I’ve been spending my mornings this weekend, listening, watching, and reading things. I’m always reading to find content for this blog, but I’ve allocating more time to consumption this weekend. So you might be noticing a slightly different varietal of posts over the past few days.

This morning it’s a podcast called Dorm Room Tycoon. It’s an interview with Andy Weissman, who is a partner with the New York venture capital firm, Union Square Ventures. The topic is “how we invest” and I’m enjoying the discussion.

Andy describes their firm as being boutique and thesis-driven. Meaning they have theses and they look for companies that dovetail with them. But in addition, he also labels their approach as “conversational investing.”

What does that mean?

It means they listen, watch, and read. They blog (all the partners write their own personal blog). They engage and discuss. They put themselves and the firm “out there”. And they don’t pretend to have all the answers or to be able to predict the future. Instead they let their conversations – both internal and with the broader market – help them make their investing decisions.

So why do I bring this up?

Because in my own small way, I am trying to do the same with real estate development, architecture, and city building. I write every day to learn and because I am infinitely curious. If you want to know what I’m thinking about, read this blog.

It’s for this reason that my favorite blog posts are the ones in which there’s lots of discussion in the comment section. It’s the market talking back, telling me whether I’m out to lunch or not. Ultimately, this idea of “conversational investing” is really about iterative decision making.

Here’s the podcast embed in case you would also like to listen:

[soundcloud url="https://api.soundcloud.com/tracks/266734055" params="auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&visual=true" width="100%" height="450" iframe="true" /]

Regardless, the Dorm Room Tycoon is worth checking out. They have other interviews with people like Malcolm Gladwell and Simon Sinek.

In 1933, the United States Congress created the Home Owners’ Loan Corporation (HOLC). With foreclosures rising as a result of The Great Depression, the task of the agency was to provide new low-interest mortgages to both homeowners and private mortgage lenders. Between 1993 and 1936, the agency served about one million households.

By 1935, the parent company of the agency (the Federal Home Loan Bank Board) decided to initiate something called the “City Survey Program.” The idea was to look at local real estate trends – including the racial and ethnic composition of the country’s largest cities – in order to get a better understanding of how to manage all of these outstanding loans.

One outcome of this program was the creation of the HOLC’s infamous “residential security maps.” (Philadelphia’s is shown at the top of this post.)

These were maps that categorized city neighborhoods according to 4 grades. Grade A neighborhoods (green) were the best ones. They were ethnically homogenous and had room to be further developed. Grade B neighborhoods (blue) were the second-best ones. They were already completely developed, but were still considered desirable. Grade C neighborhoods (yellow) were starting to decline and showed an “infiltration of a lower grade population.” And finally, grade D neighborhoods were considered “hazardous” and colored in red. These neighborhoods had low homeownership rates, old crappy housing, and an “undesirable population”, which, at the time, largely referred to Jews and African Americans.

Some have argued that the HOLC and their “residential security maps” are what kicked off systematic mortgage discrimination in America’s inner city neighborhoods – later referred to as “redlining.” This was the practice of denying credit to people who lived in these undesirable neighborhoods (and even to real estate developers who wanted to build in these undesirable neighborhoods).

But University of Pennsylvania professor Amy Hillier has argued that these maps simply reflected the ethos of the time period. Using a sampling of HOLC mortgages, she found that 62% of them were issued to grade D (red) neighborhoods. The agency, itself, was not actually redlining in practice.

Furthermore, she also looked at private mortgages issued in Philadelphia between 1937 and 1950 and found that security grade rating actually had no impact on the total number of loans issued. She did, however, discover slightly higher interest rates for properties located near and in the bottom security grades.

All of this is to say that “redlining” is likely not the only culprit for inner city decay. There are other factors at play.

To that end, the National Bureau of Economic Research recently published a working paper, which I discovered through CityLab, called, “Racial Sorting and the Emergence of Segregation in American Cities.” The key finding here is as follows:

“Our preferred estimates suggest that white flight was responsible for 34 percent of the increase in segregation over the 1910s and 50 percent over the 1920s. Our analysis suggests that segregation would likely have arisen in American cities even without the presence of discriminatory institutions as a direct consequence of the widespread and decentralized relocation decisions of white urban residents.”

In other words, it wasn’t just mortgage discrimination; it was also just general discrimination. That actually makes a lot of sense, because, if you think about it, the former couldn’t have occurred without the latter being present.

Here’s how the research paper puts it (via CityLab):

“Policies that reduce barriers faced by blacks in the housing market may thus not prevent or reverse segregation as long as white households have the ability and desire to avoid black neighbors.”

(Note: Most of the information and data used in this post was sourced from the work and research of Amy Hillier.)

