Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 582

I am moderating a panel at the Toronto Real Estate Forum later this year (it's on December 2 to be exact). The topic is innovation in development. There is a great panel of speakers ( more info here ) and the plan right now is to cover everything from new design and construction approaches to the rise of crypto and blockchains. Topics that are all near and dear to this blog.

But we are still in the early stages of planning and I haven't yet figured out what the questions to the panel will be. So I thought it would be interesting to hear from all of you: What would you say are the most important topics to cover when it comes to innovation in development? What's next for our industry, or what should be next for our industry?

If you have any thoughts, please leave a comment below. That way everyone can see them. Supposedly this is one of the most asked for topics at the real estate forum, and so it's clearly top of mind for many people.

This recent post by Benedict Evans talks about the firehose that is the internet. To illustrate this point, he gives the example of unread emails. If you were to look at your phone right now, how many unread emails would it show?

My work email account is mostly read because reading and responding to emails is one of the ways that I manage to remain gainfully employed. But my personal email currently has 27,230 unread emails. Most of these are newsletters and emails from people wanting to somehow optimize this blog or help me reach 1 trillion followers on Instagram.

Whatever the purpose, it's almost impossible to keep up. And since having unread asymmetric emails of little consequence doesn't bother me in the slightest, I let it go.

This is one way to deal with the firehose -- acceptance. And in Benedict's post he makes the argument that maybe the push that we are seeing toward the metaverse is exactly that -- full acceptance. "When software eats the world, it's not software anymore."

But the opposite way of dealing with information overload is extreme simplification. And there is something so beautiful about minimalism in a world of too much.

Today I learned about a bookstore in Tokyo called Morioka Shoten (shoten = bookstore). It is located in Ginza (pictured above) and the proposition is "a single room with a single book." The bookstore consists of, you know, a single room and at any given time there is only one book for sale.

Each book is available for six days, after which time a new book is made available. In addition to selling one book at a time, the single room shop is used for things like events and exhibitions.

It's a radical idea and perhaps it is best suited to Japan. But maybe we all need things that slow us down and focus our attention on only a few things or even a single thing. Maybe we need it to offset the information firehose.

Image: Morioka Shoten

Zillow just announced that it has paused its (algorithmic) US homebuying business for the remainder of this year. The company acquired some 3,800 homes in Q2 of this year and, apparently, it now has a backlog of repairs and sales to work through. As a reminder, this business model, which is sometimes referred to as iBuying, is based on using algorithms to quickly value and buy homes (mostly online). The homes are then renovated and flipped for a profit. The problem, as most of you know, is that this pandemic has, among other things, disrupted construction supply chains and made it difficult to hire people. That has hurt the renovation component of this model.

Today's news was bad for Zillow's stock, but good for Opendoor's stock, which is their main competitor. Opendoor subsequently came out and announced that they remain open for business. (Disclosure: I am long $OPEN). But this announcement is perhaps a good reminder that buying and selling real estate remains a different animal than, say, buying and selling stocks. And so there are some perfectly understandable reasons for why real estate hasn't been disrupted by the internet in the same way that other industries have. Matt Levine does a great job explaining this in his recent column, " Sorry, Zillow's Computer Can't Buy Your House Right Now ."

Here's an excerpt:

“I’ll pay you $350,000 for your house as long as a human can go out there, look around, and make sure that price isn’t wildly off” is an interesting model but it’s not quite the same as “push this button to sell your house for $350,000.” And “I’ll pay $350,000 for a house and then send out a crew to replace the carpets” is not quite the same as “I’ll pay $350,000 for a house and flip it 20 minutes later for $355,000, collecting a small spread for providing liquidity.” Computerization has come into the housing market, but it hasn’t taken it over yet.

One of the challenges is that the supply of homes is heterogeneous, even in a suburban community or in a multi-family building where you might have the same set of floor plans that repeat. Because maybe the home has been renovated and fit out entirely in gold. Or maybe it's the opposite and it has been poorly maintained. There are variables to contend with that have historically necessitated more rather than less human involvement. Homes are also something that don't trade all that frequently, which is less than optimal when it comes to online marketplaces.

But what if buying and selling a home was dramatically cheaper and easier to do? How often would people actually do it? Presumably more often. I agree with Matt that "computerization" hasn't taken over the real estate industry just yet. But algorithmic homebuying still appears to be one of the more promising approaches.