Selling and buying a home with iBuyers

Tech actors now in the real estate business continue to try to shake up the process:

They work like this: These companies, dubbed “iBuyers,” make cash offers for your current home at an algorithmically determined “fair market price,” allowing you to take the money, buy your next home, and move out at whatever date works best for you. The transaction closes in a matter of days.

The companies then clean and fix up your old house and sell it on the open market, collecting a fee from the seller. And because the price at which iBuyers buy the house is usually not the maximum the house would fetch if it was sold traditionally, they likely make a small gain on the sale price…

Perhaps the most striking evidence of iBuyers’ influence on the real estate industry came from Keller Williams CEO Gary Keller in January. When discussing the company’s intent to launch an iBuyer program later this year, Keller told Inman “I feel like I have no choice now.”

After posting $1.33 billion in revenue in 2018, Zillow announced a three- to five-year revenue target of a whopping $22 billion, $20 billion of which was projected to come from buying and selling homes.

It will be interesting to see how much iBuyers are co-opted or acquired by traditional real estate actors or whether they will stand on their own. And will this lower costs for consumers and/or give them advantages or will it consolidate power and knowledge into different hands?

Does all of this threaten to keep moving real estate toward a commodity? This appears to be the road we are already on with the shift from thinking about American homes as places to live and anchors in a community to seeing them primarily as investments and critical parts of retirement portfolios. Imagine doing more and more of this without seeing the homes in question and with lenders and middlemen who have little knowledge of the particularities of a neighborhood or community. Algorithms can do a lot – and possibly even reveal patterns humans tied up in local details have a hard time seeing – but they may have a hard time imparting the aesthetic and lived experience of homes and locations.

Going further, iff more people are moving toward less civic engagement, more engagement with screens, and social ties primarily chosen based on family, friends, and interests (some evidence to back all of these up), perhaps it may not really matter exactly where people live as long as it is relatively close to what they want. Why would you need to visit a place or pick a specific home or neighborhood if those local ties and interactions matter little?

Lawns as sources of and signs of boredom

In a discussion of the development of the concept of boredom in The Tech-Wise Family, Andy Crouch explores the boredom of the lawn:

This world is lost to many of our children, and to ourselves. Even the “nature” that surrounds many of our homes is shallow in a technological way. A typical suburban lawn depends on many technological devices, each of which makes something far easier than it was for previous generations: lawn mowers, pesticides and fertilizers, highly refined seed, and automatic sprinklers. The lawn itself is a kind of outdoor technological device, composed of uniform green grass, kept crew-cut short, with little variety or difference.

A peasant family in the Middle Ages had none of this technologically uniform pleasantness. They would not have had a lawn, or possibly even a yard. Their children would have wandered out into meadows and perhaps the thin edges of forests. A meadow has countless different species of grasses and other plants, plus flowers in the spring and summer, of different heights and habits. If you pay attention, you cannot possible get bored in a meadow. It is all too easy to be bored on a lawn…

It is surely not coincidental that all the earliest citations of the word bore in the Oxford English Dictionary – from the mid-eighteenth century – come from the correspondence of aristocrats and nobility. They did not have technology, but thanks to wealth and position they had a kind of easy everywhere of their own. The first people to be bored were the people who did not do manual work, who did not cook their own food, whose lives were served by others. They were also, by the way, the very first people to have lawns. (144-145)

The common American lawn is indeed a peculiar piece of “nature.”

The connection between lawns and technology is helpful, particularly since this link is likely lost amidst all the new technology of recent decades. Yet, having a lush and short lawn requires a lot of tools and innovation that many now take for granted. I’m reminded of running into advertisements between competing grass seeds: there is a lot that goes into the components of the lawn.

It also strikes me that the lawn has become increasingly boring in recent decades. It is true that American children in the last 70 years had very different experiences with nature than Middle Age peasant children (though humans have affected nature throughout history and contexts). At the same time, children today spend less time outdoors and utilize those boring lawns even compared to just a few decades ago. Perhaps we could argue that the lawn never offered much and once the world of television, video games, and fears about safety set in, it was exposed for the boring item it really is.

Finally, the lawn continues to be a status symbol just as it once marked the properties of the wealthy. Those with lawns have pressure to keep their lawns free of weeds and leaves and can differentiate their lawn from those of others. Failing to follow these norms can lead to problems.

Google Maps and more overlaid on what you see in front of you

The next era of Google Maps may soon be underway:

By making use of smartphone cameras, apps can get a more-detailed sense of where you are and where you need to go. The app knows which direction you are pointing in, even what you’re looking at. And because it’s all seen through a camera view on your phone, the app can layer directions on top of the real world, turning navigation into an augmented-reality experience.

