Real Estate: They’re not making any more of it

Over the past several months, I’ve heard the same response from many friends after I share my thoughts on the world and things that need fixing: “A lot of what you’re into is Real Estate”

Its true. Over the last couple of years, my natural interests have gotten me involved in several projects, all of which have something to do with how people live in homes, how homes get made, and what a home really is made of.

Plus, as an investor, there are a ton of interesting things about the real estate game that appeal to me. Building a house is as visceral experience of creation as any other creative act. It has all the fun of planning and management of software, but as a house is coming up, it is literally and really coming up in front of you. Empty or wild land is terraformed and tamed into something that was just a drawing a few months before. Unlike stocks, bonds, or angel investments, property is relatively simple to understand, and evolves over multi-year cycles instead of with a daily ticker. You can touch and feel it. You can even walk around inside it! Most people spend the majority of their lives in it! As a product, it might be even more intimate than foods and apparel, which some might know are other past interest areas of mine.

So to start: a chart

The message really jumps out at you. Excepting a big chunk of spend that goes to transportation, 46% or nearly half of a typical american family’s income goes to shelter & taxes. Half our capital given just to living and dying. There’s something tragic about that.

There are enough games people play with their taxes, and the general transportation problem for the majority of scenarios has been basically solved by Uber. ┬áBut housing? There’s an interesting domain to do some digging.

As you would expect from an insight pulled from the census, there’s more beneath the surface. While the average American spends 15% of their money on just the roof above their heads, and just a little less on the expenses around the home, the picture is much more stark for those in the bottom third of income and renting. A study from Pew finds that lower third income renters spend nearly half their money on rent.

 

50%!

What if the structure of our society and the structure of inequality are also actually related to the structures?

It is impossible for me to believe that the advances that we’ve made as a people and as a country over the past 100 years cannot be put toward empowering and transforming housing as well as we’ve done so in other industries and create a better world that is also better for many more people.

In the coming weeks and months, I’ll plan to use this space as an area to think aloud, partially to see how I like it, and partially to see if anyone else does as well.