Should Americans have to rent their dreams?

Homeownership rates are near historic lows. Some try to spin this as liberation from the shackles of geography and home maintenance. But others see it as the road to a new form of feudalism. In this fiefdom, the landed rental conglomerates consolidate their wealth. Meanwhile, the renting peasants see their fortunes diminish having been stripped of the one appreciating investment still accessible to commoners. Their chances of breaking free of this cycle become slimmer as the 20% downpayment and securitization of a loan become out of reach due to endemic student loan debt and stagnant wages.

A few new ventures are offering novel ways for would-be homeowners to break this cycle. Companies like Unison, Landed, and Patch Homes are offering homeowners “shared-equity” in home purchases. Consumers get cash toward down payments in exchange for skin in a home’s appreciation (or depreciation). The added funds are being touted as leading to smaller, easier-to-secure mortgages to boot.

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Amazon HQ2: Two Day Gentrification Guaranteed

Newark. Yes, it’s impoverished and crime-ridden. Like most failing cities, it has crappy schools, a crumbling infrastructure, and inadequate public transit. But it’s also got an international airport, a walkable downtown with cool old buildings, and it’s less than a half-hour to NYC’s Penn Station.  

The importance of this last point cannot be understated. One by one, never-going-to-turn places near Manhattan—the Bronx, Mt. Vernon, Jersey City, Hoboken, and others—are or have been gentrified by middle and upper middle refugees in search of bigger homes and cheaper costs of living. Why not Newark? (Yes, we know about the murders.)

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YIMBY housing advocates ask, are you dense?

The great YIMBY-NIMBY War rages on and what’s at stake is density. The YIMBYs want to add it by lifting land-use restrictions, particularly in transit-friendly urban areas—thus allowing housing supply to meet demand and lowering artificially high housing prices. NIMBYs want to prevent adding density, thereby preserving property values, personal wealth, and their ability to grow veggies in their backyards.

California is the war’s frontline. According to McKinsey, the state ranks 49th for housing units per capita, its real estate prices are rising 3x faster than household incomes, and it loses $140 billion per year in revenue due to the housing crisis. Much of the shortage flows from land use restrictions, which make it impossible to build in many areas and tags an additional $75k in various impact fees for every new housing unit built.

But if the YIMBYs get their way, State Senator Scott Weiner’s California SB 827 might prove to be the war’s D-Day (YIMBYs are the Allies and Weiner is their Ike, in case you were wondering).

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Katerra: Construction’s $865 million question?


Silicon Valley-based construction tech company Katerra announced a SoftBank-lead $865M Series D.


It’s common knowledge the construction industry is FUBAR. It’s second to last in terms of labor productivity of all major industries; it’s one of the least digitized major industries, spending <1% of revenue on R&D; and “large projects across asset classes typically take 20 percent longer to finish than scheduled and are up to 80 percent over budget,” according to McKinsey. Look no further than Denver’s unfinished VA hospital that’s gone $1 B (B as in boy) over budget as a case-in-point.    

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What I really want to know is, are you going to build my way?

Robbie Antonio is a Filipino self-portrait collectorTrump friend, and real estate mogul (or the scion of one…not clear). He’s also the dude behind Revolution Pre-crafted Properties, a company offering design-y prefab homes that can supposedly be shipped anywhere in the world. Their portfolio features designs from starchitectural offices such as Libeskind Design and that of Jean Nouvel.

RRP is now getting in the city-building business with a development called “Batulao Artscapes.” BA will be “The World’s First Livable Art Park” (we know how many people want to live in art parks).

BA sits on 346 acres 50 miles outside Manilla away from any coasts. It will, according to CNN, feature “12 different styles of [factory-built] home[s] set across four ‘villages.’….residents can choose from prefabs designed by notable creatives, from artist David Salle to the musician-turned-interior-designer Lenny Kravitz.”

So far as we know, this is the largest prefab development ever conceived. The project’s ambitions are only matched by the number of unanswered questions we have: ones like who, in a country with a per capita GDP of $3K, is going to buy funky modernist homes costing $50K-$1M (USD) set Florida-retirement-community-style in the middle of a jungle?

With a completion date said to be in 2020, our questions may soon be answered.

Autonomous vehicles and flat earth property values

One thing that will surely affect our orientation to the city mouse/suburban mouse real estate and economic divide are new forms of mobility. It’s said that ride-hailing apps are already having a flattening effect on residential real estate values in NYC. Because getting around is so easy, one-percent New Yorkers are doing the unthinkable: cross-shopping properties in the East 70s with those in the West 80s!

