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Here’s why technology hasn’t been able to tackle housing affordability
Many see it as a policy problem
Despite the flood of startups entering real estate, technology has been largely unable to tackle a central problem: affordability.
Though policymakers say tech can’t solve the housing crisis, others argue that more money directed toward the problem could change the market, the New York Times reported.
“None of that investment, nor the solutions that those companies are offering, will fundamentally change the dynamic of the housing market in a way that increases housing affordability,” said Matt Hoffman, the vice president for innovation at the national housing nonprofit Enterprise Community Partners.
Recently, Enterprise began to invest in early-stage startups itself. This year MetaProp, the New York-based venture capital firm, said it wanted to bolster the creation and protection of affordable housing. The firm, which advises and invests in property tech startups, will partner with Enterprise to invest in firms that address the undersupply of affordable homes and make credit and illiquid capital more accessible.
In the current market, startups like the SoftBank-backed Katerra have drawn attention for tackling affordability through pre-fabricated construction. But some investors insist the housing problem is one with a policy solution — not a tech one.
“This looking for a tech solution — I understand why people want it,” said Clara Brenner, a managing partner at a venture capital firm, the Urban Innovation Fund. Nimbyism, zoning laws, land use restrictions and tax policies have made the issue worse, she said. “They’re waiting for some tech company to come in and sweep up this mess, when in fact this is all of our messes, and we’re going to have to deal with it.”
At a conference this month, executives and investors also discussed the issue with some skepticism. Several startups are trying to tackle the housing affordability crisis, but may not be sustainable in a downturn, said Merritt Hummer, principal at Bain Capital Ventures.
“There are a lot of startups out there that we worry will feel less resonant in a down cycle if interest rates go down and housing prices go down,” she said. [NYT] — Meenal Vamburkar