Why Proptech Needs to Be More Inclusive
By Lionel Foster October 13, 2021 7:04 am
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It’s the kind of statistic you can’t unread. In Baltimore, as recently as 2017, more than 4 percent of children under the age of 6 had worryingly high levels of lead in their blood, amounts greater than the 5 micrograms per deciliter the Centers for Disease Control uses as its reference point. (Nationally, a still shocking 2 percent of young children have levels above this threshold.)
Lead was nearly ubiquitous in the paint that decorated homes in the U.S. before 1940 and was still part of many newly built units through the late 1970s. Acute lead poisoning can be deadly, and even low blood lead levels in children, who can digest flecks or inhale dust from old lead paint, are associated with lifelong cognitive deficits and attention-related behaviors. Researchers estimate the ongoing damage caused by childhood lead poisoning in the billions.
Growing up Black in one of the most disinvested neighborhoods in Baltimore, amid beautiful old, crumbling rowhouses, I could have been one of those kids. I think about that a lot even now—especially now—as a venture capitalist at Camber Creek in a sector reaching maturity.
“Proptech,” technological efficiency applied to any facet of real estate, is a wonderfully expansive term. It has to be: real estate is the largest asset class in the world. But, in practice, I think it needs to become even more inclusive.
This is the moment for a more expansive inclusivity as two important trends converge.
First, for about 15 years now, the private sector has been learning how to think and talk about the many ways in which business intersects with public needs and larger ethical concerns. ESG (environment, social, and governance) has become a shorthand for these concerns.
Second, the largest social protest of the past 50 years in the wake of George Floyd’s murder prompted introspection and renewed commitments to racial equity from many companies.
But ESG is already in danger of becoming a catch-all term that catches too little. Because the world is on fire, the E in ESG receives a lot of attention, the S and G not as much. Diversity and inclusion touch all three pillars of ESG, but where do they fit within that constellation? More diverse founders, board members, and investors? Yes. We need that. But in proptech we can go further. Is there a way to use real estate as the platform and tech as part of a holistic set of means by which we advance racial equity and build wealth? I believe there is.
There are a number of enormously consequential proptech challenges where market opportunity and the potential to advance racial equity overlap.
People of color are disproportionately impacted by environmental degradation. They are more likely to live near brownfield sites, near facilities emitting airborne pollutants, and in areas that will suffer disproportionately from the impacts of climate change, including flooding and coastal erosion.
Much of the country is experiencing sharp increases in the costs associated with residential housing development, which in turn exacerbates the country’s housing affordability crisis. In 2019, Black and Hispanic renters were 11.7 and 10 percentage points, respectively, more likely than white renters to pay more than 30 percent of their income for housing, the definition of being “rent-burdened.” Differences in access to mortgage credit by race contribute to a gap in homeownership rates: 74.2 percent of white households own a home while only 44.6 percent of Black households do.
Research by economist Raj Chetty and his colleagues shows that where children live can have lifelong consequences on earning potential and economic mobility.
Are we giving such problems attention that is commensurate with their importance, their urgency, and the size of the underlying opportunities?
Black people have been referred to as canaries in America’s economic coal mine, early indicators of what lies ahead for many others. When seen from the vantage point of people of color, some inconveniences are wide-scale problems in the making; problems become crises; and crises become existential threats that demand redress now.
To the extent proptech can provide even partial solutions, the entire country may benefit. But these solutions will be more effective if developed sometimes by people of color and always with the specific circumstances of people of color in mind.
In the U.S., we place too much stock in the idea that individual actions can solve systemic problems. For many of these issues, much larger factors, including government environmental regulations, new business models, and investor and consumer sentiment around ESG will play a determining role. But I think that part of the equation also involves having people who personally feel the urgency of these issues making funding decisions, highlighting opportunities hiding in plain sight, and never forgetting the 4 percent.
Lionel Foster is a senior associate at Camber Creek.
