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The Housing Cloud

11/30/2012 by Kapil

I threw out my DVD collection today. Rebel Without a Cause. Ocean’s Eleven. Gone. I own most of them on Amazon Instant Video, so I didn’t need them anymore.

It’s the same thing I did with my CD collection 10 years ago when I moved to MP3s, or with my MP3 collection when I moved to Spotify. Books to Kindle. Photos to Dropbox and Facebook. Notebooks to Hackpad. Nearly all of my digitizable content is in the cloud.

Physical things are moving to the cloud too. Zipcar is the cloud for cars. Exec is the cloud for secretarial work. And though there isn’t a “cloud” for housing, AirBnB, Craigslist, and VRBO are getting close.

From 2009 onwards, I’ve been living in furnished apartments, sublets, vacation rentals, or hotels. The benefits have been amazing. I rarely bought household goods or furniture, avoided dealing with maintenance or repair, and signed only short-term contracts. Earth Class Mail disentangled my permanent mailing address from where I was currently living. The resulting mobility enabled me to live in six different cities in three years. My housing situation felt like borrowing movies on Netflix or spinning up instances on AWS.

Working for GiftRocket has given me flexibility in where I can work.

For some it works really well. Paul Carr did it with hotels. Sam Lessin was less positive on his experience. For me, it always felt like a bit of a hack. I spent more time surfing Craigslist, AirBnB, Starwood than I would have liked[1]. The transaction costs were non-trivial.

The nature of the problem is uncertain timing. With fixed long-term stays everyone is comfortable signing leases and furnishing apartments. But I don’t know if I’m going to be traveling to another city until a couple weeks before. And the periods of stay might be minimal. As a result, I’ll be paying for two housing units- my apartment in one location and a hotel in another.

The uncertain timing makes renting out my apartment a pain. I have to worry about posting a listing, managing inquiries, interacting with guests, and having the apartment cleaned. All potentially while I’m out of town. These transaction costs result in an inefficient market.

However, these transaction costs will go down over time. Airbnb helps market the listings. Property managers help with interactions and cleanings, but at the moment they’re expensive and only available for true vacation properties. Once these inconveniences go away, housing will truly be a cloud-like entity.

And at that point, I suspect far more people will attempt to live in the housing cloud- moving from place to place at will. Not thinking about “stuff”, and spending their time on more valuable things like people, ideas, travel, and work. This lifestyle doesn’t appeal to everyone, but these changes will certainly surface the nomads among us.

[1] There was actually a period of 2 months where I had no stable housing at all. I was on business travel 3 days a week, using the points I was accumulating to stay in cheap hotels another 2 days a week, and then crashing with friends for the last 2. It led to some strange situations, like having to change clothes in my car, or forgetting dry cleaning in another city.

(c) Kapil Kale