared-appreciation model works

Ryan Vet · Right. So can you talk more specifically about what you've done to create these alternative options? I think people just aren't aware of some of the alternatives to get that jumpstart on building wealth, in a way that might not be the traditional 30-year or 15-year mortgage.

Mike Schneider · Yep. So we created a very simple structure where you can have half of the appreciation while you're in the home, without having to pay any transaction costs. When we talked about 8 or 10% to buy and sell a home, it just doesn't fit how so many people live. My wife and I moved four times in 12 years. If you're buying and selling homes that often, you're not getting ahead. But this unlocks a huge amount of inventory for people who are relocating or buying their first home. So for us, it's a shared-appreciation model. You don't have to take on debt. You do put 5% in, and that gets you a 50% share of the appreciation, and you have a lower total cost of ownership. Because we're doing this with hundreds and eventually thousands of homes, I call it the Costco effect, we get cheaper debt, cheaper insurance, all the things the consumer normally pays a ton for as prices keep going up. We're able to bundle that and provide a lower cost of ownership and a lower on-ramp for people to start building wealth.

17:48 The math: then versus now

Ryan Vet · That's incredible. And you said something interesting I want to go back to. Some statistics you shared, and I might misquote them, so feel free to correct me, but you said in the 70s it was approximately 1.9 times an annual salary for the cost of a home.

Mike Schneider · We have to give a range, it was 1.9 to two and a half. But still relatively low. You could save up your down payment, even if you're doing 10 or 20%, in about six months.

Ryan Vet · Yeah, or a year. Now if you're at six to eight, or even 10 to 12 times, depending on where you are in the country, let's use the same numbers because it's easy math. Seven times $50,000 is $350,000. Say 5% of that, you're at, what is that, $17,500 at 5%. So you're looking at, you wouldn't even make that in nine months.

Mike Schneider · Right. And the transaction costs have gone up. You're still paying the same 6 or 8% to sell, it's still a percentage. So to your point, as a percentage of your income, those transaction costs have just skyrocketed as well.

19:18 The transaction costs nobody explains

Ryan Vet · Now, can you talk a little more about the transaction costs? You've alluded to a lot, you talked about insurance and selling price. Because I think a lot of homeowners want to build wealth, they know it's the best next step toward the American dream, but they don't necessarily understand all the implications of those little things that add up on that sheet when you sign your mortgage.

Mike Schneider · Yeah, it's funny you mention that, because we started this company thinking the millennial home buyer was going to be our prime customer. And two-thirds of our customers are actually previous homeowners who've bought and sold homes. It's precisely for this reason, because they know how painful it is to buy and sell a home at the same time, and how much those transaction costs eat into what you actually walk away with. You're a marketing genius, I think it was David Ogilvy who said there are two ways to market: you can either comfort the afflicted or afflict the comfortable, and you really want to do the former. So what we've found is that people who've gone through the pain and suffering of buying a home, you pay 1 to 2% up front. Sometimes some of that gets rolled into the mortgage, your origination fee, but you're going to pay a lot of transaction costs. We're saving our average customer $8,000 to $9,000 at closing up front. But then when you go to sell your home, you're going to spend five and a half to 6% for agents, plus staging and prepping the home, and there's a bunch of other transaction costs. That's usually 6 to 8% on the back end of your sale, and that's really what eats into a lot of the returns. Another way of looking at it: when you walk across the threshold of that new $500,000 home you just bought, you're underwater until it appreciates 6 or 8%.

21:04 Staging and the rising bar to sell

Ryan Vet · That's fascinating, a really interesting thought. And you said something there, staging. Obviously Zillow and realtor.com and all sorts of other companies have basically made it so you have to be a great marketer, take the best images at the right time of day with the drone shot. Sometimes I enjoy just looking at the photography, sometimes it's less than stellar. But has that increased over time, the cost of staging? I remember when my parents looked for a house, we'd drive around a neighborhood with or without a realtor, and there was the little tube on the for-sale sign with flyers in it. Has the cost of staging a house changed, and is that a new added cost that didn't exist before?

Mike Schneider · That's a good question. I think it depends agent to agent. Some of them are rolling that into their commission and offering it as a service. I do think the standards have been raised in terms of prepping a home for sale and showing it. It depends on your objectives, but some people are even doing a fair amount of up-fit to get a home ready. A lot of our inventory in the country is pretty aged now, we've been behind on building, so sometimes people are even remodeling the kitchen or whatnot to get max price on the back end. But all those are strategies for maximizing your net proceeds at the end. There are lots of options, but the bar has definitely been raised. Having a great listing agent and presenting the product really well does outperform. So yeah, if you're joining the home buyer ranks, you want to make sure you buy well and you sell well.

