Marc Andreessen’s High-Tech Fix for the Housing Crisis Lets Him Keep Being a NIMBY

Marc Andreessen can’t seem to decide whether he wants to fix America’s housing crisis, make it worse, or creatively reinvent an untenable status quo.

On Monday, the billionaire venture capitalist announced that his firm, Andreessen Horowitz, would be a major investor in controversial WeWork founder Adam Neumann’s new housing venture Flow. The New York Times reports that Andreessen’s firm will plow $350 million into the new company and its as-of-yet unrevealed business model and that Andreessen will sit on its board.

In a blog post, Andreessen said that Neumann—who was ousted from WeWork in 2019 after a disastrous initial public offering—had the brains and vision to remake a residential real estate market characterized by overly expensive owner-occupied housing on the one hand and “soulless” rental options that build neither financial equity nor personal connections on the other.

“In a world where limited access to home ownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community, and genuine ownership has transformative power for our society,” writes Andreessen. “When you care for people at their home and provide them with a sense of physical and financial security, you empower them to do more and build things.”

These are awkward words to hear from the billionaire investor who’s taken a drubbing in the press recently for his own part in limiting access to homeownership and stopping people from building things.

Earlier this month, The Atlantic‘s Jerusalem Demsas spotlighted a June public comment submitted by Andreessen and his wife, Laura Arrillaga-Andreessen, to the planning department of Atherton, California, opposing a plan that would allow multifamily housing in the ultra-expensive San Francisco suburb where he lives.

Allowing new apartments, the two wrote, “will MASSIVELY decrease our home values, the quality of life of ourselves and our neighbors and IMMENSELY increase the noise pollution and traffic.” The vast majority of the Andreessens’ neighbors who filed public comments likewise opposed zoning for new multifamily housing in Atherton, and the plan was dropped by the city.

As Demsas notes, this kind of NIMBY (not in my backyard) opposition to new housing, and the restrictive regulations it births, is a primary cause of America’s housing shortage, estimated at somewhere between 4 million and 20 million missing units.

Andreessen isn’t unaware of the country’s housing shortage, or all the problems of immobility, unaffordability, and instability it creates.

His blog post from Monday notes that the unattainability of homes near prime job centers is a product of cities not building enough housing. And Andreessen’s famous April 2020 essay “It’s Time to Build” also called out American cities’ failure to construct enough housing as yet more evidence of our hopeless national stagnation.

“We can’t build nearly enough housing in our cities with surging economic potential—which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future,” he wrote then. “The problem is inertia. We need to want these things more than we want to prevent these things. The problem is regulatory capture. We need to want new companies to build these things, even if incumbents don’t like it.”

One might be tempted to see his investment in Flow as redemptive—a $350 million investment to fix a housing crisis clearly counteracts any damage his NIMBYism has done. Yet, from the limited details available, Flow won’t try to tackle the problems of overregulation and undersupply that Andreessen has correctly identified as the root of our housing woes.

The Wall Street Journal reported last year that companies linked to Neumann have been buying up thousands of existing apartments in fast-growing cities like Nashville, Atlanta, and Miami. The New York Times describes Flow’s business model as basically a property management company offering “a branded product with consistent service and community features.”

Rather than build new housing, Andreessen describes Flow as a new way of managing existing units that combines a “community-driven, experience-centric service with the latest technology” to solve renting remote workers’ loneliness and inability to build equity and community in a home they own.

There’s a strong whiff of standard NIMBYism in this idea. The alleged failure of rented apartment units to foster community and good morals has long provided the spiritual case for banning their construction. Encouraging people to build wealth primarily through homeownership has also sometimes given incumbent homeowners (including the Andreessens, apparently) a financial incentive to oppose new construction in their neighborhoods.

This isn’t to say that remote workers’ loneliness isn’t a problem, or that lots of people are renting only because they can’t afford to buy a house. But both those problems are downstream of our failure to build.

The superstar cities that took the biggest population hits during the pandemic also happened to be the places that have been building the least. If New York or San Francisco had managed to add new housing anywhere close to the rate at which they were adding new jobs, perhaps fewer people would have left behind their offices and professional communities for a lonelier but cheaper lifestyle of Sunbelt remote work. Massive home price increases in metros that have grown substantially post-COVID are proof we need to be building there too.

The same regulations that drive up construction costs and housing prices work against the community that Flow is trying to foster.

The first victims of restrictive zoning regulations were boarding homes and single-room occupancy hotels, places where people shared kitchens and common rooms, with meals frequently provided by their hosts. Laws still ban dorm-like housing in much of America today. If the idea behind Flow is to create more congregate living arrangements, a good first step would be to legalize those arrangements.

Eliminating density restrictions on housing would mean that developers wouldn’t have to choose between adding more apartments and adding more communal space and amenities in a new building. That could also foster the kinds of social connection Flow is aiming to create.

There’s obviously plenty of room for different approaches to the management and financing of apartments. Andreessen has a long history of backing successful Silicon Valley breakout companies. Maybe Flow will be one of them.

But even if successful, Flow will only be working on the margins. The housing supply crisis in America isn’t primarily a problem of technology or stagnant business practices. Rather, it’s a pretty straightforward product of government regulations that prevent new home construction.

Solving it is going to require building much more housing, not just a sense of community with your landlord. In addition to writing checks to Neumann, Andreessen could also choose to write fewer letters to his local planning department.

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