I’ve been spending my mornings this weekend, listening, watching, and reading things. I’m always reading to find content for this blog, but I’ve allocating more time to consumption this weekend. So you might be noticing a slightly different varietal of posts over the past few days.

This morning it’s a podcast called Dorm Room Tycoon. It’s an interview with Andy Weissman, who is a partner with the New York venture capital firm, Union Square Ventures. The topic is “how we invest” and I’m enjoying the discussion.

Andy describes their firm as being boutique and thesis-driven. Meaning they have theses and they look for companies that dovetail with them. But in addition, he also labels their approach as “conversational investing.”

What does that mean?

It means they listen, watch, and read. They blog (all the partners write their own personal blog). They engage and discuss. They put themselves and the firm “out there”. And they don’t pretend to have all the answers or to be able to predict the future. Instead they let their conversations – both internal and with the broader market – help them make their investing decisions.

So why do I bring this up?

Because in my own small way, I am trying to do the same with real estate development, architecture, and city building. I write every day to learn and because I am infinitely curious. If you want to know what I’m thinking about, read this blog.

It’s for this reason that my favorite blog posts are the ones in which there’s lots of discussion in the comment section. It’s the market talking back, telling me whether I’m out to lunch or not. Ultimately, this idea of “conversational investing” is really about iterative decision making.

Here’s the podcast embed in case you would also like to listen:

[soundcloud url="https://api.soundcloud.com/tracks/266734055" params="auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&visual=true" width="100%" height="450" iframe="true" /]

Regardless, the Dorm Room Tycoon is worth checking out. They have other interviews with people like Malcolm Gladwell and Simon Sinek.

In 1933, the United States Congress created the Home Owners’ Loan Corporation (HOLC). With foreclosures rising as a result of The Great Depression, the task of the agency was to provide new low-interest mortgages to both homeowners and private mortgage lenders. Between 1993 and 1936, the agency served about one million households.

By 1935, the parent company of the agency (the Federal Home Loan Bank Board) decided to initiate something called the “City Survey Program.” The idea was to look at local real estate trends – including the racial and ethnic composition of the country’s largest cities – in order to get a better understanding of how to manage all of these outstanding loans.

One outcome of this program was the creation of the HOLC’s infamous “residential security maps.” (Philadelphia’s is shown at the top of this post.)

These were maps that categorized city neighborhoods according to 4 grades. Grade A neighborhoods (green) were the best ones. They were ethnically homogenous and had room to be further developed. Grade B neighborhoods (blue) were the second-best ones. They were already completely developed, but were still considered desirable. Grade C neighborhoods (yellow) were starting to decline and showed an “infiltration of a lower grade population.” And finally, grade D neighborhoods were considered “hazardous” and colored in red. These neighborhoods had low homeownership rates, old crappy housing, and an “undesirable population”, which, at the time, largely referred to Jews and African Americans.

Some have argued that the HOLC and their “residential security maps” are what kicked off systematic mortgage discrimination in America’s inner city neighborhoods – later referred to as “redlining.” This was the practice of denying credit to people who lived in these undesirable neighborhoods (and even to real estate developers who wanted to build in these undesirable neighborhoods).

But University of Pennsylvania professor Amy Hillier has argued that these maps simply reflected the ethos of the time period. Using a sampling of HOLC mortgages, she found that 62% of them were issued to grade D (red) neighborhoods. The agency, itself, was not actually redlining in practice.

Furthermore, she also looked at private mortgages issued in Philadelphia between 1937 and 1950 and found that security grade rating actually had no impact on the total number of loans issued. She did, however, discover slightly higher interest rates for properties located near and in the bottom security grades.

All of this is to say that “redlining” is likely not the only culprit for inner city decay. There are other factors at play.

To that end, the National Bureau of Economic Research recently published a working paper, which I discovered through CityLab, called, “Racial Sorting and the Emergence of Segregation in American Cities.” The key finding here is as follows:

“Our preferred estimates suggest that white flight was responsible for 34 percent of the increase in segregation over the 1910s and 50 percent over the 1920s. Our analysis suggests that segregation would likely have arisen in American cities even without the presence of discriminatory institutions as a direct consequence of the widespread and decentralized relocation decisions of white urban residents.”

In other words, it wasn’t just mortgage discrimination; it was also just general discrimination. That actually makes a lot of sense, because, if you think about it, the former couldn’t have occurred without the latter being present.

Here’s how the research paper puts it (via CityLab):

“Policies that reduce barriers faced by blacks in the housing market may thus not prevent or reverse segregation as long as white households have the ability and desire to avoid black neighbors.”

(Note: Most of the information and data used in this post was sourced from the work and research of Amy Hillier.)