This blog post is going to be breaking the 4th wall, because as much as this is about me; this is about you. I'm going to be asking you questions that I want you to pause and think about; because that's the only way we're going to address the current housing crisis and to avoid further ones.

Exposition #

Do you own a house, or a Condo? If so; why? Was it to "catch" the explosive growth of the market? Why didn't you buy into a REIT or gold instead? You took out a loan to buy an asset that you're most likely highly exposed to; which any economist or traditional investor would say is an awful idea. Why is home ownership different?

How many people do you know that want to own their own abode, or already do? If your friend group is anything like mine; it's 100%.

In many cultures home ownership is a rite of passage into adulthood, and is expected particularly amongst married couples; I experienced this myself when I proposed to my wife

Deeper into the Crisis #

The global real estate market is worth 214 T $ USD as of 2019 and is only set to continue to grow as the world grows wealthier. The wealth inequality gap between owners of real estate and those who don't have increased by X% over the past Y years, and only continues to separate; especially amongst those near the lower ends of the income bracket. Real Estate is a hedge against inflation, and with stagnant wages there are few conventionally accepted ways for workers to slow the erosion of their savings. Stocks and Bonds provide that same safety net; especially stocks which have historically out performed real estate as an investment vehicle - but fewer than X% of american households own stock, but J% own some kind of real estate asset.

The answer to that question is the thesis of this post, and dives deeper into the human pyche and to the grand experiment that us and others are embarking on.

It was never about the land, and it was never about the investment - it was about control.

Landlords and rent #

I'm a renter, and if you're like the majority of Americans and Canadians; you've been / are a renter too. The rental agreement and arrangement in North America is like many one-sided contract negotiations. Typically a rental contract consists of a list of terms around what you cannot do, and what the landlord can do when they want. No room for change, negotiation or provisions, This isn't an agreement made between equals.

If the landlord doesn't like dogs, and you have a dog; you're out of luck.

Have you ever lived in an apartment or house, and were surprised with a large rent increase? How did that make you feel? If you're anything like me, you didn't pull out the calculator and start plugging away to calculate the inflation rates and increased value of the local market and say "oh in this market that rent increase is totally reasonable and was expected."; you got angry. But why? What was the motivation of this anger? Again; I argue that it was because you had no voice, no control; no influence and no financial gain. You are the loser, the landlord is the winner - this is a zero sum game and you lost, game over.

This kind of power imbalance is perfectly fine in other interpersonal agreements one might enter into, such as enrolling your kids in Grammar School or signing up for dance lessons; but the difference here is that housing isn't optional - which is why governments both at the municipal, provincial/state and federal level have stepped in to add rules around what basic rights renters have.

Picassification #

Our thesis is that the housing crisis is not just about lack of housing stock; but also the wrong kind of housing. Single family detached homes are great for gaining control over your destiny, but very bad for everyone else - Condominiums and Strata housing suck; with the loudest people controlling the terms and agreements, excluding all else.

But what if there was another way? What if we've been looking at this dicotomy between owners and renters, seeing a binary decision where in reality there may be a spectrum?

Like many Fractional real estate companies, there's a market in the negative space between owners and non-owners. People want exposure; and they want to control how they invest their money, to that point it's been proven that there's a market.

BuyProperly, Lofty.ai, CitaDAO, RealT, and many others have launched in just the last year. Each with VCs who support them and see this market potential as being the new frontier.

However only a few are looking beyond simple debt based yields; and towards active management. CityDAO was the first and largest of these; with a clear focus on creating a decentralized city where members worked with eachother via market mechanics to build a place they wanted to live. There is no revenue splitting, or other capital reward systems here; but there is decentralized control - a contributing factor into why it's the largest real estate based DAO as of writing.

We're building a different platform, called The Frabric. The goal of this platform is to create real estate and business investments accessible to everyone; but also to give back control to investors, and renters. To give them agency and decision making power that they've been craving. This isn't a socialist paradise; it's a market driven decentralized platform - but it has the power to change the world, by making a crisis become an opprotunity.