The founders of the Home Construction Collective discussed on The Agenda podcast the rising cost of homes and how DeFi might play a role in resolving this issue.
Housing prices are climbing globally, causing strain on potential buyers. While securing a home has become increasingly challenging for many, obtaining funds for new constructions has become remarkably simple, all thanks to decentralized finance (DeFi). The recently established Home Construction Collective aims to harness the crowdfunding and coordination capabilities of blockchain technology to finance the building of reasonably priced homes.
In the 14th episode of The Agenda podcast, hosts Jonathan DeYoung and Ray Salmond sit down with co-founders of the Home Construction Collective, Isaac Lidsky and Erich Wasserman. The discussion revolves around the existing housing crisis and how the application of blockchain technology might provide a solution.
Understanding the Housing Dilemma
According to Lidsky and Wasserman, the housing crisis isn’t a price problem but a supply issue. “There’s been a systemic underproduction of homes for years,” Lidsky stated. Estimates suggest a shortage of approximately 4.5 to 7 million homes today. This situation is further complicated by the trend of developing houses primarily for rental rather than for sale to potential homeowners.
The scarcity of affordable housing significantly affects the net worth of the younger generation. As Wasserman explains, “Home ownership typically constitutes the largest investment made by individuals in their lifetime. It’s the doorway to financial stability. Homeowners possess an astonishing 40 times more net worth than renters.”
Lidsky elaborated, “Baby boomers held 21% of all wealth in their 40s, but for Gen X, that figure fell to 2%. As for millennials, we stand at 4.8%, with Mark Zuckerberg alone making up 2% of that figure. These statistics are indeed alarming.”
Applying DeFi to Encourage Starter Home Construction
The Home Construction Collective’s primary objective is to finance the building of “starter homes” – homes affordable for first-time buyers. Lidsky noted the extreme shortage of such homes. “The more we can introduce to the market, the more affordable they become,” he suggested.
To achieve this, the project divides the investment process, enabling people worldwide to invest in a new home’s construction and profit upon its sale. Wasserman explained the project’s mission in this context, “We aim to democratize investment access to these assets, which have primarily been controlled by regional banks and private lenders. We believe they haven’t performed well over the last decades in meeting the demand.”
In addition to co-founding the Home Construction Collective, Lidsky and Wasserman also developed a protocol named Rigor, which employs blockchain to simplify the construction supply chain and payment process. Lidsky emphasized that by employing Rigor, the cost of producing homes financed by the Home Construction Collective is lowered, “We aim to further enhance our tools to reduce the production cost of these homes, both in terms of time and money. It’s an effective strategy.”
For more insights from Lidsky and Wasserman’s discussion with The Agenda, visit Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to explore Cointelegraph’s full range of other shows!