Executive Summary: Home Equity Investments as a Tool for Sustainable Development

A recent milestone by Hometap, which has deployed over $2 billion in home equity investments (HEIs) to more than 20,000 homeowners, highlights the growing role of alternative financing in promoting financial stability and advancing several United Nations Sustainable Development Goals (SDGs). This report analyzes the growth of the HEI market, its operational model, and its direct contributions to fostering economic resilience, reducing inequality, and building sustainable communities.

Addressing Homeowner Financial Vulnerability and Promoting Economic Well-being

H3: Mitigating Financial Stress and Poverty (SDG 1: No Poverty)

A recent survey indicates significant financial pressure on homeowners, with 54.5% reporting financial stress. Rising costs are a primary driver of this instability. HEIs provide a critical financial buffer, allowing homeowners to access capital without incurring additional debt or monthly payments. This mechanism directly supports SDG 1 by preventing households from falling into poverty due to unexpected expenses or economic downturns.

• Inflationary pressures on household budgets.
• Surging home insurance and property tax expenses.
• Increased daily living and home maintenance costs.

H3: Fostering Economic Growth and Stability (SDG 8: Decent Work and Economic Growth)

The American housing market holds an estimated $34.5 trillion in home equity. Unlocking a fraction of this value through HEIs injects capital into the economy. Homeowners can use these funds for life events, home improvements, or entrepreneurial ventures, thereby stimulating economic activity and contributing to the objectives of SDG 8. The Hometap model, which involves a partnership in the home’s future appreciation, aligns the interests of the investor with the financial well-being of the homeowner.

Enhancing Housing Stability and Reducing Inequality

H3: Creating Sustainable and Inclusive Communities (SDG 11: Sustainable Cities and Communities)

The HEI model is designed to make homeownership more sustainable. By providing an alternative to foreclosure or forced sales during periods of financial hardship, it helps maintain neighborhood stability. This approach ensures that homeowners can remain in their homes, preserving the social fabric of communities and contributing to the core mission of SDG 11.

1. Homeowners receive a cash payment in exchange for a share of their home’s future value.
2. The investment term lasts up to 10 years with no required monthly payments.
3. Settlement occurs upon the sale of the home, refinancing, or at the end of the term.

H3: Reducing Financial Inequalities (SDG 10: Reduced Inequalities)

HEIs expand the range of financial tools available to homeowners, particularly for those who may not qualify for or wish to take on traditional debt products like Home Equity Lines of Credit (HELOCs). By providing a debt-free option, the model enhances financial inclusion and reduces inequalities in access to capital. The emphasis on consumer education is crucial for empowering homeowners to make informed decisions, further supporting the goals of SDG 10 by ensuring equitable access to financial resources and information.

Strategic Outlook and Market Development

The rapid acceleration in HEI deployment is attributed to two primary factors: persistent consumer demand for flexible financial solutions and the maturation of the HEI securitization market. The development of a secondary market enhances investor confidence and allows capital to be recycled more efficiently, ensuring a reliable flow of funds to homeowners. Hometap’s strategy of securing long-term, large-scale capital partners underscores a commitment to building a durable and scalable solution that aligns financial innovation with sustainable development objectives. The ultimate goal is to broaden the financial ecosystem, offering a diverse portfolio of equity-based options to address the varied needs of homeowners across the economic spectrum.

SDGs Addressed in the Article

• SDG 1: No Poverty
• SDG 8: Decent Work and Economic Growth
• SDG 10: Reduced Inequalities
• SDG 11: Sustainable Cities and Communities

Specific SDG Targets Identified

1. SDG 1: No Poverty

   • Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to … ownership and control over … other forms of property … and financial services.
     
     Explanation: The article discusses Hometap’s home equity investment (HEI) product, which is a financial service that allows homeowners to access the economic resource (cash) tied up in their property. This service is presented as a solution for homeowners who are “financially stressed” due to rising costs, thereby providing them with access to capital from their own assets.

2. SDG 8: Decent Work and Economic Growth

   • Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.
     
     Explanation: Hometap is expanding the financial options available to homeowners beyond traditional debt products like HELOCs. The article states, “Our goal is to expand that overall pie and say, ‘Look, there’s $35 trillion worth of home equity in the U.S. Here are three or five or 10 different ways for you to tap into that as a homeowner.'” This demonstrates an expansion of access to financial services.

3. SDG 10: Reduced Inequalities

   • Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all…
     
     Explanation: The HEI product offers a way to access capital without incurring monthly debt payments. This can promote the economic inclusion of homeowners who are asset-rich but may have inconsistent income or be unable to take on more monthly debt, thus empowering them to “access the resources they need to fund life’s opportunities and challenges.”

4. SDG 11: Sustainable Cities and Communities

   • Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing…
     
     Explanation: The article highlights Hometap’s mission “to make homeownership less stressful and more accessible” and explicitly mentions that they are “helping more people stay in their homes.” By providing a financial tool to manage the rising costs of homeownership, the service helps ensure homeowners can maintain their housing.

Indicators for Measuring Progress

1. Target 1.4 / 11.1

   • Indicator: Number of homeowners utilizing the financial service.
     
     From the article: Hometap has deployed capital to “20,000-plus homeowners.” This directly measures the reach of the service aimed at helping homeowners access their equity and stay in their homes.
   • Indicator: Amount of capital deployed to homeowners.
     
     From the article: The company has deployed “more than $2 billion” to homeowners, quantifying the economic resources made accessible.
   • Indicator: Percentage of homeowners experiencing financial stress related to housing costs.
     
     From the article: A survey found “54.5% report feeling financially stressed, and 45% cite rising homeownership costs as their top concern.” This provides a baseline metric against which the impact of such financial solutions can be measured.

2. Target 8.10

   • Indicator: Growth in the volume of alternative financial products.
     
     From the article: Hometap’s rapid growth from “$1 billion to $2 billion in originations” in less than 18 months indicates the expansion of this specific financial service.
   • Indicator: Total potential market for expanded financial services.
     
     From the article: The mention that “American households had $34.5 trillion in home equity” serves as an indicator of the total capacity for expanding these types of financial services.

SDGs, Targets, and Indicators Analysis

Source: housingwire.com