There is a housing crisis in our country.
The demographic trends affecting America’s housing market cannot be ignored: Our country is creating households faster than we are building homes. A structural shortage of homes available for sale is driving up house prices, while young people are living alone longer and increasingly concentrated in highly desirable inner-city areas. These factors are putting enormous pressure on rents in the nation’s most dynamic cities, starkly revealing the troubling realities on both sides of two historic housing market models.
The first model: You have a home to call your own, usually with a multi-decade mortgage, near your current employer. IF you can find a house as these areas often don’t see new housing being built. IF you can afford this house as house prices have skyrocketed in many of these places. And even then, you’re stuck—you can’t move, even if your economic opportunities or life path wants to take you somewhere else.
Second model: You rent an apartment, but: it’s a soulless experience; even though you hang out with your neighbors, don’t you have any friends in your complex? Do you feel like home or just a place to sleep? Are you proud to host friends and family, or hesitant? And you can pay rent for decades and still have 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 do not create any connection between a person and a place, and without a community – no connection between a person.
Now drop the impact of a post-Covid world on top of that. Many people will live far away from work and many others will move to a hybrid environment. As a result, they will experience much less, if any, of the social connections and camaraderie in the office that local workers enjoy. For many of these people, increased screen time and less personal interaction will cause problems beyond work, such as alienation and loneliness. This is a bad way to go for anyone and needs to be addressed right now.
At the same time, over the past two years, we have seen a change in life priorities. For hundreds of years, ambitious young people have had to move to the closest geographical location to employers in order to have access to the best jobs according to their skills and talents. This suddenly ceased to be true. This new flexibility triggered the “Great Retirement,” when people prioritized other factors over professional considerations. Many people vote with their feet and move from traditional economic centers to other cities, towns or rural areas without diminishing economic opportunities. My partner Kathryn Boyle wrote about this, and I think she’s right: Can Zoom Save the American Family? and Can Starlink save America’s mother?
The world of residential real estate needs to keep up with these changing dynamics. And yet, almost no part of the modern housing market is ready for these changes.
Therefore, we are pleased to cooperate with Adam Neumann and his colleaguees on Flow, which is a direct blow to this very problem.
Adam is a visionary leader who has revolutionized the world’s second largest asset class — commercial real estate — by bringing community and brand to an industry where nothing existed before. Adam and the story of WeWork have been exhaustively chronicled, analyzed, and fictionalized – sometimes accurately. For all the energy spent covering this story, what’s often underestimated is the fact that just one person has revolutionized the office experience and led a paradigm-shifting global company: Adam Neumann. We understand how difficult it is to build something like this, and we love seeing repeat founders build on past successes while building on the lessons learned. There are many successes and lessons learned for Adam, and we are excited to embark on this journey with him and his colleagues as we build a future life.
We think it’s only natural that, in his first venture after WeWork, Adam returns to the theme of bringing people together by transforming their physical spaces and creating communities where people spend the most time: their homes. Residential real estate, the world’s largest asset class, is poised for just such changes.
Shelter is one of our most important needs. In a world where limited access to home ownership continues to be a driver of 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 homes and make them feel physically and financially secure, you empower them to do more and build things. Addressing this issue is key to increasing opportunities for everyone.
Make no mistake, a mission like this is hard work. Only through a seismic shift in the way industry relationships are structured and the mechanisms by which value is created can we hope to address the problems underlying the current system and develop solutions. This requires combining services focused on the community experience with the latest technology to create a system where renters get the benefits of owners. This means rethinking the entire value chain, from the way buildings are acquired and owned to the way residents interact with their buildings to the way value is shared between stakeholders. And given the fragmented nature of today’s ecosystem, we can only hope to achieve this by bringing together all aspects of the lived experience.
We are excited about the scope and ambitions of this project. It doesn’t lack vision or ambition, but only projects with such lofty goals have a chance to change the world.
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