23:00 Is Gen Z outpacing millennials?

Ryan Vet · Absolutely. We talked about Gen Z earlier, and there was a recent study that compared everyone at 28 years old. It compared Gen Z to Gen X to millennials to boomers, and basically found that Gen Zers at age 28, 38% own a home, a higher number than I would have guessed, compared to only 36.8% of millennials. So Gen Z is actually outpacing millennials ever so slightly. But then when you compare that at the same age to boomers and Gen X, they're at 42% and 44.4% respectively. Do you think that has to do with the slow-life model and getting married later? And why do you think Gen Z is outpacing millennials?

Mike Schneider · My gut is that millennials saw the great financial crisis, which was housing-driven, and saw homes crash and people upside down with lots of foreclosures. So I think they probably had a little more hesitation, that's my guess. But we're speculating.

23:59 The inventory shortage

Ryan Vet · Right, and that's fine. We're always trying to figure out why we are where we are. There's a great book by Ezra Klein and Derek Thompson called Abundance. It's a book on the economy, and while it's not their main thesis, they touch on inventory being a significant issue behind many of the economic concerns in the United States. We talked a little about the American dream, build wealth, buy the house, white picket fence. Could you talk a little about the inventory situation we're in? You mentioned starter homes disappearing, but what's the inventory situation, and what will change it?

Mike Schneider · It's not good. Right now it's politically popular to blame Wall Street for our housing affordability challenges. It is not Wall Street's fault. They bought less than 1.6% of homes. What has really driven home prices is this difference in price growth and now interest rates. For a long time, the difference between home price growth and income growth was masked, because interest rates were coming down for so long. Now interest rates are candidly back at a more normal level, but now we see what's been happening with home prices and transaction prices going up. But the big driver is also inventory. Depending on which economists and studies you look at, we're between one and a half and five million homes short, and we're not building enough to make up for that lack of inventory. One of the drivers there, too, was that in the great financial crisis, banks got bailed out, but builders did not. So builders have always been very cautious since then to make sure their homes are going to be absorbed and they're not going to outbuild demand. But that certainly is a huge driver, especially as millennials, a big cohort, got into home-buying age. We just didn't build enough homes, and that drove up prices as well.

Ryan Vet · So one and a half to five million homes short. That's significant. Those are percentage points of our population.

Mike Schneider · It's going to take a while, and it's exacerbated in areas where there's population growth, the Southeast, where people have been moving. So we've got a lot of building to do. I think there have been some good bills, the House bill particularly, trying to remove some regulation and make it easier for folks to build more homes, which I think would help.

26:33 The 40-, 50-, 60-year mortgage question

Ryan Vet · That's great. You mentioned a lot of media right now is blaming Wall Street and BlackRock for buying up all these houses and renting them, causing pressure on renters. So that's one thing we're seeing in the media landscape. The other conversation that's hit headlines is, are we going to get a 40-, 50-, or 60-year mortgage, and what are the implications? Mortgages prior to the 50s were, I believe, five or 10 years, very short, and you had to put something like 50% down. Then we introduced the 15- and 30-year mortgages, which were a huge improvement. Now, fast-forward 70 years, and they're entertaining 40-, 50-, 60-year mortgages. What are your thoughts? Is that going to solve the problem, exacerbate it, or is it just another political move?

Mike Schneider · Primarily a political move. That one died on the vine pretty quick from what I saw, because it doesn't really solve the problem very much. You're only lowering the payment very, very little. And whatever amount you're lowering it, you're also going to increase demand, and so prices, by that much. So if you're only going to lower my payment by $200 for taking a 50- instead of a 30-year mortgage, but I'm going to pay hundreds of thousands of dollars more in interest and build so much less wealth in the earlier years, and it's probably also going to drive prices up, because you'll bring more demand back into the market with a little more affordability. It just doesn't solve the broader problem. So yeah, I'm not a big fan of the 50 or the 60. Part of what's good about ownership is that it's a forced-savings mechanism, because Americans aren't great at saving, at the federal level and at the household level. We spend about a dollar and thirty cents for every dollar we make. So having a mortgage you're paying down, where you're actually building some wealth and consistently paying it down, I think is a really helpful structure. And if you stretch it out to 50 years, you build so much less of that. What I appreciate about real ownership is that people are actually going to have consistent savings.

