Diving Deep into the Deep Code (Pt1): Unraveling the Knotted Problem Space of Housing
Two months ago, we launched a new part of the Dark Matter Labs ecosystem: Property & Beyond Lab. Since then, we have expanded our portfolio of strategic property provocations; we have launched a digital platform that maps the connections between global systemic risks and property; and we have co-hosted the conference “What and How We Own: The Politics of Change”, where we gathered with over a hundred experts to explore the intricate workings of property systems, their extensive impacts on our everyday lives, as well as promising ideas, case studies, and methods that can seed different futures.
If there is one thing that has become unmistakably clear at our conference and through this work, it is that the time of tinkering at the margins is over. In a similar way that we cannot address the biodiversity crisis by simply planting additional trees, we are seeing that we cannot address the micro-massive impacts of failing property institutions — such as rising inequality, growing numbers of unhoused peoples, and concentrations of power — by tweaks to surface level codes such as taxes, regulation, and contracts.
The global real estate market (which includes commercial and residential real estate and agricultural land) is the world’s biggest source of wealth at $379.7 trillion, yet much of that is owned by the global top 1% whose wealth share rose to 44.5% in 2022. While the planet is headed for at least 1.5C of heating — with disastrous results for people and ecosystems — control over the critical minerals necessary for our green transitions has been highly concentrated, with only 3 companies owning 49% of global lithium production in 2020. Meanwhile, our housing crisis puts us in a tight double bind, with our need to house people contributing heavily to even more carbon emissions and biodiversity loss (our own research suggests that Europe can afford to build only 176,000 new homes a year to remain within the carbon budget set by the Paris Agreement, which is far below the housing supply required to meet demand).
Governments have been dealing with these emerging and evolving risks and impacts by shoring up flaws in policies or trying to course-correct. Yet we believe it is time to ask the more fundamental question of whether property and ownership in its current form, with its hierarchies of control and worldview of separation, is in fact the right framework to deal with the challenges at hand. Or to put it simply, it is becoming clear that without innovating the deep code of property and the cultural norms that surround it, the scale of the transitions ahead of us feel out of reach.
This blog is an attempt to dive deeper into the complexities of the property problem space, by starting to unpack two of its most pressing yet knotted challenges: housing and data.
Part 1: In this first part, we will start to peel back the layers of the multifaceted crisis of housing looking at its intertwined economic, social, and ecological impacts.
Part 2: A second part on data ownership, in which we look at the need to transition away from governing data itself to governing access to data and what it is used for.
These blogs are intended both as an exploratory journey and a rallying cry to policymakers and strategic risk holders to deepen their commitment to systemic innovation and invest in compelling visions for the future to be able to overcome political and institutional lock-ins and match the necessity of the contexts we face.
HOW A DIFFERENT LENS ALLOWS US TO SEE PROPERTY ANEW
At Dark Matter Labs, we have found it increasingly helpful to get a better picture of property’s complex problem landscapes by looking through the lens of affordances and disaffordances: what do our property systems allow us to do, see, be and imagine? And consequently, how could its redesign recast our relationship with each other, with ecosystems, and with the planet and build a pathway to systemic thriving?
Affordance is a concept that was originally developed in the late 1960s by the ecological psychologist James Gibson, who defined affordance as what an artifact “offers the animal, what it provides or furnishes, either for good or ill” (Gibson, 1979). It was later popularized in design by Donald Norman’s book The Design of Everyday Things, where he defined it as the “perceived and actual properties of the thing, primarily those fundamental properties that determine how the thing could possibly be used.” Affordances can be both positive and negative, which is to say beneficial and injurious depending on the context. A fire can afford both the warmth necessary to life, but it can also cause destruction.
What is interesting in adopting the lens of affordances is that it allows us to see our legal designs as not just socially-constructed, but as having ontological effects: what we design designs us back. Our legal designs mediate our understanding of perceptions of the world and what is possible to do. Our individual and collective sense of agency is mediated by these designs, and so too is our understanding of ourselves and the world co-constituted through the lens of that mediation.
When we apply this lens to our property rights frameworks, what becomes very clear is how it allows for a very specific, narrow range of behaviors and actions that are increasingly misaligned with our changing material reality (or VUCA world).