Lots of companies are working on improving your maps, but nobody’s maps matter more than Google’s. The company announced an AR walking feature for Google Maps at its developer conference last May and now is making it available to some users before a wider release coming… later. (Google says only that it requires more testing.)…

A moment after the app found me, a set of bold, can’t-miss-’em 3-D arrows appeared on my phone screen, hovering in the middle of the street. The arrows pointed right, so I headed right. That’s when a rectangular blue sign appeared, floating above the sidewalk: 249 feet until my next turn. At the corner, the arrows again pointed right, and down the street a phone booth-size red pin marked my destination. It was as if Maps had drawn my directions onto the real world, though nobody else could see them….

And directions aren’t the sole point either. AR maps could help you learn more about everything you pass. Tory Smith, product strategy lead for autonomous vehicles at Mapbox, a navigation startup, envisions a possible future in which your windshield could display the nearest parking garage, then tell you how many spots are open, how much it costs and whether there’s a good coffee shop nearby. You might someday navigate indoors—where GPS doesn’t work—using AR maps, with Google Translate instantly turning every sign you pass into your own language.

It is not a matter of whether this happens: it is just a matter of when. I wonder if the first company/app/place that really goes all in on this early on will benefit greatly or if this will be feature that takes a long time to catch on. This seems like what Google Glass was truly made for.

What this will do to our abilities to read maps and know places is uncertain. This is not just digital maps versus paper maps: this is a combination of realities where pedestrians could soon just expect to have directions and information in the their view at all times. Whether this makes people more or less knowledgeable about their communities would remain to be seen. If individual users had a lot of control over their settings, perhaps people would literally only see what they want to see.

 

 

When digital maps are wrong

If maps help us make spatial and social sense of our places and world, what happens when they are wrong?

Another factor in the paper versus digital debate is accuracy. Obviously, a good digital map is better than a bad paper map, just like a good paper map is better than a bad digital map.

Technochauvinists may believe that all digital maps are good, but just as in the paper world, the accuracy of digital maps depends entirely on the level of detail and fact-checking invested by the company making the map.

For example, a 2012 survey by the crowdsourcing company Crowdflower found that Google Maps accurately located 89 percent of businesses, while Apple Maps correctly found 74 percent. This isn’t surprising, as Google invests millions in sending people around the world to map terrain for Google StreetView. Google Maps are good because the company invests time, money, and human effort in making its maps good—not because digital maps are inherently better…

In my view, it’s easier to forgive the errors in a paper map. Physical maps usually include an easily visible publication date so users can see when the map was published. (When was the last time you noticed the date-of-last-update on your car navigation system?) When you are passively following the spoken GPS directions of a navigation system, and there is, say, an unmarked exit, it confuses the GPS system and causes chaos among the people in the car. (Especially the backseat drivers.)

The general argument of this piece (and the larger book) appears to be that we should not become too reliant on digital sources of information. We tend to think that digital sources of information are inherently more correct or less prone to error. So, if the digital map is wrong, we might be very surprised.

I recently thought of this myself as we purchased a vehicle with a built-in navigation system. When going through the options in the map menus, I noticed the map had a date from several years ago. When at the dealer a few weeks back, I noticed they had a sign up explaining how to update the maps. I hope to do that soon.

On the other hand, the advantage of digital systems is that our brains can offload some of the work of navigating or understanding a place by relying on a digital map or navigation system. We make use of distributed cognition in many ways, including through the use of paper maps.

Of course, upping and maintaining the accuracy of digital maps is an ongoing task and there is much at risk. All systems have the risk of failure and perhaps the biggest issue here is that we do not assume the digital map is always right.

Linking Microsoft giving $500 million for Seattle area housing to tech companies and declining gov’t support for housing

Microsoft is pledging a substantial amount to address the important issue of housing in Seattle:

Microsoft plans to lend $225 million at subsidized rates to preserve and build middle-income housing in six cities near its Redmond headquarters. It will put an additional $250 million into low-income housing across the region. Some of those loans may be made through the federal programs that provide tax breaks for low-income housing.

The company plans to invest the money within three years, and expects most of it to go to Seattle’s suburbs.

The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.

This article frames the giving as part of the housing issues wrought by the actions of tech companies:

Microsoft’s money represents the most ambitious effort by a tech company to directly address the inequality that has spread in areas where the industry is concentrated, particularly on the West Coast. It will fund construction for homes affordable not only to the company’s own non-tech workers, but also for teachers, firefighters and other middle- and low-income residents.

From this point of view, the health of a region matters for companies. If workers, whether ones employed by a particular company or organization or others, cannot find affordable housing, it will be harder for the region to find and hold on to workers. Whereas businesses often focus on a good business climate (low taxes, tax breaks, business-friendly governments, etc.), housing is a big factor in finding a strong work force. Additionally, Microsoft can help show through these actions that they care about local conditions in ways that tech companies are often said to ignore because of their global status. Would Microsoft be the same if it were not in the Seattle region?

