Technology and Housing’s Two Big Cost Traps: Productivity and Policy
We headline writers have an uncanny ability to ask the right question the wrong way.
,” a piece that New York Times staffer Emily Badger published Tuesday, posted at first with the headline, “Can Technology Help Fix the Housing Crisis?”Each version of the story’s teaser, while doing a good job to pique interest, is a mis-characterization on two fronts. One side of it misstates how technology works, and the way people and technology solve problems. The other mistakenly portrays “the housing crisis” as susceptible to anything but human solutions.
Innovation is not a tool to fix broken markets. Innovation is the foundation upon which new markets are created.
That’s a visionary statement. Only, what does it mean? Or rather, how can its meaning be helpful to people who invest in, design, develop, and build housing today?
Those are the people necessary, who’ll one-day use technology as a “foundation upon which new markets are created,” and, ultimately fix housing.
Emily Badger’s article itself–underneath the misleading headline–gets at this.
The “fix” itself won’t come either because technology will, by itself, drive costs down far enough to make home options more attainable to everybody, nor as a result of tech companies pouring enough cash into housing development to change a nationwide affordability disequilibrium.
Housing is an exceptionally knotty problem, even if any one strand of it — making construction more efficient, or equity more accessible, or markets more transparent — sounds straightforward.
Knotty. That’s a good word, but it doesn’t go far enough to differentiate between complicated situations and complex challenges. Complications tend to surrender themselves nicely to technology. A complex convergence of inefficient systems–our lovely mess of a world, housing–is an order of magnitude “knottier.”
What ails housing at a macro level–a widening fissure between what it costs to profitably produce it and the whole spectrum of household incomes–has roots in that array of intersecting and interwoven dysfunctions, several of which haven’t changed due–we believe–to fear.
Fear is over-simplistic, of course. In business, it emerges in one of its forms as cost-consciousness, a fear of financial risk to the business model.
In policy, which Plato tells us is “the family writ large,” fear emerges in the form of concerns–valid ones–about adding noise, traffic, pollution, stress on water and infrastructure, crime, and, well dammit, more people “we don’t want living here.” One of my five brothers and my sister and I love each other dearly. But can we seven agree, profoundly, harmoniously, unarguably about anything? Fat chance.
Same goes with policy and regulations. The same regulation, rule, policy measure, code, permitting process, etc. that some of my siblings may believe save lives, protect them from danger, or protect their surrounding from harm, others of my siblings would argue vehemently against. Not only do those regulatory burdens not serve their intended purpose, they harm people’s and companies’ and communities’ ability to make a go of it in the world of work, and profit, and economic progress.
Magnify that to a community level, a town, city, county, region, state, and nation. What’s life-saving to some is an existential threat to others. In all cases, policy is life-altering, and that may be a reason many bring their fear to it.
One might guess that fear–an instinct to self-preserve, appropriately or not–may be why builders and architects and engineers and materials suppliers don’t modernize their processes. Some currently lucrative livelihoods–maybe all of them–would radically change if–or more accurately when–the architecture-engineering-and-construction equation becomes an integrated, harmonized system rather than a collision of somewhat overlapping but ever-oppositional forces.
It’s curious to me that people believe the business fear and the policy fear have nothing to do with each other. At the human level, they both have to do with a rush of adrenaline and cortisol through the brain and into the emotions, attitudes, and behaviors of people. Adrenaline and cortisol spike in feeling of stress in people when nature or conditions suggest “fight or flight.”
Again, over-simply, housing’s affordability crisis traces to two helical–separate but related–areas that trap money, time, talent, land, and materials. One is 25% of first-cost expense reportedly trapped in lost productivity in the stream of events, resources, materials, and land that become homes.
The other is 25% to 35%–wherein some X value can be regarded as trapped–that nests itself on top of every dollar for every square foot measure of our built space thanks to policy and regulation.
Can technology fix that, either via construction processes that drive down costs and then drive down prices, or, via tech firms themselves plowing capital investment directly into more attainable housing development?
Again, that may be getting at a good question, but it’s phrased all wrong.
Technology is changing what people can do, exponentially. People, in turn, are transforming what technology needs to do at an equally exponential pace. The roadmap and the rules of the road are evolving, and have to be regarded as at a still primitive state.
Antony Van Leeuwenhoek learned in Delft, The Netherlands, about a wilderness of microscopic creatures in a sample of pepper and tap water in 1676. He used technological tools–an early microscope–to solve a problem of how to understand ways that humans share the air we breathe and the water we drink with countless, unname-ably vast other species of life, some of which harm us and most of which help us live healthily.
It would be 250 years before the discovery of penicillin, the first antibiotic.
Technology is not going to, never will, “fix” the housing affordability crisis. Will it play a vital role in whether people fix it? Without a doubt.
What happens when city and town decision-makers have tech tools, solutions, applications, etc. that enable them to look at tracts of land in the light of added revenue, added generational diversity, added essential worker access, added children, added community stakeholders, rather than as they do today: more noise, more crime, more traffic, more pollution, more stress on systems?
It’s early yet, but technology will play a direct role in housing’s crisis. But not as a force in and of itself, but as a means for people to make that change. Disruption doesn’t happen. People use brilliance and tools and effort to make disruption happen.
There’s really no better time than now for legacy builders and developers and investors to engage with the best of what technology has to offer, from the horse’s mouth of companies who approach business models with a blank sheet of paper and the one question that really matters to strategic viability. What human need can we fulfill?