In 1960, real estate investment trusts were created in the U.S. with the goal of democratizing real estate ownership. Here’s how Yale professor Robert Schiller described it:

“REITs were created by law in 1960 to democratize the real estate market and make it possible for a broad base of investors to participate in this huge asset class. That was absolutely the right thing to do, because portfolio theory tells us people should diversify across major asset classes, and real estate is one of them.”

But a lot of things have changed since 1960. We now have the internet. 

And one of the things that the internet is very good at is creating peer-to-peer networks that connect supply and demand without the same kind of intermediaries. This could be people who have MP3s with people who want MP3s or it could be people who have real estate with people who are looking to invest in real estate.

So with the advent of crowdfunding in both the U.S. and Canada, I think we are at the dawn of another era of real estate democratization. Already we have seen the first crowdfunded real estate development project and it happened at a much smaller and local scale than is usually the case with REITs.

Similarly, we are also seeing companies emerge – such as HomeUnion in the U.S. – that allow people to build their own rental portfolios by directly investing, either fully or partially, in real estate. Again, there are differences here compared to how REITs typically operate.

When I was in grad school at Penn and Sam Zell used to come in and talk to the students, he used always mention how when he started out in real estate (1960s) the industry was disproportionately controlled by a small number of players. That’s been changing ever since and it looks like that trend will only continue.

I’ve been following and checking out Kickstarter pretty much since the beginning. But it wasn’t until last night that I backed my first project. 

After doing that, I immediately started thinking about urban projects that might be able to also get crowdfunded using Kickstarter. How could it be used for city building? A Kickstarter project, after all, just has to be something with a defined scope and a clear end goal.

Not surprisingly, this has already been happening for many years now.

A great example is +Pool in New York, which is an initiative to build a publicly accessible floating pool that also filters river water. The project launched in June 2011 and by July 2011 they had raised $41,648 USD to build and test different filtration techniques.

Today, the project is still moving ahead and they are now offering up the opportunity to buy and have your name engraved on tiles within the pool. If I lived in New York, I would be all over this.

But what’s powerful here is the ability for crowd-based platforms (like Kickstarter) to both get radical new ideas off the ground and to empower local communities to affect change. Here’s a quote from PSFK:

It’s very difficult to get funding for these ‘out there’ ideas that regular systems might not support. Creators have to take risks and be imaginative, as well as put their ideas out there and let the public decide. There are no traditional guidelines on crowd-sourced platforms—they’re much more meritocratic. You can think in big scope and that changes what gets made and who can access it. Anybody with a couple of doubles can voice what they want to be built, and in that way we see the entire community having a huge say in the design world.

And when I see projects and platforms like this, I can’t help but wonder if (when) city building is going to become even more decentralized. 

Last night I was also at an event – being put on by Ryerson University’s City Building Institute – called Bridging Divides: What Can Cities Do? And one of the suggestions that came up was that Toronto needs more local and granular community councils (there are currently 4) in order to bridge some of the divides that are happening in our city.

But in a world where it’s possible for each and every person in a city to not only have a say but to quickly say it from their smartphones, why can’t we go even more local? Instead of 4, 10, or 90 community councils, why can’t we have everyone more engaged?

I think we’re headed in that direction.