But ride-hailing will be gentle kneading compared to the rolling pin of autonomous vehicles (AVs). Locations that were unthinkably far away when accessed in regular vehicles will become thinkable in AVs—it’s the difference road-raging during your 1.5 hour commute or binge-watching Narcos.

Quantifying this changing orientation to location is exactly what Phil Levin’s new consultancy 99mph is doing. He expects a $1 trillion movement of capital due to AVs flattening effect on real estate. And though full autonomous vehicles are a few years off, the long horizon of real estate investment makes this a timely concern.

Follow the money

Every six months or so, an article comes out saying that, despite ideas to the contrary, millennials love suburbs, not cities. What these articles seldom mention is the socioeconomic composition of these suburbaphiles. While populations boom in the burbs, educated elites still have a strong preference for cities, according to data recently released by City Observatory. They state, for example, that “the number of well-educated young adults living in the nation’s largest cities increased 19 percent between 2012 and 2016, about 50 percent faster than the increase outside these large cities.”

The proximity-enabled network effect of cities can be an economic multiplier, which is a strong draw for money-loving people and businesses alike. In contrast, many suburbs have fewer opportunities and may be over-reliant on a handful of large employers. And even though homes are typically more affordable, when lower wages and higher transit costs are factored, the suburban economic advantage is eroded. These conditions might help explain why suburban poverty rates in the early aughts were double those of cities.

While many people truly prefer suburbs, it’s also true that many others want to live closer to urban cores but simply cannot because there are no market-rate housing options that are affordable and attractive. Hell, lots of the educated elite can’t afford city-living. The universe belongs to whoever can provide those housing options in a timely and economical manner.


Alphabet/Google came out guns blazing last year with the announcement of Quayside, a planned city-within-a-city (Toronto) whose technological infrastructure will put Masdar City and Agrosanti to shame. According to The Atlantic’s Laura Bliss, Quayside will have a “self-contained thermal grid” with recirculating energy, carless sections, autonomous transit shuttles, convertible modular buildings, and much, much more.

Sounds dope. But there’s another aspect that’s less dopey: “a data-harvesting, wifi-beaming ‘digital layer’” covering the city. This layer is ostensibly designed to improve urban UX, but Bliss asks, “But to whom, and how, would this data be made available? And what would such an arrangement mean for any Quaysider who doesn’t wish to be monitored?” In other words, would you want Google or former Toronto mayor Rob Ford’s administration to know your every move? Would Ford have wanted anyone knowing any of his every move?

Lest we get too worked up about the whole deal, let’s remember building cities is hard—even within existing cities (just ask Tony Hsieh). Sidewalk Labs—Alphabet’s urban lab helmed by city-hating CEO Dan Doctoroff—has pledged $50 million to Quayside. That should cover a four-story mixed use building, and maybe a bus stop. The rest of the funds will likely come from private developers, who will no doubt make the Sidewalk project more pedestrian.

Any way you look at it, using cities-as-data-mines will be a big deal in the coming years for cities new and old alike. Expect many questions in this realm as well as a growing focus on how data harvesting affects real estate valuation.

One Step Forward, 6,533 Steps Back

Last week was NAHB International Builders Show (IBS) in Orlando, Florida. Per tradition, the show builds The New American Home (TNAH), an offsite showcase for the latest and greatest in single-family home design and construction.

This year’s entry put the “NAH” in TNAH (it’s also like real estate’s case of IBS…so many puns to choose from). The 6,533 square foot “Tuscan” five bedroom behemoth featured two double garages and a master bathroom suitable for bathing at rhinoceros. Read Treehugger’s Lloyd concise takedown of this monstrosity.

The house is a sad commentary on the mindset of American builders.

Single-family housing is still the main type of American housing, making up 76% of the housing stock. And there’s a huge deficit of low-and-mid-market new housing. Harvard reported last year that “Between 2004 and 2015, completions of smaller single-family homes (under 1,800 square feet) fell from nearly 500,000 units to only 136,000. Similarly, the number of townhouses started in 2016 (98,000) was less than half the number started in 2005.”

This deficit at the middle and bottom exacerbate an already-bleak housing situation. And while there are intermittent signals that builders are interested new, modest models of single-family housing, the TNAH shows that, despite its bad press, the McMansion is alive and well.

