4 ms·

Against my better judgment, I'm gonna comment that I hate this. This is certainly a good business/investment opportunity. If your algorithms are any good you'l

Against my better judgment, I'm gonna comment that I hate this. This is certainly a good business/investment opportunity. If your algorithms are any good you'll make a lot of money, and you'll help your customers make money. My problem with Lofty is that it is bad for society. Fundamentally, this is gentrification-as-a-service. You're driving additional demand to neighborhoods at inflection points, and if it works well it's definitely going to accelerate displacement. It is true that Blackrock et al already do this and likely have similar in-house algorithms, but this will widen the market and make things worse. I'm not completely against gentrification, especially when there's development that increases market supply- and when done right that can actually decrease displacement. (an example you're probably familiar with is the USC Village. Despite the criticism it gets, it removed thousands of student renters from the South Central LA market which likely resulted in downward pressure on prices) But housing speculation like this drives up prices and only hurts poor and minority communities. To Jerry and Max: did you consider the ethical implications when deciding to start this? I completely see the angle that you're democratizing access to an investment asset that currently mainly benefits wealthy institutional investors. I imagine, though, that a lot of people are going to see your team of young almost-all-white males and paint you as everything that's wrong with tech, and you should consider to what degree that assumption represents the truth.

loftyai 7y ago
You're absolutely right about this, and it is something we have and are considering everyday. I will be honest and say, at the moment, we do not have a perfect solution yet. One of the things we looked into before starting the company was a paper that mentioned the Portland project, which showed that gentrification and displacement are not always synonymous. There, the neighborhood was completely gentrified, but the locals benefited greatly, because many of their home prices increased in value, and many owned local businesses that benefited from the influx with affluent people. One of our goals is to see how we can use our data and business to make gentrification more like the Portland project. One idea has been to provide our data and analytics to city governments for free, so they can act faster in regards to setting up affordable housing. In the meantime, our customers will be buying the homes, so someone has to act as the seller. If a local resident was the owner of the property, then hopefully, they benefit from the sale (we recommend our customers offer the "listing price" and not negotiate at all). If they are the renter, then current California laws should provide them a lot of protection. It's not perfect of course, but we are looking for better alternatives.
- erichurkman 7y ago
  > There, the neighborhood was completely gentrified, but the locals benefited greatly, because many of their home prices increased in value But they lose mobility as their family needs change. New kids and need a larger home? You can sell yours, but the differential between a 2br and 4br is now outside your price range due to gentrified prices. Also, it depends heavily on tax laws. Long time California home owners are protected from tax increases under Proposition 13, but many localities lack these protections, so ultimately higher taxes price you out.
  - loftyai 7y ago
    You have a very valid point here. Our hope is that we can help them find new homes as well. Most of the homes selected by our algorithm tend to be very affordable, so a larger segment of the market can take advantage of appreciating home price. The goal is to make sure that not only existing wealthy people can benefit from rising home values.
- nabnob 7y ago
  In many of these poor areas being gentrified, people don't own their homes and they rent because they're poor and don't have the credit to buy a home. That's why gentrification is a problem - landlords increase rent because the area has higher demand, and effectively price people out of their homes.
fapjacks 7y ago
These are precisely my thoughts, too. I try to keep myself from falling prey to the ultimate human indulgence of claiming to live in some kind of moral decline preceding some end times, but this is exactly the kind of thing that scares the shit out of me. Once people are paying 40% or 50% of their income to rents because they have no choice, what comes next? Combined with all of the enormous consumer debt...

loftyai 7y ago

You're absolutely right about this, and it is something we have and are considering everyday. I will be honest and say, at the moment, we do not have a perfect solution yet. One of the things we looked into before starting the company was a paper that mentioned the Portland project, which showed that gentrification and displacement are not always synonymous. There, the neighborhood was completely gentrified, but the locals benefited greatly, because many of their home prices increased in value, and many owned local businesses that benefited from the influx with affluent people. One of our goals is to see how we can use our data and business to make gentrification more like the Portland project. One idea has been to provide our data and analytics to city governments for free, so they can act faster in regards to setting up affordable housing. In the meantime, our customers will be buying the homes, so someone has to act as the seller. If a local resident was the owner of the property, then hopefully, they benefit from the sale (we recommend our customers offer the "listing price" and not negotiate at all). If they are the renter, then current California laws should provide them a lot of protection. It's not perfect of course, but we are looking for better alternatives.

erichurkman 7y ago
> There, the neighborhood was completely gentrified, but the locals benefited greatly, because many of their home prices increased in value But they lose mobility as their family needs change. New kids and need a larger home? You can sell yours, but the differential between a 2br and 4br is now outside your price range due to gentrified prices. Also, it depends heavily on tax laws. Long time California home owners are protected from tax increases under Proposition 13, but many localities lack these protections, so ultimately higher taxes price you out.
- loftyai 7y ago
  You have a very valid point here. Our hope is that we can help them find new homes as well. Most of the homes selected by our algorithm tend to be very affordable, so a larger segment of the market can take advantage of appreciating home price. The goal is to make sure that not only existing wealthy people can benefit from rising home values.
nabnob 7y ago
In many of these poor areas being gentrified, people don't own their homes and they rent because they're poor and don't have the credit to buy a home. That's why gentrification is a problem - landlords increase rent because the area has higher demand, and effectively price people out of their homes.

fapjacks 7y ago

These are precisely my thoughts, too. I try to keep myself from falling prey to the ultimate human indulgence of claiming to live in some kind of moral decline preceding some end times, but this is exactly the kind of thing that scares the shit out of me. Once people are paying 40% or 50% of their income to rents because they have no choice, what comes next? Combined with all of the enormous consumer debt...