28:48 The future of the American dream

Ryan Vet · That's good. I love the forced-savings idea. I think it's so important, and it's true, you have to pay your mortgage, otherwise you lose your house. But at the end of the day you've accumulated wealth, even though that's not complete liquidity. And it's not that hard, especially if there's an inventory shortage, to get that back in some way or another. Now let's look to the future as we wrap up. What are your thoughts on the future of home buying in America? What's it going to look like, and what's it going to take to change? If we could just open it up and look forward, what do you see on the horizon?

Mike Schneider · So we focused on a lot of the challenges people are facing right now. But despite those things, I really think the American dream is both great for our country and still pretty strong. Like I said, 83% of Americans would rather own than rent, even in today's market. And we're still at about 65 to 66% homeownership rate, which is higher than a lot of the other periods we've glossed over in this call, higher than the eighties and others. So we actually have very high homeownership rates right now. That's why I've dedicated myself to building a couple of companies to help more people participate and really focus on the homeownership side of the equation. The reason we call it the American dream is that it's a really stabilizing, great thing to be able to participate in. I think America is continuing to grow, and I don't see home prices coming down dramatically anytime soon, especially because of some of the broader macro challenges. So for me, that means we've got this period where affordability has gotten out of control, and we have a lot of people stuck, unfortunately, trying to figure out what to do. That's where I just saw the need for new models, so we went and built one.

31:08 Where to find Mike Schneider and Acre

Ryan Vet · I love that. And you said something really important. It feels like headlines and conversations and a lot of writing is on "we're doomed, people aren't going to be able to afford houses." But you brought up an interesting point, that we're at one of the highest homeownership rates we've ever been at in this country, and that's not changing that much either. It seems like it's actually trending in a positive direction. So despite the headlines, there are actually some really good undercurrents. It doesn't mean it's affordable for everybody yet, but there are good undercurrents and good backbone. And you're part of that. How can people find out about some of the things you offer, and how they might figure out a way a home could be more affordable when they previously thought it was out of reach?

Mike Schneider · Yeah, if people are looking for a more flexible option, we've got everything from first-time home buyers to downsizers who want to live close to the grandkids and aren't sure they're going to be there for more than five, seven, or 10 years, which you need to be sure of if you're getting a mortgage. You can go to AcreHomes.com. That's where we've opened up in a handful of markets in the Southeast, and we're going to be expanding more broadly. We're excited to be pioneering this space of shared appreciation, a new ownership model, and we hope there are five, 10, 15 more companies that serve different parts of the country with additional models that aren't just a big mortgage.

Ryan Vet · That's fantastic, Mike. I appreciate all you've done over the last decade and a half or so to help homeowners, and that you're continuing to do it. I appreciate your insights today, and I want to thank everyone for listening to this episode of The Ryan Vet Show. Until next time.

Mike Schneider · Awesome.

Frequently asked

Who is Mike Schneider? +

He is the founder of Acre Homes and a longtime real estate operator who earlier co-founded First, a company that used machine learning to predict home sellers. He is a Durham-based millennial and a longtime friend of Ryan Vet.

How did homes get so unaffordable? +

Mike points to three drivers: the affordability math broke, with income-to-price multiples rising from about 2x to 6x or more; household formation was delayed; and the affordable starter home largely disappeared.

Is Wall Street to blame for housing prices? +

Mike argues no. Institutional investors bought less than 1.6 percent of homes, so blaming Wall Street is politically popular but misses the real, structural causes.

What is Acre Homes' shared ownership model? +

Buyers put roughly 5 percent down in exchange for sharing 50 percent of the home's appreciation, with no upfront transaction costs and a lower total cost of ownership than a traditional mortgage.

Resources mentioned

Books

Cover

Abundance Ezra Klein and Derek Thompson

Also mentioned

Company Acre Homes — acrehomes.com →

Research Lending Tree, October 2024: 83 percent of Americans prefer to own over rent

Full show notes

The affordability math from the 1970s, 80s, and 90s is broken. Mike Schneider, founder of Acre Homes and longtime real estate operator, joins The Ryan Vet Show to walk through what actually happened to home ownership in America, and what comes next.