Through its legal coding, property rights have turned the world into abstract objects and things, and subsequently a world of capital assets. Land is no longer a source of social and cultural value, a sense of belonging and group identity, or existential and ecological rootedness, but an object that can be mortgaged and sold for the extraction of profits. The prism of property as it currently stands stamps out any different modes of relating to land other than through the lens of financial value. Property detaches ‘things’ from their social and ecological relationships, resulting in absurdities like timber being valued as a resource more than the forest as a living ecosystem.
Property tends to create competing interests of the individual owner versus society. As Blackstone famously formulated, the “sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe” (Blackstone, 1753). It generates an artificial distinction between first and third parties, and then systematically structures relationships in service of property-owners at the expense of non-owners and that which is ‘owned’. In this process of optimizing for individual rights and interests, it purports to provide security — as if somehow the world is made up of a series of individual parts, rather than recognizing that everything happens out of the coming together of complex wholes (Iain McGilchrist, 2023).
Property affords only a reductive mode of information processing and organizing in which complexity and entanglement is reduced to systems of low information burdens. Boundaries are drawn, fences put up, to communicate the limit of where rights apply, from which the world and their interests are excluded. Definitions of what counts as “property”, “property damage” and externalities limit actions that can be taken to mitigate distributed risks and impacts, or acknowledge multiple value creation, as is becoming increasingly pressing with copyright and other forms of IP in the context of machine learning systems which extract private value from the availability of vast amounts of public training data and the “collective intelligence” of humanity.
Where Friedrich Hayek recognized that “liberty and responsibility are inseparable” in The Constitution of Liberty, our current forms of property have failed to balance the freedoms of rights with the burdens of responsibilities, especially when those consequences fall on non-individualized and non-human, such as the social and ecological commons.
Seeing property and ownership through the lens of affordances — by looking at how it shapes our ways of being and relating, the incentives it creates, the priorities it assigns, the asymmetries it creates — allows us to lift our gaze from the micro-institutional or domain-specific level where impacts are felt, one case or transaction at a time, towards the wider system-level operation of property and the logic and norms that define and sustain it.
THE HOUSING CRISIS: A KNOTTED PROBLEM SPACE
By diving deeper into the deep codes of our systems, we get to see our problem spaces more clearly. The housing crisis, often portrayed as a singular issue, starts to quickly reveal itself as a complex web of challenges and deeply intertwined with and restrained by the disaffordances of our dominant systems of property and ownership.
New York, Toronto, London, Amsterdam, and Seoul, indeed nearly every urban center faces a housing crisis. In 200 cities studied across the world, 90% were found to be unaffordable to live in. Nearly half of all renters in the US spend more than 30% of their income on rent, and a quarter spend more than 50%. Houselessness is on the rise and not just limited to major cities: the number of people without access to housing climbed in every type of setting — including a 10% increase in rural areas. Globally, UN-Habitat estimates that 1.6 billion people live in inadequate housing, of which 1 billion live in slums and informal settlements; numbers which are likely to only increase with growing displacement by conflicts and climate-related impacts like water scarcity, crop failure, and rising sea levels.
Meanwhile, real estate lobbyists, policy makers, and some housing experts have portrayed the housing crisis as simply a problem of supply. If we build more housing, the argument goes, people will have more choices, and rents will be lower. The problem with this supply-side argument is that it is not the full picture. In fact, research shows that there tends to be a surplus in virtually every urban area. New York, for example, has an excess of a quarter-million units beyond what is necessary to house its current population. Not to mention its vacant office and commercial space — 74,582,671 square feet to be precise, or 26 Empire State buildings worth — that could potentially be retrofitted for housing and community-serving uses.
Simply building more homes won’t solve the problem of affordability. The crisis is much deeper than that: it is rooted in a cluster of dysfunctions of property and ownership. In order to craft effective solutions, we need a new approach that unpacks how our legal coding, institutional logics, and cultural norms around property all play a complex, entangled role in creating this multi-faceted problem space. This means developing a new understanding of how property as a framework has articulated and captured social imaginaries as to the goals we set around housing, how it has enabled the privatization of benefits while commoning costs to society and the environment, and how it has built a systemic lock-in for NIMBY solutions. This is especially critical because pathways to democratizing access to housing as we currently understand it are becoming increasingly unavailable, through rising costs, carbon constraints, material affordability, and declining public investments.
UNTANGLING THE KNOT
So what are the different strands of this knotted problem space? What actions, behaviors, and imaginaries does property and ownership afford us when it comes to our homes?
