Rigor, partners, and lenders speak to root causes for the long-term decline in housing starts and the resulting “affordability” crisis, offer solutions
ORLANDO, Fla. and MIAMI, Dec. 17, 2021 /PRNewswire/ — Rigor, a decentralized finance (DeFi) platform for home construction, is joining with lenders, builders, and homebuyers to call for an end to the “affordability crisis” that has plagued housing markets for decades. While the U.S. Census and the Department of Housing and Urban Development today reported an 11.8 percent increase in housing starts as compared with October, it will still take years to address the shortfall of approximately seven million homes plaguing the U.S. housing market, as estimated by industry trade groups and a recent White House report.
Despite historic demand for homes, the U.S. is building 50 percent fewer homes today than were built at peak production in 2006. Housing starts as a share of population have declined 39% since 1970, and housing prices are rising faster than wages in 80% of U.S. metropolitan markets. The explanations offered for these massive shortfalls fail to explain this longstanding supply-demand imbalance. These include intermittent supply chain woes, labor shortages, regulations, and even the high cost of textiles and other building materials. While these reasons are valid, they fail to account for the root problem within the industry.
“What we’re seeing isn’t an ‘affordability’ crisis, it’s a lending crisis that’s hitting home builders hard and preventing the housing output we need,” said Isaac Lidsky, CEO of Rigor. “At Rigor, we believe it’s a problem that’s both understandable and solvable. Understandable because home building is seen as a risky investment by many – so much so that new home construction receives a pitiful three percent of all real estate lending. Solvable because when you pair transparent capital flows for lenders with instant payments for verified work to the supply chain, you eliminate the risks that have prevented scaled investment in the asset class.”
Rigor is an easy-to-use web application that enables anyone to lend into home construction projects. With Rigor, lenders gain a platform to find and fund quality homebuilding projects, pool capital with other lenders, and get repaid. Homebuilders manage the work those funds pay for with task-level budgets paid directly to subcontractors and vendors as tasks are completed throughout a build – subject to verification by anyone the lender specifies in combination: builders, contractors, vendors, and municipal or third-party inspectors. All parties can see and understand where and to whom capital flows across the supply chain in real-time.
“You would never guess that demand for housing is at record levels when you consider the difficulties builders like us face securing and …….