Our nation has a housing crisis.
The demographic trends driving America’s housing market are impossible to ignore: our country is creating families faster than we are building homes. A structural shortage in available homes for sale is pushing house prices higher, while young people are staying single longer and increasingly concentrating in highly desirable urban centres. These factors put enormous pressure on rents in the nation’s most dynamic cities, clearly revealing the troubling realities of both sides of two historic housing market models.
The first model is: you own a house you call your own, usually with a multi-decade mortgage, next to your current employer. IF you can find a house, as these places are often not building new housing. IF you can afford that house, as house prices in many such places have skyrocketed. And even then, you are now stuck – unable to move, even if your economic opportunity or life path takes you elsewhere.
Second pattern: you rent an apartment, but: it’s a soulless experience; do you even meet your neighbors, much less have friends in your complex? Does it feel like home, or just a place to sleep? Are you proud to bring friends and family to visit, or are you hesitant? And you can pay rent for decades and still own zero equity – nothing. There’s a reason the federal government started subsidizing home mortgages: someone who bought where they live cares more about where they live. Without this, apartments generate no connection between person and place, and without community, no connection between person and person.
Now throw the impact of the post-COVID world into this. Many people will live in places far away from where they work and many more will move to a hybrid environment. As a result, they will experience far fewer, if any, of the social connections and friendships in the office that local workers enjoy. For many of these people, increased screen time and reduced in-person interaction will cause challenges that are not limited to work, such as alienation and loneliness. This is not a good path for anyone and needs to be addressed directly, right now.
At the same time, in the last two years, we have seen a change in life’s priorities. For hundreds of years, ambitious young people have had to move in immediate geographic co-location with employers to access the best jobs for their skills and talents. This is suddenly no longer true. This newfound flexibility has caused the “Great Resignation,” where people prioritized other factors over professional considerations. Many people are voting with their feet and moving away from traditional economic centers to different cities, towns or rural areas, without diminishing economic opportunities. My partner Katherine Boyle wrote about this, and I think she’s right: Can Zoom Save the American Family? AND Can Starlink save the American mother?
The world of residential real estate must address these changing dynamics. And yet, virtually no aspect of the modern housing market is ready for these changes.
And so, we’re excited to partner with Adam Neumann and his colleaguees on Flow, which is a direct hit on this very problem.
Adam is a visionary leader who revolutionized the world’s second largest asset class – commercial real estate – bringing community and brand to an industry where neither existed before. Adam, and the story of WeWork, has been exhaustively chronicled, analyzed and fictionalized – sometimes accurately. For all the energy devoted to covering history, it is often not appreciated that just one person has fundamentally redesigned the office experience and led a paradigm-shifting global company in the process: Adam Neumann. We understand how hard it is to build something like this, and we love to see iterative founders build on past successes while growing from lessons learned. For Adam, the successes and learnings are many and we are excited to go on this journey with him and his colleagues building the future of living.
We think it’s only natural that for his first venture since WeWork, Adam would return to the theme of connecting people by transforming their physical spaces and building the communities where people spend the most time: their homes. Residential real estate—the world’s largest asset class—is poised for just this change.
Housing is one of our most basic needs. In a world where limited access to home ownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community and real ownership has transformative power for our society. When you take care of people in their home and provide them with a sense of physical and financial security, you empower them to do more and build things. Solving this problem is key to increasing opportunities for all.
Make no mistake, this type of mission is heavy lifting. Only through a seismic shift in the way industry relationships are structured and the mechanisms through which value is delivered can we hope to address the underlying problems of the current system and build the solution. Doing so requires combining community-driven, experience-centric service with cutting-edge technology in a way that has never been done before to create a system where renters get the benefits of owners. This means rethinking the entire value chain, from how buildings are purchased and owned, to how residents interact with their buildings to how value is distributed among stakeholders. And given the fragmented nature of the ecosystem today, we can only hope to achieve any of this by bringing every aspect of the living experience together.
We are excited by the scope and aspiration of this project. It does not lack vision or ambition, but only projects with such lofty goals have a chance to change the world.
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