Homes are seen as a financial asset, rather than a place to live …
Housing has become the world’s most valuable asset class, worth US$379.7 trillion or three times global GDP. Owning property is viewed as a secure pathway to long-term financial stability for individual and institutional investors alike. Residential real estate has become an investment of choice for private equity firms, pension funds, and insurance companies, who have turned to real estate looking to diversify and hedge against market volatility, driving up housing prices — and financial volatility for individual residents — as a result. This prioritization of housing as a financial asset over its social value or human right is problematic, but the reality is presently essential to the economic models of our cities and countries. Property taxes account for over 60% of township/municipal revenue in the US, while also being an essential part of the financial health and sustainability of the pensions of our nurses, teachers, and firefighters. We are facing deep institutional lock-ins that make dealing with any systemic change a political hot potato.
… where security of tenure for some comes at the expense of that of others
By perceiving and treating housing as just another commodity, we fall into a persistent analytical error. At the heart of this error is that land, on which housing is built, is a fixed resource. We cannot produce more of it. Especially highly desirable land — be it downtown building lots or arable farmland — are scarce, giving those who own it the upper hand. In addition, housing is immobile and has high transaction and construction costs (Ryan-Collins et al. 2017). These features are not market failures, but fundamental properties that limit how the housing system is able to behave. They mean that increased demand invariably translates into upward spirals of housing prices, rent-seeking and hoarding, rather than increased supply as in real commodity markets. Housing increases in value over time, incentivizing someone to hold on to an empty apartment, to keep land lying dormant, or to buy an additional investment property. The result is that the security of tenure and investment by some deprives others, accelerating and externalizing the costs of insecurity.
Home ownership allows for the privatization of public value …
What would your home be worth if you were to move it to McCarthy, Alaska? (one of the most isolated places with a population of a mere 107 at the 2020 census) This might be a strange question, but not if you consider that most of what our homes are worth is made up of the value of the land on which it is built, sometimes over two-thirds. In matters of real estate, it really is location, location, location. The majority of current property value is derived from what is called “unearned increment”, the financial value that is captured by homeowners, landlords, and speculators of the non-financial value generated by our social and ecological commons. These are the things that make a place desirable, such as access to schools, safe streets, the amount of sunlight, or ecological integrity. Property rights have enabled homeowners to systematically gain an unfair dividend of our shared public goods and investments. This private enclosure of public goods is nowhere more evident than in the example of the NYC High Line. A US$187 million investment (of which 77% from public funds from a mixture of NYC, federal and state government) led to a US$3.4 billion surge in surrounding property values. Individual homeowners reaped most of this benefit, whilst property tax revenue only went up by US$103 million.
“Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains — and all the while the landlord sits still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced.”
— W. Churchill
… and the externalization of costs
Whenever we build a house, we create social and ecological impacts that reach well beyond the construction site, impacts that are seldom factored into the overall costs. This includes environmental degradation, depletion of resources, and both direct and indirect displacement of communities — costs that society bears rather than them being included in the price of construction. In 2020, the built environment accounted for 37% of annual global greenhouse gas emissions and the use of 25% of all plastic worldwide. Construction is spending our sand ‘budgets’ faster than it can be produced naturally and responsibly, leading to pollution, hoarding, price gouging and even the rise of “sand mafias”. All these forms of lifecycle costs are rarely taken into account, never mind priced in for investors, developers or builders, and the impacts accumulate. As the necessity to internalize these costs grows, we are likely to see a significant decrease in housing affordability for the majority. This will also challenge the supply-side approach to solving the housing crisis, potentially leading to an erosion of the housing market’s capacity to meet demand affordably.
CRAFTING PATHWAYS TOWARDS NEW AFFORDANCES
Untangling the knot of the housing crisis shows that if we were to meaningfully take on its interwoven challenges, we would have to reimagine and recode the problematizing structures of property and ownership. We would need to build new institutional mechanisms that provide a wider scope of affordances, allowing for (re)new(ed) ways of relating to our homes, the land it is built on, the materials it is drawn from, the ecologies it supports, and the public goods it relies on. It would involve unhooking homes from both control and extractive dynamics in favor of stewardship, mutual care, and responsibility.
On our journey so far, we have begun to progressively craft some of the blueprints for instruments, institutions, and interfaces that allow for new ways of relating to our homes.
What if building materials of a house were rented and not owned?
