By Jeff Zananiri
There was no good news to be had with Tuesday’s release of the latest housing data.
Building permits were down 1.3% and housing starts declined 9.6% in July from June – a steeper drop than anticipated by economists.
Added to that, the National Association of Homebuilders/Wells Fargo Housing Market Index experienced its eighth consecutive month of decline. In fact, the 6-point drop in August brought the index to 49 – falling below the key break-even measure of 50.
NAHB Chief Economist, Robert Dietz, has boldly stated that he believes we’re in a housing recession brought on by “tighter monetary policy from the Federal Reserve and persistently elevated construction costs.”
The result of this grim news means fewer new single-family homes on the market. Combine this with rising mortgage rates, and all those potential home buyers are often forced to re-envision themselves as renters. (You can get my full analysis on the U.S. housing crisis right here.)
Adam Neumann, of WeWork fame (some would say, infamy) sees the writing on the wall.
The Israeli serial entrepreneur has managed to secure $350 million from venture capital firm Andreessen Horowitz (aka a16z) for a new startup called simply “Flow”.
This is the largest investment ever for the VC firm. Marc Andreessen, cofounder of a16z, explained the reasoning…
“Adam is a visionary leader who revolutionized the second largest asset class in the world – commercial real estate – by bringing community and brand to an industry in which neither existed before… We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes… Residential real estate – the world’s largest asset class – is ready for exactly this change.”
The details about Flow are vague, as yet… as its elemental website reflects:
Don’t bother clicking that “Join Us” button. It prompts you to enter your email for more information. I tried – repeatedly – and got nothing at all.
Here’s what is known so far…
Neumann plans to offer branded rental-housing experiences – plus services to outside developers.
The idea behind the brand seems to be focused on community living for remote workers… a sort of work-from-home utopia for renters. Or as Andreessen, cofounder of a16z, describes it…
“Combining community-driven, experience-centric service with the latest technology in a way that has never been done before to create a system where renters receive the benefits of owners. This means rethinking the entire value chain, from the way buildings are purchased and owned to the way residents interact with their buildings to the way value is distributed among stakeholders. And given the fragmented nature of the ecosystem today, we can only hope to accomplish any of this by bringing every aspect of the living experience together.”
Neumann’s last residential living venture, a kind of dorm set up for adults called WeLive, failed miserably (it’s no wonder he left the “We” off the company name this time around). But with the confidence and money provided by a16z, he’s already bought over 3,000 apartment units in Miami, Fort Lauderdale, Nashville and Atlanta.
I’ll be watching to see how things pan out. Neumann’s latest venture may be short on info at this point, but the underlying premise behind the investment is one I agree with: The United States is becoming a “Landlord Nation“. Some of my favorite investments right now are looking to take advantage of that trend.
Who knows, maybe I’ll even get an email back from Flow, at last.