Whether it is about finding a new house or getting that perfect piece of furniture for the corner in your living room. Technology has been playing a vital role in fixing smaller as well as bigger issues in the lives of millions. Majority of us have been following the trend of the tech industry concentrated on the housing market. With time, there are a number of startups which are serving efficiently in helping homeowners manage the sales. But even though these startups help the tenants cope up with their packages or help landlords manage properties, it is not enough. The key problem still exists. The problem of affordability of the houses.
It is true that policymakers believe that it is impossible to solve this issue through technology. But on the other hand, Mr. Hoffman believes that with the right ideas it is possible to change the market. Which is why the Enterprise has started to invest in budding tech startups. According to Clara Brenner, a managing partner at a venture capital firm refuses to believe that tech solution for housing crises exists. She believes that this policy problem has been made worse by Nimbysim, Zoning laws and tax policies.
There are a few existing startups which gained attention with their efforts to refine affordability by trying to refresh the old trend of prefabricated construction. A Californian company, Katerra believes that it is possible to twist efficiencies from the construction firm which has seen gains in decades. Other than that, Factory OS which was found by a developer of inexpensive housing is currently constructing housing in a factory in Vallejo, Calif.
According to the faculty director of the Terner Center for Housing Innovation at the University of California, Berkeley, Carol Galante, fulfilling the dream of affordable housing is possible through innovation. Currently, it costs around $500,000 per unit to construct low-income housing in the most high priced market. But it is possible that the reduction in the cost of construction might help the developers of these housing extend the subsides forward. Also, it is possible low-cost construction might also change the market where developers believe that building a middle-class housing is no good.
On the other hand, Mr. Hoffman is doubtful if the construction tech can change the affordability, market-rate developers have no incentives to transfer the savings on to renters. Instead of that, the Enterprise is seeking companies which might affect the consumption and financing of the housing. It is possible that they could allow the models between renting and ownership, or twist new housing which already exists. Recently, Enterprise paired up with a venture capital firm from New York, MetaProp, to select and co-invest in the companies.
Paired up they both are seeking for logical business which can grow with great speed. These companies are not exactly focusing on the creation of affordable housing. But it would be great if it results in the same. Leila Collins, a senior associate at MetaProp believes that profit fast-growing business can help in resolving the issue much faster than any other. She believes that no change in policy can bring about a trend of affordable housing in cities.
An Enterprise, Point Digital Finance, is known for helping homeowners get the equity in the homes in exchange for a share of the property’s future appreciation. The service might help the homeowners pay for forming an accessory dwelling unit just like a backyard cottage. As per housing experts, a small scale unit could add up to the less cost rental stock, but it is possible that lenders might not help them financially. It is non-deniable that Housing is a complicated problem. Even though the parts like improving the efficiency of construction or making equity more accessible individually might look way simpler.
NoAppFee, a Portland startup, set up by Tyrone Poole after facing homelessness caused by medical debts. Even though he received a year’s worth of rental assistance, he still faced trouble in finding a landlord to acquire it. Along with this, he spent a lot of money on application fees every time he was rejected by a landlord. Mr. Poole worked with an idea which was to follow background check for renters and also to sieve the conclusion to show them which would accept them in the representation of the credit, income or in the criminal history. With this Poole believed that it would help in decreasing homelessness and also creating the tool which would help the profit business giving the service to high-income tenants and other upscale landlords.
But he found that people were registering for units they were not qualified for. Frequently, people registered for the houses which were more than their income to qualify. The company is now renamed OneApp Oregon is focused on preparing more efficient tools which are aimed at completely different problems, which include low incomes. It will very soon provide signing options for the tenants whose incomes were not sufficient and also a service similar tenants so together their income would qualify. Mr. Poole also mentioned that they are using software other than the development to create affordable housing. It is not focused on housing, but housing which that’s reachable to people.
But, the software is not able to resolve the actual problem which caused the gap between fixed income and increasing housing cost. Mr. Poole can help a renter passing half his income on housing secure that housing. But it is true that the housing costs are too much. Recently, Microsoft and the Chan Zuckerberg Initiative is focusing on major new housing investments but it isn’t focused on spending on fixing tech. Both of these companies announced investment funds in order to help affordable housing developers and also they plan to focus on local policies which will help in making expansion of housing easier, which might prove to be the most appropriate route for tech startups to form a completely new market.