A funny-but-unfair potshot the American housing industry gets is this: It’s a 200-year-old industry undeterred by progress. That’s the glib narrative, and it’s at least part-true. What the one-liner belies, however, is that invention and progress have sent shivers of light, excitement, and possibility through U.S. housing and construction’s $3-trillion-a-year firmament, especially of late.
Three vaunted examples:
- Modular and offsite factory-based building technologies today step-change building envelope quality and structural performance, virtually eliminate wasted material, reduce umpteen time-value-as-money variables, and integrate “livability” smart home features and functionality at a solutions level traditional site-build practices cannot equal.
- Local, county, and state policy amendments—now permitting accessory dwelling units on existing residential properties—have spawned an entirely new community of ADU designers, builders, planners, and financial partners, many bent on applying new zoning accommodations to adding new housing inventory at lower cost, that advantage both current property owners and their prospective ADU renters as an affordability builder.
- Single-family homes built-to-rent—considered a fringe opportunity coming out of the Great Recession—has emerged as a consumer-driven market of the future, and for capital investment, a whole new “asset class,” especially for households who prefer lower-density, roomier post-pandemic era living options as near- and mid-term locations of choice.
And these sweeping shifts don’t even take into consideration an accelerating flow of materials science applications, the role of artificial intelligence in design and construction, the explosive power of building information modeling, a still-barely tapped digital thread linking a household to his, her, or their future home and community.
The trouble is this.
Who specifically does all of this real-world, real-time innovation—occurring at every turn in geographical nooks and crannies and cracks and crevices of residential real estate and construction—ultimately impact? Factories, distribution centers, job sites, white board conference rooms, research and development labs, innovators among lenders, financiers, marketers, builders, planners, developers, architects, materials suppliers, etc.—housing teems with change-agents, young, middle-aged, and older.
Innovation promises, but does it deliver on those promises? Whether an innovation “bends the cost curve,” “improves productivity, or “expands the credit box,” “reduces friction,” “adds inventory,” “lowers regulatory barriers,” etc., they all beg the same questions. Are fewer people housing burdened? Are more properties safe from natural hazard harm or destruction? Do more homes operate at net carbon positive levels that will, possibly lower risk of climate collapse?
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The answer is yes and no. Innovations tend to do one of the three big jobs they need to, but not the other two. As a result, housing’s familiar “whack-a-mole” phenomenon of solving for an issue and either worsening or ignoring two equally compelling challenges.
Certainly, the innovations mentioned above all claim beneficiaries and create new value. Still, can the effort and investment in housing’s most scientifically, strategically, and financially innovative work apply brilliance and ingenuity where housing needs it most of all? Solutions to crisis challenges in housing affordability, sustainability, and resiliency at a time need—especially among society’s most vulnerable people—is non-negotiable across all three spheres.
“In both the private sector and among earnest and enlightened people working in the public sector, we’re seeing active efforts to stretch out of the past into the future,” says former Obama Administration housing official Carol Galante, who is I. Donald Terner Professor in Affordable Housing and Urban Planning and founder-faculty director of the Terner Center for Housing Innovation at University of California at Berkeley.
“We’re not going to get to the solutions we need unless we marry policy change with innovations in practice and innovations in the way we finance projects and community development, and in how we define ownership and stakeholder-ship,” Galante says. “We’re seeing great strides of progress everywhere in how we build housing, how we get it approved, and how we get it financed, and we have to work to apply these innovative techniques to create results where housing can be a solution for where the crises hit the hardest.”
Galante—like many of housing’s pantheon of experts and leaders—notes that a day almost never goes by that does not come with it revelation of some unprecedented height of unparalleled achievement, unrivaled capability, breakthrough processes, material, integration, designs, engineered impact on structure, systems, and livability. Game-changing uses of technology, data, machine learning, robotics, match-making, process engineering, etc. dazzle the mind in ways few could have imagined a decade ago.
But when it comes to “keepers”—disruptive innovations that gain sector-wide, transformative traction, at least near-universal adoption, and implementation in housing—many of even the most necessary and ingenious of today’s initiatives fall short of the kind of impact housing needs most urgently right now.
“It’s always a challenge for policy—particularly local land-use policy—to keep pace with building technologies advances, and, lately financial ones,” Galante notes. “If anything good can come out of the enormous distress the pandemic has created it’s what I’d call an emerging coalition of the willing on the policy front that have both been exposed more profoundly to wealth and income disparities among people of color and society’s most vulnerable populations, and experienced, first-hand, a sense of possibility around what’s achievable.”
Galante and her colleagues at Terner Center’s Housing Lab accelerator program are accepting applications through April 7, 2021 for a second cohort of new ventures whose strategies, operational models, and impact would promote an equitable economic recovery from the current pandemic shock and economic disruption.
“We are looking for innovators with creative solutions that are responsive to the unique circumstances of the current moment, while also being responsive to the housing market failures that existed long before COVID-19,” a Housing Lab challenge reads.
For year two, the Housing Lab will support ventures accepted into its 2021 cohort with a $100,000 grant, a dedicated business coach, capital structure advice, and access to the Terner Center’s ecosystem of builders, policy makers, nonprofits, and entrepreneurs. In 2020, six new ventures—Digs, Dweller, ESuSu, Hurry Home, Padsplit, and PrefabADU were selected from nearly 140 applications from all fifty U.S. states. Within six months of graduation, two ventures completed their next funding rounds and one was acquired, despite graduating into the early days of the COVID-19 pandemic. Participating entrepreneurs rated the Lab with a Net Promoter Score of 100. All six companies are still in operation and on a path towards scale.