In real estate, certain phrases resound. Everyone knows the most famous of these — “location, location, location.” An important — but perhaps distant second — is “Real Estate is Local.”
In the world of globalization, footloose billionaires and celebrity culture, we tend to forget that most people don’t have multiple homes or jet-set lives. For most people, housing is an impossibility and for those of us lucky enough to have shelter, homeownership is very much a local question.
If you can’t flit between Miami, Beverly Hills, and London, you likely care more about the details of your singular residence. What are the schools like? Are your neighbors friendly? Are you part of a community? And so on.
It’s a wildly different housing market
In the US, those questions have taken on a more weighty tone over the past five years as house-prices have skyrocketed while wages have stagnated or grown only slightly. An entire generation graduated into a world of mediocre income, forcing them to “return” home to live with parents. Outside of a few shining sectors, jobs that allow for home-affordability have been rare. This coupled with a different set of attitudes in new generations and with a mistrust of “permanence,” have led to a housing market that is wildly different than it was before.
What about community?
All of this has militated strongly against the idea of “community.” This word is naturally fluid and ambiguous and certainly means different things to different people. Irrespective of these nuances, one common thread persists. Communities are symbiotic clusters where people rely on each other for needs and wants. For most people, this has an element of physicality. They want to talk to, mingle with, raise children with, and “break bread” with others in their communities.
Which brings us back to that memorable phrase, “Real estate is local.”
In the classic sense, communities are built locally. But they rely on their members’ ability to stay in the area, to be part of the active energies in any particular locale. In many towns and cities in the U.S., this ability has been eroded, as people get priced out of the market and are forced to move farther away from these vital elements of community and, sadly, from their own places of employment. Lest anyone suggest that this effects only those being displaced, that notion is plain wrong. Eroding and palsied communities affect everyone, even those who happen to be lucky enough to stick.
We can wring our hands, or we can act to remedy the situation.
The vectors are currently skewed. Many people suggest they want “diverse communities” but the socio-economic factors create homogeneity. Many people suggest that they want their kids to be “raised in a village,” but the socio-economic vectors make the village dwellers transient.
So how do we act? In this author’s view, there are four pillars to action:
2. Fight NIMBY-ism
3. Create new business models
4. Support institutions
Let’s examine each one.
1. Activism. While business people don’t often seek answers in bottoms-up political processes, it is a well-documented and incontrovertible fact that social change has come about in the U.S. as the result of activism, followed by forced legislation. The housing crisis and other forms of economic and racial inequalities are squarely issues of social justice and democracy and must be handled as such.
2. Fighting NIMBY-ism. The “Not in My Backyard” fights tend to cut across the normal political lines. “Protecting property values” is sacrosanct to most Americans. Implicit in this, naturally, is that class and race diversity in neighborhoods drives prices lower. NIMBY-ism must be fought at every turn and the hypocrisy associated with it called out as such.
3. Create new business models. The housing industry has been operating on the same model since the early post-War period. Loans-based on credit-worthiness, mortgages, and interest-based payment structures are the mode in housing. However, does it have to be this way? What about taking aspects of the Sharing Economy and Decentralized Finance and seeing if innovations based on those models and platforms can allow for more widespread home access?
4. Support institutions. There are many neighborhood associations, non-profits, NGOs, and other institutions that need support on the financial, material, and personnel axis. Anyone who cares about these issues can support exemplary institutions that aim at redress and problem-solving.
Though there are a lot of communities that indeed are dispersed and global, for the most part, the idea of “community” is local. Local implies residential and residential implies housing. As we distort the housing market, we distort the very possibilities of community. And that is a synthetic tragedy.
This column does not necessarily reflect the opinion of RealTrends’ editorial department and its owners.
To contact the author of this story:
Romi Mahajan at [email protected]
To contact the editor responsible for this story:
Tracey Velt at [email protected]