Thanks for the super thoughtful response (btw — I’ve really enjoyed reading your medium pieces). I agree with the general principle that subsidizing housing is *not* a systemic solution to improving access to housing. I’d much rather see an increase in supply.
Another thought: the more I read about the Landed model, the less I’m convinced it’s a subsidy. Isn’t it just a way to sell equity in your home in exchange for upfront financing for your down payments? If I’m thinking about this right, there seem to be two possible scenarios we could see:
- Landed makes money. The company succeeds.Tthe model scales up. I sort of think of Landed as an experiment in “equity-for-down-payment” model. If it works, that suggests investors today are overweighting the risk/return of this particular financing model (otherwise it would already exist). If this turns out to be right (you can make money by buying equity with upfront capital), I’d think the outcome would be a rush of capital to offer similar deals to prospective homeowners. I’d think home prices would rise (more demand for homes) but the all-in cost to purchase a home would drop (cheaper capital). It’s not obvious to me what the distributional impact of this would be but I *think* the overall benefit would be net positive — after all these are willing buyers and sellers suggesting positive utility gains.
Winners: Landed investors and customers, current homeowners.
Unclear: Prospective homeowners (will higher home prices outweigh cheaper capital?). Renters (Higher home prices would presumably drive up rents but shift in demand from renting to buying could lower prices)
2. Landed doesn’t make money. The company fails. In this case, I think the impact outside of Landed would be minimal. It’s just not big enough to impact the market.
Losers: Landed investors and customers.
Not sure if I’m thinking about this right — it’s been fun to try to go back in time to my econ classes :). Keep up the great writing!
Also if you haven’t read it yet, I found this to be a good piece summarizing the debate in SF: https://juliagalef.com/2017/07/13/should-we-build-lots-more-housing-in-san-francisco-three-reasons-people-disagree/