Can AI Fix Housing and Healthcare Affordability?

Investment Context

• The firm has announced an investment in Elyse AI, a startup founded by Minna (Mina) and Tony in 2017.
• The investment targets the housing and healthcare sectors, which collectively consume 40% of the US GDP and represent 42% of typical household spending.

Housing Market Fundamentals

• The US faces a deficit of 5 million housing units relative to actual demand.
• Current construction rates (approx. 1.5 million units/year) are insufficient; delivery must increase by 50% to reach 1.8–2 million units annually to stabilize the market.
• The construction pipeline is projected to shrink by 50% between now and 2026, exacerbating the shortage.
• Housing supply is identified as the single greatest determinant of affordability; however, short-term efficiency can unlock latent supply.
• Approximately 50% of rental inquiries currently go unresponded to, leaving units vacant and underutilized due to manual inefficiencies.
• Buildings utilizing Elyse AI achieved a 2% higher occupancy rate compared to the broader market in early 2026 data.

Operational Efficiency & Automation

• Goal: Enable "fully autonomous buildings" where core operations run without human intervention, leaving only physical maintenance and legally mandated tasks for humans.
• Labor Metrics:
  • Equity Residential achieved a ratio of 200 units per employee using Elyse technology.
  • Brookfield Properties utilizes a centralized model where one employee manages up to 10,000 units across multiple properties via AI.
  • Baseline industry efficiency is approximately 100 units per employee; Elyse aims to double or triple this.
• Workflow Improvements:
  • Average work order completion times reduced from 4–5 days to under 48 hours via AI triage and routing.
  • Average time from listing to leasing reduced from 30 days to under 14 days through AI-driven tours and scheduling.
  • Administrative costs reduced by automating repetitive inquiries, legal compliance (reducing legal fees), and preventive maintenance (reducing CapEx).
• Physical Tech Integration: Replacing physical keys with smart locks enables AI-managed online key provisioning.

Market Dynamics & Economics

• Real estate has the lowest R&D spending of any industry due to historical reliance on human labor to manage high variability and edge cases.
• AI lowers the cost of short-term lease turnover, potentially increasing market mobility and reducing friction for tenants changing jobs or schools.
• Regulatory bottlenecks, such as zoning laws, persist; Minneapolis ended single-family zoning in 2019, resulting in supply growth 3x the national average while keeping rents flat.
• Elyse AI argues that inefficiencies currently grant existing landlords pricing power; increased AI adoption creates "10x operators" with higher returns to attract capital.
• The firm posits that technology historically lowers costs in all touched sectors (e.g., computers, gaming), contrasting with the upward price trajectory of housing and healthcare.

Healthcare Sector Expansion

• Elyse AI recently expanded operations into healthcare, leveraging similar admin workflows (intake, scheduling, high-volume repetitive inquiries) to those in housing.
• Voice technology and scheduling optimization from the housing vertical translated seamlessly to healthcare admin.
• Current healthcare tech adoption has failed to lower administrative costs, which have skyrocketed faster than clinical costs.
• AI initiatives aim to improve patient adherence to treatment plans post-appointment through automated reminders and education.
• AI is expected to mitigate language barriers and allow patients to involve family in care planning without requiring their physical presence.

Future Outlook & Vision

• Long-term Vision: Reduce the combined cost burden of housing and healthcare from 42% to approximately 20% of household income.
• Labor Evolution: Menial on-site tasks will disappear, replaced by specialized roles in community engagement, conflict resolution, and AI workforce oversight.
• Future Technologies: The founders anticipate robotics and modular construction will be required to solve the physical construction bottleneck in 10 years.
• Demographic Impact: AI-driven cost reductions and longevity research could increase population growth by making housing more affordable for families.
• Strategic Reflection: The founders note they would have started with "affordable housing" first due to its complex compliance and administrative drag, as solving the hardest cases first creates the greatest downstream impact.
• Defensive Position: The team counters criticisms that PropTech extracts value from tenants by arguing that low technology adoption currently drives higher costs and that competition will naturally pass savings to consumers.