This might involve a system where materials are not owned but are part of an Open Chain Digital Trust. This idea reflects the philosophy once expressed by the Indigenous peoples of Taiwan: “I will borrow the stones and give them back once I’m done.” Such a system is now feasible digitally and enables a fully circular material economy — designed to remove incentives for waste, rent-seeking and hoarding and encourage maximum utility and sustainability. Open Chain Digital Trusts are one way in which new technologies are creating affordances that surpass the qualitative affordances of not just property rights but law as such, allowing us to dynamically and transparently manage multiple entangled risks, interests, and values and distribute power in unprecedented ways.
What if a house could generate value for the commons?
Community Land Trusts have long been around as a promising way of removing housing from the speculative market to create stable, affordable housing options that are controlled by the community and stewarded by the residents that live in them. The People’s Community Land Trust in Atlanta is an inspiring example of leveraging housing to build community wealth. Yet regulatory barriers and long and expensive development trajectories have meant that CLTs are still not widespread: there are an estimated 225 CLTs in the US that provide only around 10,000 homeownership units and 20,000 rentals. That’s why we have been contemplating what kind of additional pathways are opened up when a house is not just put in the hands of the community, but removed entirely from property structures and is made self-owning. Liberating a house from its extractive rent-seeking logic allows it to be put fully in the service of both the ecological and social commons. It could unlock (re)generative returns currently unavailable within housing policy, such as savings in healthcare or ecosystem restoration. We are looking to demonstrate this with FreeHouse Toronto, where we aim to build regenerative housing on ravine land, where residents carry out land stewardship under the leadership of Indigenous stewardship stakeholder groups.
What if our contract would not be with a landlord, but with our neighbors?
Rent-seeking behavior has largely undermined property’s classical justification as a means of securing future returns on labor and contribution and has instead led to increasing waste and inefficiencies of use. Previously we have written about how our Proof of Possibility Permissioning the City with local government in Daegu, South Korea seeks to overcome the inefficiencies and barriers of centralized management and regulation by unlocking vacant and underutilized spaces for creative use via a digital peer-to-peer permissioning system. Yet distributed permissioning systems could open up many other new pathways for commoning, for instance by using it to create a partial commons layer over privately-owned properties to facilitate the development of shared green spaces or joint renewable energy projects.
OUR CALL TO ACTION
Addressing the knotted problem spaces of our housing crisis demands a deep-code perspective. Solutions so far have focused too often on single, isolated aspects. Whether it is by boosting public and private housing supplies or establishing CLTs, these solutions individually fail to address the deep-rooted asymmetries, distributed harms, and underperformance plaguing the housing system — dysfunctions that can be traced back to the narrow range of affordances of our axiomatic property and ownership institutions. By diving deep into the deep code, we can start to see how seemingly discrete challenges are in fact interrelated and interdependent, and idiosyncratic for a wider system that optimizes for control, single point optimization, and financial value. A meaningful transition for the housing sector demands we recognize the need to build truly new option spaces. We are in need of new institutional capabilities — governance instruments, cultural norms, technical infrastructures, and legal contracts — that allow us to relate differently to housing as a critical infrastructure and its effects on our shared economic stability, social wellbeing, and environmental thriving.
Did this blog resonate with you and are you interested in getting involved? We see a few potential pathways for engagement:
I am a funder or strategic risk-holder and I would like to understand how I can support
We are hoping to convene with funders and strategic risk-holders who are keen to explore and actively support a strategic portfolio of real-world demonstrations of system-level solutions to the housing crisis.
I have experience or expertise that I think might be useful and I am interested to see how I could contribute to making these provocations happen in the real world
We are looking to connect with potential collaborators who would be keen to build our Proofs of Possibility in real-world contexts. Do you have a plot of land or property you would be interested in making self-owning; or are you part of a group of neighbors wanting to explore the potential of partial commoning for urban rewilding or a green energy grid? We would like to hear from you.
This blog was written by Alexandra Bekker in collaboration with Jayne Engle and Indy Johar, building on work by Meggan Collins, Calvin Po, and Fang-Jui Chang.
Property & Beyond Lab is currently supported by Omidyar Network and Rockefeller Foundation, and in collaboration with RadicalxChange Foundation and a Stanford University research team.
Property & Beyond Lab is a collaboration of Radicle Civics, Partners for a New Economy, and of 7GenCities and the Mi’kmaw Native Friendship Centre.