In a new series of recent research papers from Harvard University’s Joint Center for Housing Studies, David Luberoff and Chris Herbert examine digitalization — or the strategic use of technology for collecting, creating, processing, organizing, analyzing, and monetizing data.
As a result of recent digitalization changes, the authors contend that efforts to address affordability, equity, resiliency, and livability challenges can be advanced. A $100 billion venture capital fund was committed to ongoing digitalization efforts in 2019 and throughout the pandemic, according to the authors.
New digital tools, such as OpenDoor and Zillow, have already changed how investors find, buy, lease, and manage houses, as well as how consumers search for homes.
A less visible change is how institutions such as Fannie Mae and Freddie Mac review and approve mortgages using automated underwriting tools.
Moreover, the research paper emphasizes that some digitalization-driven changes have made progress in addressing housing challenges, while others seem to be exacerbating them; while others may either address or exacerbate them. The same is true for tools used by investors to purchase single-family homes, placing homebuyers at an increased risk of being unable to afford them.
Luberoff said that in light of the fact that the impact of digitalization varies across sectors, it’s imperative that different approaches be adopted not just to benefit those who develop and fund these changes, but also the society as a whole. There will probably be a combination of public, private, and civic sectors involved in these approaches, but the public sector will have a crucial role to play. There will be a need for regulatory approaches in areas where changes are likely to exacerbate existing problems.
Luberoff added that in areas where private and public goals are aligned, regulation, investment, education, and incentives combination may spur and guide private investment. It may be possible to improve civic discourse about new housing developments by increasing access to data about investors and investment patterns. In order to stimulate the growth of offsite construction in housing, targeted grants, education programs, and collaboration on standards might be helpful. Additionally, the benefits of such incentives could be distributed in an equitable manner.