Investors, Managers, Tech Startups Turn their Attention to Affordable Housing

The housing industry is changing — and institutional investors are helping to drive, and fund, that change.

A growing number of forward-thinking pension funds, asset managers and foundations are putting their money to work to support affordable housing projects, offer low-interest loans, and even support startups focused on disrupting the home and apartment rental marketplace.

Safe and affordable housing is a key component of one of the UN’s Sustainable Development Goals, but it’s also something that no one expects the federal government — or many cash-strapped state governments — to put an emphasis on for now. So the market is stepping in, with investors and tech startups looking to help make housing more affordable and available.

Among the initiatives in recent years:

  • A group of 15 leading foundations, including the Ford Foundation, the Bill and Melinda Gates Foundation and the MacArthur Foundation, came together to fund and launch an initiative called Funders for Housing and Opportunity to ensure safe and affordable housing for low-income individuals and families. Beyond this program, the MacArthur Foundation itself has invested nearly $400 million over the past two decades in support of affordable housing.
  • The New York City Pension Funds said they would invest $450 million to support non-predatory mortgages for New York City residents, and would also make an extra effort to invest in funds that finance affordable housing — both single family homes and apartment buildings — in the city.
  • Wespath Benefits and Investments uses its Positive Social Purpose lending program to offer housing loans to underserved communities. The program has been around since 1990 and has helped develop low-income housing projects around the country.
  • Calvert Impact Capital funds a wide array of affordable housing projects and programs through loans, investments and other means. The manager has recently highlighted efforts being undertaken by some of its portfolio companies to assist people who have been displaced or face uncertain housing situations due to the Covid-19 pandemic and related economic slowdown.

Tech companies are also eyeing the housing space. Many are developing solutions to make homes and apartments more energy efficient. But others are looking at the process of renting and buying housing, and looking for ways to disrupt that process and make it more friendly for lower-income Americans.

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  • Modular home builder Katerra, the unicorn that’s based in Menlo Park, Calif., last month raised another $200 million from Softbank, its biggest backer, bringing its total funding to more than $2 billion. Katerra is working to make apartment construction cheaper and faster by assembling many parts in its factories. It has about 8,000 employees.
  • MetaProp, a New York-based tech accelerator and venture capital fund MetaProp last year paired with affordable housing nonprofit Enterprise Community Partners to support startups that focus on making housing faster to build and cheaper to rent.
  • Seattle-based Blokable builds modular smart home units that are trucked to a project site and can be quickly stacked into multi-story housing units. The company raised $23 million in a Series A funding round last summer and planned to use the cash to build a new manufacturing facility outside of Sacramento.
  • RentLogic is a free website for apartment renters in New York City that crunches data on apartment buildings and assigns letter grades. Tenants can look up a building’s grade before they sign a lease; the idea is that it levels the playing field and gives tenants more information and leverage, while also encouraging landlords to maintain their properties.

 

Editor’s note: CleantechIQ is hosting a webinar to discuss issues and opportunities around sustainable affordable housing finance, featuring experts from Jonathan Rose Companies, Wells Fargo and Blokable. The 50-minute webinar is on Wednesday, June 17 at 11:30am Eastern time. Click here for more information and to sign up.

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