How Change In Building Homes Can Happen, One House, One Community, One Process at a Time
Fixing America’s housing affordability crisis strikes many of us as a boil-the-ocean kind of challenge. It puts people off from even trying to do anything about it, not only because it is hugely daunting, but because it means so many different things to different people.
So vast and so deep and so timeless are its dimensions, its variations, and its tentacles into society, we almost can’t help but to think of it as an inevitable evil, part of living anywhere. It may be that we begin to believe in it as not having a beginning, nor finiteness, nor susceptibility to action. Many of us look at the extent, the chronic presence, and the algorithmic growth of un-affordability and stop ourselves from trying to change it. A few others look at the same set of conditions as a place to begin.
Thankfully, some people see and sense what many of us don’t. Such rare individuals recognize that solving even some of business and society’s most difficult, most unyielding, most impregnable challenges can only happen by starting somewhere.
At BUILDER, we believe market rate home builders, developers, investors, manufacturers, and their partners have both a critical role and an opportunity in exactly that pursuit. This is why we’ve made builder, developer, and investor innovation central to our insight, education, and leadership training agenda at the upcoming Housing Leadership Summit, May 13-15, at the Ritz Carlton, Laguna Niguel, Calif. To register, link here. This is also why we’re honored to have teamed up as partners with the Ivory Prize for Housing Affordability, a new annual award for the best of the best in initiatives, people, organizations, and platforms transforming housing economics across three broad areas of focus–design and construction, finance and capital, and policy and regulation. This year’s crop of 10 finalists reflect a powerful and diverse mix of the ways builders, developers, manufacturers, investors, and distributors can partner with communities to make a difference in this housing issue of our lifetimes.
A lack of affordability–or to turn the phrase around somewhat–a lack of access to decent affordable housing, happens one household at a time, at the sub-sub-market granular level. We, none of us today, know what the ultimate solutions may be, however, we are capable of glimpses at what they’re not. They’re not, for instance, solely a matter of automating the building process, using machine learning, and robotics, and lightning fast, precision tooling for cutting, hoisting, and fabrication. It’s more than that, for land use, financial capital programs, building codes, and even the very nature of employment and incomes all lie at the base of causes for which a household may have an affordability problem.
If we are reminded of that, we may find ourselves willing to address it and change it one house at a time, or one block in one neighborhood at a time, or one construction process at a time, rather than trying to boil the ocean, and attempt to fix it for all households.
Scale and scalability, then, become a different proposition.
A single household’s ability—by virtue of innovative approaches to construction, materials use, and energy efficiency—to own a new home in a community is a win-win. It has two beneficiaries, the household that gets access to an attainable, safe, decent place to live, with manageable operating costs, and the people whose job it is to develop, build, and deliver it to them.
A single neighborhood’s ability to resurrect itself from a zombie-state of blight, of crime, of abandoned and decrepit buildings, and sub-decent houses—creating a new base of jobs, of training, of social support and repair, of homesteading, and of homeownership has a multiplier-effect of beneficiaries. If, again by virtue of innovative approaches to finance, and tax-credit programs, and zoning, and permitting, and block-to-block social efforts, the people living and who have lived in a neighborhood can renew its value, and build some of their own value to boot—rather than turning over their last and only shot at social and economic mobility to speculators and investors and an eventual new tide of gentrifiers.
A single new construction process–one that captures labor costs, materials waste, cycle time, quality inconsistencies, and price variability on building products and materials–also represents a multiplier effect for beneficiaries, ranging from investors, to building partners, to eventual home buyers and owners.
As we know, capturing those costs is a challenge easier said than done, and returning those efficiencies and expense reductions to people in the form of lower asking prices and lower rents is another one altogether.
No doubt, many residential market-rate developer and builder players would be frustrated by this game of little numbers, of tiny gains and the most modest measures of progress. Still, the patience, the canny community advocacy and support work, the deft assembly of lots, and the scrappy stacks of financial capital that underlie these initiatives are the epitome of innovation, bringing change that meaningfully improves lives by saving them—whether through container homes or block revitalization programs in blighted urban neighborhoods—from displacement, from being priced out, from social and economic stagnancy vs. social and economic mobility.
Efforts like these happen because rather than being daunted and overwhelmed about where to begin addressing such big problems, their founders choose simply to begin. These programs cause us to have to rethink scalability altogether. Because without focus at this granular household and neighborhood level, there would be no question of scalability ever when it comes to affordability because it’s too big a phenomenon to tackle.
So, although one of the Ivory Prize for Housing Innovation’s principle criteria for assessing a project, or program, or technology’s merit is its scalability, a few of the 10 finalists satisfied that litmus test by virtue of having created an operational model that could scale, and potentially be applied to the same need in other submarkets and markets around the country.
