High mortgage rates, inflation, and high home prices have made the road to homeownership very challenging for first-time homebuyers, but an alternative route is gaining traction in achieving the American dream—but only for an investor.
Fractional real estate enables individuals to own a piece or “fraction” of a property—whether that be a home, residential building, or even land—thus lowering barriers to owning property that can be used as an income stream.
“The number of first-time homebuyers has fallen to half its historical norm. That affordability crisis is the single biggest catalyst behind fractional real estate’s growth,” says Alex Blackwood, co-founder of mogul, a fractional real estate investment platform.
And this market is quickly exploding. Market research and consulting firm DataIntelo reports that the “global fractional real estate platform market was valued at $4.2 billion in 2025 and is projected to expand to $14.8 billion by 2034,” with North America dominating, accounting for 38.6% of revenue in 2025.
Fractional real estate
Blackwood says that the 2026 fractional real estate landscape is overwhelmingly driven by millennials and Gen Z, two generations for whom traditional property ownership has become a statistical long shot, so investing in property has become the more lucrative option.
With the old way, a young person would need an large lump sum of cash in order to afford a down payment. These days, most are locked out of building that kind of savings.
“These are digital-first participants bypassing six-figure down payments to acquire smaller, liquid shares of income-producing properties,” explains Blackwood, “and their behavior is shifting away from speculative appreciation toward stable monthly cash flow.”
On mogul, millennials and Gen Z together make up half of the investors, with millennials alone being the single largest cohort.
“This is a generation that watched their parents build wealth through real estate and then got handed a market where the median home requires an income most of them won’t hit until their 40s, if ever. They’re not waiting around,” Blackwood says.
Mogul distributes rental income monthly to its investors, with properties yielding between 7% and 12% annually, according to its co-founder.
“That kind of predictable return resonates with a generation that’s done waiting for the market to come back to them,” Blackwood says.
Boomers, meanwhile, are a smaller slice of the base—though they write significantly larger checks.
“They put in roughly three to four times what a typical millennial puts in per transaction. They’re treating fractional real estate as a portfolio diversification play. And the younger generations are following suit so that they can grow their wealth with real estate,” Blackwood adds.
Chris Gerardi, CEO, president, and founder of the fractional real estate platform Realbricks, sees the same happening with his clients and notes that the platform’s median age is 36, and the average income is $60,000–$110,000.
“A large segment of millennials are locked out of the real estate market due to driving factors such as home cost, insurance, and taxes. Also, the millennials realize the math of a traditional home purchase doesn’t work out. Millennials are our largest demographic group; however, our fastest-growing demographic is Gen Z,” Gerardi says.
Where is the highest growth, and where are the next hot spots?
For a while, there was some hesitancy for many to get involved. But in the last three years, the U.S. Securities and Exchange Commission (SEC) has created clear rules that allow regular people to invest safely. With that, according to DataIntelo, people poured over $2 billion into these types of platforms in 2025.
According to Blackwood, the growth is concentrated in the Sunbelt and Southeast.
“On mogul, our highest-concentration property markets are Texas, Georgia, Arizona, and Florida: all Sunbelt, all yield-driven. Capital is following the population. Between 2020 and 2025, the Phoenix metro added over 400,000 residents, while San Francisco lost nearly 100,000. That tells you everything you need to know about where the money is going,” Blackwood says.
On the other hand, gateway markets that historically dominated real estate investment are losing interest from fractional participants. These include Los Angeles, New York, and San Francisco, which “continues to bleed population and pricing power.”
“The reason is simple: entry costs in LA, SF, and New York are too high for the yield math to work, and regulatory complexity adds friction that platforms, and their investors would rather avoid,” he adds.
The downside: wealth now, not later
There are drawbacks to this arrangement, however.
Antonella D’Angelo, founder of luxury real estate company NCGVilla, notes that while fractional purchasing enables first-time homebuyers to gain traction, it may also exacerbate already-high prices.
“I am well aware of the potential price inflation issue here,” D’Angelo says. “More people putting in bids inevitably leads to more competition, regardless of the form that capital takes. For already hypercompetitive sub-markets, the introduction of fractional platforms can worsen the affordability crisis.”
Still, she adds that, for the moment, the balance is still tipping in favor of the fractional users’ ability to enter the market.
Additionally, Sergio Altomare, CEO and co-founder of Hearthfire Holdings, argues that the biggest long-term question is whether this model builds wealth as effectively as traditional ownership.
“Owning a slice of a home is still better than building no equity at all, but it’s not economically identical to owning 100% of a home and capturing all the appreciation, control, and refinancing flexibility,” Altomare explains. “The danger is that we normalize partial ownership without fixing the supply problem, leaving younger households with a thinner version of the wealth-building tools prior generations enjoyed.”
Data from the Realtor.com® Generational Wealth report supports this concern, noting that early entry into homeownership is associated with a substantially higher net worth by midlife. Buying by age 32 is linked to a roughly 22.5% higher net worth by age 50—approximately $119,000 more for a typical household—compared to those who wait until their 40s.
However, these figures assume a person owns an entire home, not a fraction. They also assume a steady stream of equity being funneled into the property. Because fractional real estate is an investment rather than a primary residence, its success depends on the property being occupied and rental income filtering back to the shareholders.
Ultimately, Ryann Brier, a real estate agent with City Lights Home Buyers, believes that while fractional real estate solves the “entry fee” problem for new investors, it doesn’t automatically guarantee long-term wealth.
She notes that while it remains a strong option for some, she asks clients whether they are choosing fractional investing because they cannot afford a house or for a more strategic reason. According to Brier, investors who see the most success with this model typically fall into three categories: buyers in high-cost coastal cities who are years away from buying a starter home; people seeking rental income who don’t want the responsibilities of a landlord; and current homeowners looking to diversify their cash flow.
Still, the model falls short regarding autonomy. Owners lack control over the asset, so platform costs—including sourcing, management, and sales fees—eventually add up and eat into cash flow.
“Fractional is the backup plan,” Brier says, “not a shortcut to the same destination.”
