The housing industry is in the middle of a prolonged crisis. There is massive, pent-up demand for more housing. Housing shortages have stretched current inventory to the max, driving prices up, particularly in cities. Homeownership and rental vacancy rates are at all time lows. Every single county in the US has an affordable housing crisis--a statistical situation that only hints at the affordability issues for those ineligible for subsidized housing. Despite massive demand, the industry cannot supply. Skyrocketing development costs have made affordable new housing a contradiction in terms. In particular, labor shortages have exacerbated the situation. The National Association of Homebuilders (NAHB) “estimates that there are approximately 200,000 unfilled construction jobs in the U.S.--a jump of 81% in the last two years,” as reported in Fortune.

The housing industry is in the middle of a prolonged crisis. There is massive, pent-up demand for more housing. Housing shortages have stretched current inventory to the max, driving prices up, particularly in cities. Homeownership and rental vacancy rates are at all time lows. Every single county in the US has an affordable housing crisis--a statistical situation that only hints at the affordability issues for those ineligible for subsidized housing. Despite massive demand, the industry cannot supply. Skyrocketing development costs have made affordable new housing a contradiction in terms. In particular, labor shortages have exacerbated the situation. The National Association of Homebuilders (NAHB) “estimates that there are approximately 200,000 unfilled construction jobs in the U.S.--a jump of 81% in the last two years,” as reported in Fortune.

The MVP Dilemma

In 1996, Motorola released the StarTAC cellular phone. The $1000 flip phone was a major leap forward in the evolution of mobile tech. But today it looks like an antique next to an iPhone, which packs multiple times the processing power of a 1996 desktop computer in a pocket-sized package. 

Cellphone innovation has grown in leaps and bounds partly because a phone’s deficiencies are relevant as long as a consumer has the phone, which is around two years nowadays. If a phone has problems, fix them on the next version.

Housing is very different. There is no MVP (minimum viable product) in housing. Few developers will knowingly put a house to market with bugs and glitches. There is no remote firmware update to correct those bugs. When something goes wrong with a home, real builders, getting paid real wages have to go to the house fix the problem.

And then there’s the matter of money. It takes large amounts of capital to build the most modest housing project. And because of high land and labor costs, margins are razor thin. Financial backers, especially institutional lenders, will opt for market validation nine times out of ten over a new approaches, even when those new approaches are a significantly better than the status quo.

Risk, the cornerstone of innovation, is often shunned in housing development. So housing continues to be developed based on historical patterns. And it’s tough to create revolutionary processes and products when your primary reference point is the past. The iPhone and the Tesla Model S were inventions referencing futures that could be, not pasts that already occurred.

‍A Path Forward

While I don’t know the exact innovation that will bring housing into the 21st century and beyond, here are a few good places to start:

Build in terms of systems. One of the culprits of inefficiency and waste is that homes and buildings aren’t thought of as the consumer products they are. If they were, they would be designed for production and replicability. For example, on the URBANEER Bungalow, we made the made the main housing module conform with standard sheetrock sizes to minimize cutting and associated labor costs. With our multifamily developers, we offer a number of prefabricated furnishing systems that minimize site work and streamline interior fit outs. These are systems that can be replicated again and again, thereby making housing easier to build and significantly cutting down waste and time-labor.Digitize. Only one industry (hunting and agriculture) devotes less money to IT than the construction industry. With solutions such as Building Information Modeling (BIM), VR, and robotic fabrication, there are innumerable ways tech can be brought to bear to make design, development, and construction faster, cheaper, and better.Respond to market data. Real estate development has a notoriously long lag time between market data and industry response--a situation that has led to developers churning out products no one wants. Market needs shift and the industry must be nimble enough to respond. Our bungalow is a data-driven response to the growing demand for more compact, amenity-rich, near-neighborhood housing. Our work with multifamily developers, most of which involve optimizing spaces in centrally located apartments, are responses to demographic shifts toward smaller households and escalating urban development costs.Prototype. Our Bungalow, 600 Douglas project with Rockford Construction, and Mercy Health prototype are all explorations into new ideas of how to build and use space. We’ve learned a lot from these projects about how to maximize space use. But we would not have learned any of this if we kept referring to convention for optimal design.

Science fiction writer William Gibson remarked, “The future is already here—it's just not very evenly distributed.” Builders like FullStack Modular and Kasita are bringing a systems and mass production-based approach to development, design, and construction. Companies like Sekisui and Blueprint Robotics are using machines to build homes faster, better, and less reliant on the dwindling supply of qualified labor. On the consumer side, companies like WeLiveCommon, and Ollie, are ushering in a new era where real estate is just as likely to be used as a service as a commodity.

The main problem stems not so much from a shortage of innovative solutions to solve the housing crisis. The main problem stems from an unwillingness to give up what we know for what we want: a robust, profitable, sustainable (in every sense of the word) housing industry.

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