When cities give you crappy housing options, making housing aid

It will probably take a full-on economic meltdown to move urban housing markets away from high-end condos and rentals in prime locations. I get it, building is tough: the land is crazy expensive, most cities impose money and time consuming regulatory obstacles that would make a Byzantine bureaucrat blush, there’s no labor to build anything, and lenders shy away from any project letting off the faintest fragrance of risk. And then there are the other buyers and renters — those middle-market, debt-saddled, salary-plateauing masses yearning to be housed. Why bother developing accessible “missing middle” housing? In high-end housing, hefty price premiums can be charged for superficial upgrades like a travertine-clad lobby designed by Charo; these premiums help mask and offset the innumerable and inevitable inefficiency-related costs of urban development.

So until that meltdown occurs, until lease-ups on those new $5,000/month one bedrooms start taking years, not months, the quest for more affordable, market-rate housing will be more art than science. Here are a few cool projects that are working within the current market and regulatory conditions to bring more accessible housing to city-centers.


One hundred years ago, most cities had housing options for nearly every demographic. Unlike today, pre-housing reform cities didn’t pathologize their citizen’s socioeconomic stations, they capitalized on them. Even the lowliest pauper with a nickel in his pocket could find a covered, out-of-the-elements place to lay his head at night.

The flophouse was the most basic housing option. Flophouses charged a very small amount of money for a bed that was usually located in a room filled with large numbers of other beds. Unfortunately, the lack of regulation resulted in horrific living conditions and most flophouses were shuttered in the second half of the 20th century, along with residential hotels, boarding houses, and other types of housing catering to middle-and-low-income transients.

But just because the execution of the flophouse sucked didn’t mean the basic model sucked too. Cities are perpetual breeding grounds for itinerant workers looking for affordable, flexible housing.

Podshare is taking this historic model and giving it a fresh coat of paint (and lots of 2x4s). The company, founded in 2012, has four locations spread across Los Angeles. They take existing commercial properties and convert them into short and medium-stay bunkhouses.

Podshare “members” pay around $50/night (I’ve got a feeling you can get a monthly break). The charge covers your bunk bed (some of which convert to desk areas), linens, a locker, wifi, an in-pod TV/LCD screen, outlets, and access to kitchens, baths, work tables, events, and other stuff.

While this form of housing might strike some as dystopian, it’s important to remember it’s not for everyone. Different stages of life require different types of housing. For every ten people who will find the lack of privacy abhorrent, one will find it enticing. The key is that Podshare offers clean, flexible, affordable-ish housing in prime locations. Also, it works within existing market and regulatory conditions. And given that they’re packing a large number of people in a relatively small space, I imagine there’s a strong business case for the model.


In the next few years, thousands of new units are coming online in NYC, SF, and other pricey metropolises. Unfortunately, most of those units — for reasons outlined above — are high-end with high rents. This is already leading to a high-end inventory glut which is driving prices down at the top — a descent that is expected to continue in the near future. But because of the astronomic starting rents, even a 5–15% rent reduction has little value for middle and low-end renters, leaving those markets competing for the limited supply of cheaper, older inventory.

SF-based startup Homeshare is capitalizing on this glut of new properties. With buildings in SF, Silicon Valley, and NYC, it is adapting new units for sharing, often converting living rooms into bedrooms with moveable partitions. By increasing unit density, Homeshare can offer approachable rents in otherwise unapproachable buildings and neighborhoods. To illustrate, you can get into a luxury SF rental building for around $1,100 (“converted” rooms cost less than private ones).


Like Podshare, Homeshare is not for everyone. Many won’t want to sleep behind a partition, nor might they want someone sleeping in their living room behind that partition. If that’s not your thing, don’t move into one.

However, if you’re into living in a relatively affordable, well-located, well-maintained, clean, amenity-rich home, and you’re not super concerned about privacy, Homeshare gives you an option within our screwed up market conditions.


Boston-based startup Nesterly is building a network of senior-owned homes that are opened up for younger folks in search of affordable rents. In exchange for those low rents, lodgers may be asked to help around the house, or simply provide company for otherwise isolated seniors.

Given that a disproportionate amount of housing in America is owned by older adults, and seeing that that housing is often underutilized, Nesterly is a great match for the lopsided nature of market conditions.

Nesterly’s network is currently in Boston only, but I see great potential in other markets. For example, in my Brooklyn neighborhood there are scores of seniors who purchased large homes 30–40 years ago when they were a fraction of their current value, and when those homes housed the owner’s families. It’s not a stretch to imagine these house-and-space rich seniors enjoying the social aspects of having a young lodger and the supplemental income that comes with.