The need for affordable housing and housing affordability, housing technology, the Citi Impact Fund and affordable housing finance are increasingly gaining significance in the United States, where homeownership rates have increased and housing is scarce. To address these challenges, Citigroup announced its Citi Impact Fund will invest $25 million in companies creating technology solutions to enhance access to housing, boost the supply of housing, and bring housing to a more affordable price point nationwide.

The new investment follows Citi's work to help solve housing inequities through innovation and long-term financing. The bank's backing of companies that are adopting advanced technologies like artificial intelligence, fintech and construction tech are helping to support businesses that can help lower barriers to affordable housing that are also able to create measurable social impact along with financial return.

Concentrate on the technology side to solve housing problems.

The investment will focus on businesses working at various points in the housing value chain, Citigroup said. The funding will help in the creation of new technology in the construction sector for boosting productivity and lowering the cost of construction while speeding up the construction of houses. These innovations will help to address one of the significant challenges that the U.S. housing market is facing – the cost of housing construction which can restrict the supply of affordable housing.

The investment will also include financial tech startups that tackle the financial obstacles to homeownership. These platforms also offer a way to streamline mortgage access, enhance affordability calculations and offer financial products that are more accessible to lower and middle-income people to buy homes.

The investment approach will also incorporate the use of artificial intelligence. Citi will provide support for AI-powered platforms that enable contractors to complete projects more efficiently through the automation of administrative tasks, such as permitting and documentation. These technologies are expected to shorten project timelines and lower development costs by minimizing delays and administrative costs.

Building on Citi Impact Fund’s Social Investment Strategy

In 2020, the Citi Impact Fund was created to invest in businesses that provide social and financial returns. The fund adopts a “double-bottom-line” investment strategy that invests in businesses with positive social impact while providing a return on investment.

The fund has been dedicated to investing in companies that seek to enhance the possibilities for economically struggling Americans since its inception. It invests in four strategic priorities – social infrastructure, financial resilience, the future of work and climate resilience.

One of the major focus areas in the social infrastructure category has been housing. Investing in the fund has helped fund companies remove barriers in the housing continuum from housing development and financing through to homeownership support services, Citi said.

With the new $25 million pledge comes an increase in these efforts, with innovation as a key component to increasing housing opportunity and affordability in communities feeling the pressure.

This is one of Citi's Broader Blueprint for Housing Opportunity initiatives.

The investment is part of Citi's Blueprint for Housing Opportunity, a five-year program to boost affordable housing finance and housing ecosystems in the U.S.

Through the initiative, Citi and the Citi Foundation will make $60 billion of financing available over the next five years for affordable housing acquisition, construction, rehabilitation and long-term financing. The money would be used to build more affordable housing and support community development initiatives in areas that don't have enough housing.

The Citi Foundation has also committed to $50 million in philanthropic grants for nonprofit organizations to provide solutions to local housing problems. These grants will be used to fund programs that advance the financial health of the residents of the community, enhance services for housing, and fund research into scalable housing programs.

Public policy and advocacy to boost the country's housing supply is also part of the Blueprint for Housing Opportunity. As part of these efforts, Citi has been supporting the U.S. Low-Income Housing Tax Credit (LIHTC) programme, which has been a key funding source for affordable housing projects in the U.S. for many years.

Housing affordability continues to be a national issue.

Homeownership remains one of the biggest economic and social issues in the U.S. as home prices continue to rise, mortgage interest rates are becoming higher and the housing supply is shrinking. Meanwhile, homebuilders are also having to deal with rising material prices, a lack of skilled workers and a sluggish permitting process, all of which limit housing supply.

A key instrument to help solve these structural challenges is the use of technology. Digital platforms, automation, artificial intelligence and financial innovation can help to increase the efficiency of processes in the housing development and financing sector and reduce costs for developers and prospective homebuyers.

Citi hopes to spur sustainable solutions that can enhance housing outcomes and drive long-term economic resilience by focusing investments on companies operating in these sectors.

Citi Highlights' Cover Story is on the role of innovation in expanding housing access.Citi Highlights' Cover Story highlights the role of innovation in expanding housing access.

Edward Skyler, Citi's Head of Enterprise Services and Public Affairs, said that innovation has the potential to make a significant contribution to solving the housing affordability issue, while also offering a sustainable business opportunity.

A spirit of entrepreneurship that has powered America's AI and tech leadership is needed to bring that innovation to fruition and demonstrate that lasting commercial success and community benefit go hand in hand – in this instance, that's making homes more accessible to more Americans.

The $25 million investment is the next step in Citi's effort to leverage its technology and impact investing expertise to solve one of the nation's most critical housing crises. The bank's investments in construction technology, financial technology and AI-led housing solutions seek to help increase housing access and to support businesses with the potential for commercial growth and measurable social impact.