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Can Proptech Invigorate the Affordable Housing Market?
Over the last few decades, the United States hasn’t built enough houses to keep up with demand. This has led to an economic decline, rising home and rent prices, lower wages, reduced productivity and income inequality. It’s become a common source of commentary, both among those in the real estate industry and new home buyers.
After the Great Recession, there was a shift toward building large, beautiful homes. This has created a shortage in entry and mid-level housing. On top of that, rising interest rates are keeping buyers on the sideline, as they wait for mortgage rates to go down.
If you’ve been reading the news lately, you may have heard that large investment companies aren’t helping the situation. The most affordable properties are bought up by huge conglomerates, leaving the average American with limited, affordable inventory when it comes to purchasing a home.
These challenges are compounded by a lack of building materials, which leads to increased costs for the builder and consumer. The costs of the construction labor force have also increased, making all levels of home building more expensive than a few decades above.
Zoning laws don’t always keep up with all the options and sellers are unsure about whether they want to jump into a market that goes up and down. On top of that, Baby Boomers are often deciding to age in place. Rather than downsizing or moving into senior facilities, they’re staying in their homes as they age.
There are a lot of considerations and a quick look might make you think there’s no recourse for this shortage. However, enterprising innovators in the proptech world have been crafting solutions on their own. This article will dig deeper into the current issue and share some of the solutions that may lie just beyond the horizon.
What’s Happening with the Housing Supply Action Plan
In May 2022, the White House announced the Housing Supply Action Plan. This plan is composed of diverse ideas that act as a comprehensive way for the government to help close the housing shortfall, which is the worst that it has ever been.
However, nearly a year later, very little progress has been made. Rising interest rates have even created a slowdown in construction. While the government has made investments in infrastructure and climate, new spending has not been authorized to create a larger housing supply.
Progress was made in home building last year. In fact, more multifamily projects began in recent years than all the way back to 1986. Some believe the economic stimulus had something to do with that, while others disagree.
In the State of the Union address, the topic of the housing crisis came up but only for a moment. The reality is that the administration has many priorities and the housing supply issue doesn’t always come out on top. The housing supply is believed to be included in the next budget proposal but that remains to be seen.
The good news is that the government isn’t the only source of solutions for needed affordable housing. Proptech companies across the United States are pulling out all the stops to create a change and ensure reasonably priced housing is available for all. Below, we’ll dig into some of these projects and initiatives to give you an idea of what to expect moving forward.
Forward Movement in Florida
Meanwhile, as of March 29, 2023, Florida Governor Ron DeSantis signed new legislation about affordable housing. It’s meant to add $711 million into incentivizing developers with tax breaks and boosting housing programs. The Live Local Act (Senate Bill 102), was signed days after passing in the Florida House of Representatives.
In addition to placing money into the affordable housing issue, the law supersedes local regulations about height, density, and zoning for affordable housing in areas that are mixed-use or commercial. It also removes the ability to use rent control, which was only used in the past in housing emergencies.
Individuals developing mixed-use and affordable housing are likely to make use of the new law. At least 40% of the space would need to be set aside for affordable housing for 30 years at a minimum. If 65% is allocated to residential, the county would not be able to restrict the height of the development below what’s allowed up to a mile from the project.
South Florida has been one of the least affordable housing markets over the last year due to rising rent and home prices based on the pandemic. This measure could help fill in the gaps that are common for currently stalled projects to create some relief.
Introducing the Genesis Collection
The Genesis Collection is an exciting new project coming out of Austin, Texas, at Wolf Ranch. Anyone passing through the area might think it’s just another subdivision in a lazy suburban neighborhood. That changes when you turn the corner and see robots creating homes that look like waves built into sturdy concrete.
Wolf Ranch plans to have 2,500 homes and 100 of them are part of the Genesis Collection. This new project marks a collaboration between 3D printing superpower, Icon and the second-largest home builder in the United States, Lennar Corp. It also may be the most innovative change to residential construction in several decades.
Assuming the project goes well and scales, 3D-printed construction could become the source of creating affordable and energy-efficient homes much faster than ever before. It avoids most courses of waste and can incorporate truly incredible designs.
For those who live in these homes, there are even more perks. These homes are made of concrete, which makes them very resilient. They can handle things like heat waves, wildfires, and even hurricanes.
An expert with the project notes that a 3D printed house costs from 10 to 30% less to construct than the costs of traditional construction. It’s also expected that it can shave about 30% off the construction time.
Things are still early in the stages with the Genesis Collection, but this could be a change in the right direction in terms of affordable housing. It’s impossible to say whether 3D printing will take over construction as we know it but the industry is ripe for disruption due to its current carbon footprint.
btcRE Pushes for Changes in Real Estate
Another company to watch as we move into 2023 is btcRE. The idea is to take their expertise in community collaboration, stakeholder conflict resolution, mentoring and coaching, regulatory and legislative work, transactional complexity, and site redevelopment to assume a massive challenge.
They plan to create affordable housing, but beyond the housing itself, these homes will have access to efficient transportation, energy, and more. The firm plans to accept speaking engagements, investment opportunities, and advisory appointments with housing organizations that have the same values.
This fits the values of the boutique itself, which is named btcRE, after “be the change” they wanted to see in real estate. The idea has been to create a reimagined built environment that encompasses creativity, transparency, collaboration, integrity, and passion as core values.
The firm is adamant about the fact that they know solutions are available and they simply want to identify them, credit those who created them, and then build them to scale to help everyone who needs housing.
Since leaving Coldwell Banker, where he was previously the CEO, M. Ryan Gorman had room in his schedule for passion projects and btcRE became one of them. He certainly has the experience to make a change for the better but it remains to be seen what direction he will go in.
What to Know About ICON’s Initiative 99 Competition
Less of a project and more of a competition, Icon of 3D printing fame, has announced Initiative 99. The company behind the competition is known for its experimental and all-encompassing spirit and has created everything from mid-century-inspired luxury to Mars habitats and boho campsites. The brand is far from new when it comes to accessible construction.
In 2018, Icon was already creating affordable housing solutions using a proprietary material similar to cement and their huge Vulcan printer. The brand is best known for fabrication projects, but has partnered with cutting-edge architecture firms like Bjarke Ingels Group and Lake | Flato to create impressively forward-thinking 3D printable designs.
However, Icon has something new up its sleeves and it could be a boon for those searching to find an end to the affordable housing shortage. The global competition has been named Initiative 99 and pushes designers to create houses that are not just affordable but aesthetically pleasing.
At the end of this 12-month competition, the winning design teams will be rewarded with a pot of $1,000,000. At that point, the winning designs will be constructed by Icon at several locations, which will be revealed in the near future.
While anyone is welcome to join in the competition, university students, firms, and architects are recommended to jump in and participate. Submission presentations will be made to a jury of experts, including big names from UN-Habitat and BIG. If you’re interested in learning more, you can register starting in Summer 2023 here.
While the government has commented on the housing issues that plague the United States, many believe that not enough is being done. This has led to innovative proptech entrepreneurs and businesses stepping forward to fill in the gap that remains.
Three great examples of where proptech might take this problem in the coming years are included above. However, this is only a small selection of stories about how people are going out there and trying to find solutions for major issues in the real estate world.
Whether a firm is 3D printing homes, searching for solutions to implement on a wider scale, or holding a competition that brings hundreds of great minds together, the country as a whole is working to solve an issue that has needed attention for years.
Will these be the companies and organizations that create affordable housing for everyone? It’s impossible to answer that right now. However, innovation and creativity are happening and it’s worth looking at. Things could be different in construction and real estate soon.