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I used to be pretty enthusiastic about real estate technology, or “proptech”. I thought that technology could be used to make housing more affordable and easier for the average homeowner to buy. Instead, it seems like technology has helped to make housing less affordable for most and more profitable for some.
How technology works against affordability
We leverage technology to turn what was once affordable housing into short-term rentals. The owners receive far more in rent than they would on a one-year lease or month-to-month rent. Short-term rentals can drive up housing costs and deprive homebuyers of an opportunity to buy, occupy and build equity.
Technology makes partial ownership easier than ever, which is wonderful for people who can afford a second or third home. It doesn’t seem like a great alternative for those who cannot buy a first home. The American dream of homeownership hasn’t died but has become unobtainable for too many people.
How technology reinforces bias
Some have suggested that AI (artificial intelligence) can help close the homeownership gap by removing biases from the homebuying process. So far, AI technology has failed to recognize the human face if it belongs to someone with dark skin. Some AI systems have trouble recognizing the human voice if it belongs to a woman.
Employers use technology and AI to weed out job applicants. Getting a job is about learning how to navigate software and correctly guess which keywords to use in a resume for the opportunity to talk to a human. We know the software is biased because it was created by humans and humans are biased.
Technology and proprietary formulas are used by large corporations (credit bureaus) to determine who is creditworthy and who isn’t. We know that software is biased, too. People who have a credit score that is too low end up paying more for housing.
The corporations buying up housing will no doubt come up with more ways to use technology to get the most from their investments. They will tell the people who cannot afford to own a home how much better off they are renting one, even though a rental can never truly be a home.
The environmental impact of cryptocurrency
Cryptocurrency has the potential to make housing far more expensive when we consider the environmental costs of paying for housing with cryptocurrencies. Cryptocurrency technology uses vast quantities of electricity. Where will the energy come from?
Is cryptocurrency helping us all or is it enriching a few at the expense of the many? How will cryptocurrency survive the planetary climate crisis?
What I wish technology were doing instead
I could get excited about technology that makes housing more affordable or technology that removes some of the biases from the credit rating system. Technology that could shorten the loan approval process would be most welcome. A process that doesn’t involve that one underwriter with the full voice mailbox who is on vacation the week before the closing.
What if there is a way to improve credit scoring technology? At the very least people should have alternatives and be able to opt out of the current system and still be able to get a loan.
When a credit bureau makes a mistake it is up to the victim to correct it. Low credit scores ruin lives.
How is it that people who cannot afford houses can afford to rent them for more than they would pay to own them?
What about using technology to make homes more energy efficient? Energy-efficient appliances would be nice, too.
The high-tech thermostat I use in my own home helps reduce our energy use. So do some of the smart outlets and light bulbs. Smart home technology is a great start. Lower utility costs make housing more affordable.
Maybe technology could be leveraged to help provide more clean drinking water so that everyone has access to it.
Could we use technology to fill the jobs that no one wants instead of using it to supervise workers so that they produce more?
Maybe we could create a kind of utopia where humans get all of the good jobs and machines take care of the rest.
The technology could be used to make housing more affordable instead of being used to make it more profitable and less affordable.
The companies that make the technology could hire the young and the old, and a diverse group of men and women. People who reflect humanity. Technology could be leveraged to provide more housing for more people rather than more wealth for fewer people.
Housing fills a basic human need. Everyone deserves a place to live.
Real estate is more than an investment for some, it is a need for all.
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul, Minnesota. She is also the founder of StPaulRealEstateBlog.com.