Mike Schneider has spent the last decade and a half rebuilding the math of home ownership. He co-founded First in 2012, using machine learning and AI to predict who would sell their home, and sold that company. He is now the founder of Acre Homes, a shared appreciation model that lets people own without taking on a $670,000 mortgage. In this conversation with host Ryan Vet, two Durham millennials walk through how home ownership got this expensive, why blaming Wall Street is missing the real story, and what a generation of would-be buyers actually needs.

The episode opens with the conversation that started this episode: Ryan spotted Mike walking down a Durham street wearing wired headphones. Two millennials, both Durham-based, both quietly recalibrating away from the trendy and back to the durable. That instinct, going analog, is showing up in housing too. Mike unpacks the three primary drivers of the affordability crisis (broken income-to-price math, delayed household formation, the disappearing starter home), the data on which generations are actually buying houses (Gen Z is outpacing millennials at age 28), and why the 50 or 60 year mortgage is a political move that does not solve the underlying problem.

Then Mike walks through the shared ownership model. In the United Kingdom, Zillow’s equivalent lets you filter for sale, for rent, or shared ownership. In the United States, that third option does not exist. Acre Homes is building it. Five percent down for fifty percent of the appreciation. No transaction costs on the front end. Lower total cost of ownership through what Mike calls the “Costco effect” of bundling debt, insurance, and operations across thousands of homes. Mike explains why two-thirds of Acre’s customers are not first-time buyers (as expected) but previous homeowners who have lived the pain of buying and selling under the current model.

The conversation closes on the data Mike thinks gets buried under the doom headlines. American home ownership is at 65 to 66 percent, higher than the 1980s. Eighty-three percent of Americans still prefer to own rather than rent (Lending Tree, October 2024). The country is between 1.5 and 5 million homes short on inventory. The American Dream is not dead. The math just needs new models.

In this episode:

Why the housing affordability math from the 1970s, 80s, and 90s is broken (the income-to-price multiple has gone from 2x to 6x or higher)The three primary drivers of the modern affordability crisis: broken math, delayed household formation, the disappearing starter homeWhy Gen Z at age 28 is outpacing millennials in home ownership (38 percent vs 36.8 percent), and what that says about the great financial crisis effectWhy blaming Wall Street is missing the real story (institutional investors bought less than 1.6 percent of homes)Why the 40, 50, and 60 year mortgage proposals are political moves, not solutionsHow shared ownership works in the UK and why the United States is behind on the modelThe Acre Homes model: 5 percent down, 50 percent of appreciation, no transaction costs on the front, lower total cost of ownershipWhy two-thirds of Acre’s customers are previous homeowners, not first-time buyersThe transaction costs nobody talks about: why you walk across the threshold of your new $500,000 home already underwater until it appreciates 6 to 8 percentThe starter home problem: why we have built bigger homes and where the entry point disappearedThe data buried under the doom headlines: 65 to 66 percent home ownership rate, 83 percent of Americans prefer to own (Lending Tree, October 2024)Referenced in this episode:

Acre Homes: acrehomes.comAziz Sundirji, economist focused on housing and household formationCharlie Munger’s line: “The renter never washes the rental car”David Ogilvy on marketing: “Comfort the afflicted or afflict the comfortable”Abundance by Ezra Klein and Derek ThompsonLending Tree study, October 2024: 83 percent of Americans prefer to own over rentConnect with Mike Schneider:

Acre Homes: acrehomes.comLinkedIn: linkedin.com/in/mikeschneider3Connect with Ryan Vet:

Website: ryanvet.comCOLLIDE Newsletter: ryanvet.com/collideLinkedIn: linkedin.com/in/ryanvetInstagram: instagram.com/ryancvetBook Ryan as a Keynote Speaker: ryanvet.com/generational-speakerSubscribe to The Ryan Vet Show on Apple Podcasts, Spotify, YouTube, and wherever you get your podcasts. The guest era continues every Monday at 6am ET. Next week: Kevin Stinehart, the elementary school teacher and play advocate featured in chapter 11 of Jonathan Haidt’s The Anxious Generation, on rebuilding play and recess inside the modern school system. The COLLIDE essay podcast continues every Thursday at 7am ET.

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About Ryan VetRyan Vet is a USA TODAY bestselling author, futurist, and international keynote speaker whose insights on generations, culture, and the future of work have been featured in Forbes, Financial Times, ABC, NBC, and CBS. His research helps leaders understand emerging generational patterns and anticipate societal shifts before they fully unfold.

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Mike Schneider of Acre Homes: The Generational Housing Question, the Broken Affordability Math, and Shared Ownership

Mike Schneider

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