Another way to view this is that private companies are now taking on what the federal government should address:

The government spent about three times as much on housing programs in the 1970s as it does today, according to the National Low Income Housing Coalition. In the years since, the government has gotten out of the business of building public housing. And capital funds to repair the remaining public housing stock have been cut in half over the last 15 years.

Over this time, federal resources have increasingly shifted away from subsidizing the construction of affordable housing to subsidizing renters who find housing in the private market. And now most new below-market-rate housing is built not by public agencies, but by nonprofit developers leveraging tax credits. The value of those credits has declined recently as well, as a result of changes in the tax bill passed in 2017.

In a sense, Microsoft’s proposal is an extension of this story, as private actors continue to step in where the government once stood.

Ed Goetz, a professor at the University of Minnesota who has studied the history of public housing in America, said: “I don’t want to diminish the magnitude of what they’re doing. I think it’s important, and it will help. But it won’t solve Seattle’s problem.”

This argument suggests that private actors can only do so much to address housing issues. Because so much money is involved and the issue is so widespread, even $500 million may not do much in a single metropolitan region with high land and housing costs. Of course, the government is involved in the housing industry: the federal government for decades has supported single-family homes, primarily in the suburbs. At the same time, the government and the American people have always been more ambivalent about public housing. It is not as if  the housing market is a free market: the United States subsidizes mortgages.

At the least, this will be an interesting experiment: can Microsoft make even a small dent in the housing needs of the Seattle area? Will this help strengthen the metropolitan region or primarily serve as good publicity for the company?

Data centers in the suburbs

Data centers are important elements in the infrastructure of a Internet-based, networked world. So, it should not be a surprise to see them pop up in suburbs in the Chicago region:

Data center provider Element Critical is expanding into the Chicago market with the acquisition of two data centers in suburban Wood Dale, Illinois, the company announced today. The deal provides a third market for Element Critical, which currently has operations in Silicon Valley and Northern Virginia…

The two data centers the company has acquired in Chicago encompass 195,000 square feet of data center space. Wood Dale is in the suburban Chicago market, 17 miles west of downtown Chicago and two miles from O’Hare International airport. Element Critical did not identify the seller, but Sungard Availability Services is listed as operating two facilities in Wood Dale…

Last week CIM Group and fifteenfortyseven Critical Systems Realty (1547) acquired a data center at 725 South Wells in Chicago’s business district. The 66,000-square-foot facility was purchased from Digital Capital Partners, a wholesale data center provider. The building has 5 megawatts of capacity.

On Monday, New Continuum said that it has acquired its flagship data center at 603 Discovery Drive in West Chicago, Illinois. The company has been leasing the site since 2013, and was supported with financing by Post Road Group, a leading real estate bridge lender

I would guess that (1) very few Internet users think about data centers and (2) very few nearby residents could identify a data center from another kind of facility. For example, here is a Google Street View image of the Discovery Drive facility mentioned above:

DiscoveryDriveDataCenter.png

There are numerous good reasons to not widely broadcast what is taking place in such facilities – with similarities to urban buildings that house telecommunication centers – yet such buildings will increasingly become regular parts of urban and suburban landscapes.

Academic research with all that location data collected by smartphones

If you really want to understand places in the United States, wouldn’t the location data collected by smartphone apps be useful?

At least 75 companies receive anonymous, precise location data from apps whose users enable location services to get local news and weather or other information, The Times found. The database reviewed by The Times — a sample of information gathered in 2017 and held by one company — reveals people’s travels in startling detail, accurate to within a few yards and in some cases updated more than 14,000 times a day.

These companies sell, use or analyze the data to cater to advertisers, retail outlets and even hedge funds. It is a hot market, with sales of location-targeted advertising reaching an estimated $21 billion this year. IBM has gotten into the industry, with its purchase of the Weather Channel’s apps…

To evaluate location-sharing practices, The Times tested 20 apps, most of which had been flagged by researchers and industry insiders as potentially sharing the data. Together, 17 of the apps sent exact latitude and longitude to about 70 businesses. Precise location data from one app, WeatherBug on iOS, was received by 40 companies. When contacted by The Times, some of the companies that received that data described it as “unsolicited” or “inappropriate.”…

Apps form the backbone of this new location data economy. The app developers can make money by directly selling their data, or by sharing it for location-based ads, which command a premium. Location data companies pay half a cent to 2 cents per user per month, according to offer letters to app makers reviewed by The Times.

Sure, this could all be monetized for advertising purposes. But, it’s longer-lasting influence could come in helping us better understand location patterns across people. There are many different ways to understand places, the sets of human activity and meaning associated with particular spatial arrangements. The location data from apps could reveal all sorts of interesting things: commuter patterns and responses to traffic/delays, how far people travel from home or work for certain activities, where leisure time is spent, and how locations differ across various demographics (race/ethnicity, social class, gender, age, etc.).

What are the odds that this data will be made available to researchers? Very slim. But, I hope someone is able to get access to it and find some intriguing patterns in urban and suburban life.