Two examples, recognized among the Ivory Prize top 10 innovators for 2019, are Century Partners, which advanced as a finalist for its approach to revitalizing neighborhoods through rehab, workforce development, and community design in the Fitzgerald community in northwest Detroit, and Factory OS, which is vertically integrating 21st century off-site building technologies, software operating systems, lean manufacturing, & progressive labor practices, specifically to drive costs down and impact housing affordability.
One innovation works at the grass-roots neighborhood level to repair blight both at the land and the resident population’s household level, so that each can get back to a state of regenerative value. The other, a platform whose originators blend both deep housing development experience and fresh, technology-development oriented approaches to manufacturing and product production, offers a sneak preview into physical community building of the future, where software and structure merge, and where bill-of-materials approaches to procurement, materials supply chains, and production offer potential solutions to cost and inefficiency traps in the construction process.
Here’s a look at the Century Partners value proposition at a glance:
The Fitzgerald Revitalization project will materially increase the amount of affordable high quality homes working class Detroiters are able to own with significant asset appreciation potential, allowing these individuals to own an equity stake in their city’s revitalization.
Additionally, Century Partners has worked with local banks to ensure that this neighborhood received CRA funds in the form of Down Payment Assistance and other home buyer subsidies to maximize affordability for homebuyers. Century Partners are working with the DEGC to form a Neighborhood Enterprise Zone (NEZ) for area to limit the property tax increases for both existing and new residents.
Finally, Century Partners is working with the city and local foundations to direct funding in the form of 0% interest loans and grants to existing home owners to assist in their home repair needs. A $10,000 investment in windows can significantly reduce heating and cooling costs, thereby making homeownership significantly more affordable.
Goals and Project Metrics:
- 50 Residents to enter workforce development program
- Minimum 10 graduates from program to enter into skilled construction trades + Rehab 100 homes
Nominee: Century Partners Website: www.centurypartners.org/
- Provide green infrastructure across 200 vacant lots
- Expected increase in appraisals from $50 / ft. to $125 / ft.
- Century Partners also tracks the following metrics:
- Number of first time homebuyers
- Police response time
- Number of residents that attend community meetings
- Pounds of local agricultural production
- Number of homes beyond their portfolio that are being improved within the neighborhood
We recognize that many market-rate home builders will look at this initiative and reflexively conclude, “this is not my business.” We’d beg to differ. We’d assert that neighborhood repair and regeneration models are every bit as much the business and future of residential construction and development players as the following operational model, from Factory OS, and the ways they’re changing the construction process.
Compared to competitors, Factory_OS is unique because of their automated factory. With a 33 station assembly line, the Company currently finishes two units a day. Merging Autodesk technology (AutoCAD and Revit), Factory_OS creates a more efficient process as they build offsite by streamlining the process to design electronic plans for 2D drafting/drawing, 3D design/visualization, and architectural/structural design and engineering resulting in an incredible amount of time and inevitably cost savings.
Factory_OS intends to be open source, sharing their innovation to assist in the housing affordability crisis. By building factories around the United States equipped with the unique automating process of a clockwise assembly line, Factory_OS will be able to reach every major city facing the crisis of housing affordability. The Company plans to expand initially along the west coast, building factories near cities that are currently facing an intense affordability crisis like Seattle and Los Angeles and hopes to up their production from two to four units a day by quarter three. The labor shortage is a serious concern and propellant of the housing affordability crisis. Factory_OS workers make up to $30 an hour which is about half of what workers typically make on-site. Factory_OS provides a steady job with set hours, full health benefits, and paid vacation days. The Company is dedicated to hiring diverse employees, including former prisoners and people recovering from substance abuse. The benefits of working for Factory_OS will incentivize workers in every city as the Company scales and a large workforce will contribute to their success.
The 40,000 unit orders show high demand for Factory_OS’ product and as long as the facility can keep up with the orders, Factory_OS will be able to sustain their business model as they scale. Increasing their production from two units a day to the Company’s goal of four units a day will allow them to handle greater amounts of orders. The Company’s first order was 300 homes requested by Google and Autodesk named Factory_OS as an “Autodesk Entrepreneur Impact Partner” for the Company’s innovation in the housing industry. These strategic partnerships have attracted and will continue to attract more attention and demand to the Company.
Common to these two initiatives, as is the case with two we spotlighted last week, are high-bars of ambition to make fundamental change where there’s both a crying need and a blossoming opportunity.
This gets at the very nature of housing innovation, which is to bring new ways of doing things, and new gains from doing them differently, and better, and more expansively in the future, versus doing them for a shrinking pie of opportunity as is happening now.
At least part of what it takes is a willingness to begin. Not to boil the ocean, but to change things one household, one neighborhood, and one construction process at a time.