Access to Housing
Our house provides us with a sense of belonging and serves as a sanctuary where we can retreat from the chaos of the world. Once we accept the importance of housing, our focus needs to shift to how we can make it more accessible.
.webp)
The Problem
The concept of a house has been fundamental to human history. The German philosopher Otto Friedrich Bollnow described man as “a fugitive on earth” who only gains his footing in the world through the walls of his house; a place that protects him from the outside world.
Your house affects every aspect of your daily life. It determines which community you belong to, which jobs you are able to commute to, which schools your children go to and which social services you have access to. It also affects the society you live in. Housing impacts, among other things, productivity levels, family sizes, poverty levels and social mobility.
Once we accept the importance of a house in human history for the emotional and social wellbeing of people, as well as the economic success of countries, our focus needs to shift to how we can ensure stable and affordable housing for everybody.
However, the reality is far from this ideal.In the United States alone an estimated 3.7 million people reported some form of housing insecurity. At least half a million people are homeless. 11 million Americans allocate more than 50% of their income towards rent. There is currently a deficit of over 7 million affordable homes for low-income renters in the United States.
Is this really a problem worth solving?
Stable and affordable housing is a requirement for stable families and communities. Millions of Americans have encountered eviction, homelessness, and housing instability, all of which contribute to, amongst others, financial instability, detrimental stress, and inadequate academic performance among children.
Housing is everything
As Works in Progress puts it:
Try listing every problem the Western world has at the moment. Along with Covid, you might include slow growth, climate change, poor health, financial instability, economic inequality, and falling fertility. These longer-term trends contribute to a sense of malaise that many of us feel about our societies. They may seem loosely related, but there is one big thing that makes them all worse. That thing is a shortage of housing: too few homes being built where people want to live. And if we fix those shortages, we will help to solve many of the other, seemingly unrelated problems that we face as well.
Systemic societal risk
Housing insecurity results in an inability to maintain stable employment or pursue educational opportunities, which can lead to a cycle of poverty and economic instability. This, in turn, leads to increased demand for public services, such as welfare and emergency housing, which can strain government budgets. The most recent US budget included $7.5 billion in funding for rental assistance, as one example of the strain the housing crisis is placing on government coffers.
Housing affordability also affects the wider economy, as it limits the ability of people to participate fully in the workforce and contribute to the economy. Most innovation happens in cities. That is where the capital, labor and innovations are. For example, the Bay Area has more venture funding available than the entirety of Europe. But due to the severe housing constraints in the region, innovation and productivity in this hub of economic activity are unnecessarily restricted.
Based on one study, the adoption of less stringent regulations on constructing denser housing in only three cities - New York City, San Jose, and San Francisco - could result in the migration of millions of workers to jobs that utilize their abilities optimally, causing an 8.9% rise in the total GDP of the United States.
A risk to personal health and wellness
As much as housing has a societal impact, it directly impacts individuals too. The escalation of housing expenses is frequently cited as a driver behind individuals holding multiple jobs, which can adversely affect their mental and physical well-being. Prolonged commute times stem directly from the scarcity of affordable housing, which result in lower-paid workers being compelled to live further away from their workplaces. Research indicates that individuals who undertake lengthy commutes to and from work consistently face more stress and lower moods.
Housing insecurity also leads to negative health outcomes. People with a small income may be compelled to rent subpar housing that can pose serious health and safety hazards, such as vermin infestations, mold growth, water leaks, and insufficient heating or cooling systems. Or, they may be compelled to cohabitate unsafely with others, leading to overcrowding, which has its own negative mental and physical consequences. The dangers of overcrowding on the spread of disease was clearly highlighted during the COVID pandemic.
Research shows that frequent relocation - moving three or more times in a year - has been linked to adverse health consequences in children, including chronic illnesses, suboptimal physical health, and a higher likelihood of lacking sustained health insurance coverage. This does not cover the severe and well-documented impact of homelessness on physical and mental health.
Inability to advance
Due to the cost of housing in economic hubs such as New York City and San Francisco, the ability of lower and middle income workers to move to these cities have been severely curtailed. Economists have deduced that this hurdle, among other factors, has contributed to a deceleration in the pace at which less affluent American states have been narrowing the economic gap with their more prosperous counterparts.
Apart from the macro-economic impact, housing insecurity also leads to an inability to advance on a very individual basis, and can make it difficult for children to attend school regularly. Frequent moves can hinder individuals and families from forming enduring connections with their communities. Research has also shown that children forced to live in high-poverty areas are less likely to go to college, have lower incomes and are more likely to be a single parent.
The scarcity of housing is one of the most pressing concerns of our time, and it is crucial that everyone makes it a top priority. It has severe implications for individuals, communities and economies. Resolving this challenge could vastly improve people's lives, not just by giving them access to stable and affordable housing, but also by fostering tighter-knit communities, promoting better employment prospects and raising living standards.
Further on, we will explore some of the bottlenecks preventing access to housing. A bottleneck, for those unaware of the term, is a factor that hinders the efficient functioning of a system, and we explore everything from zoning regulations to better transit systems, and the startups that plan to get these ideas off the ground.
Subscribe to The Deep End Digest
Bottlenecks to building more housing
It might seem simplistic, but as populations grow, we are simply running out of space close to urban, productive centers. While we cannot create more space, we can use the space we have more efficiently. In many cases, zoning and regulatory regulations limit the amount of housing that can be built in a given area. We explore solutions to these problems below.
How do we overcome spatial barriers and improve zoning regulations?
1. Upzone the neighborhood
Upzoning refers to the process of changing the zoning laws or regulations in a particular area to allow for more intensive development, such as the construction of larger buildings or an increased number of units on a specific piece of land. The bottom line is that changing restrictive zoning laws will increase the supply of housing.
A significant hurdle is posed by local zoning regulations that restrict the development of anything other than single-family detached homes on 75% of land in most United States cities. This is unusual compared with the rest of the world. Local governments in the United States are slowly changing this practice, with the Minneapolis City Council, as an example, passing a vote to permit three housing units on each residential parcel.
PadSplit, an Atlanta-based co-living start-up, focuses on creating more housing options by subdividing existing single-family homes and apartments to create additional bedrooms, shared common spaces, and bathrooms. This approach aims to provide more affordable housing options for individuals and families who might otherwise struggle to find suitable accommodation.
Relaxing zoning regulations is gaining steam in other major cities too. The mayor of New York City is also now supporting amendments to the city's zoning code to facilitate the construction of housing. Among the proposed changes is the elimination of restrictions on the construction of studio apartments, as well as the elimination of requirements for a minimum number of parking spaces to be included with housing units.
Based on historical data, cities in the United States actually have remarkably low population densities and are widely spread out. If New York City was to permit the level of densities in line with the historical data, some economists suggest that the cost of housing would drift toward the cost of construction, and the city's population could potentially double.
Kim is partner at Initialized who invests in proptech, real estate, and climate. In 2014, her essay on TechCrunch titled "How Burrowing Owls Lead To Vomiting Anarchists (Or SF’s Housing Crisis Explained)" sparked almost a decade of public advocacy that changed a number of state laws in California around housing and zoning.
%20(1).webp)
2. Get creative on public lands
The current housing crisis is an ideal time for architects and local governments to get creative. Within the District of Columbia and Virginia, local governments are on the hunt for public lands and buildings to build around or on top of, including vacant lots, libraries, fire stations, and schools.
In Alexandria, Virginia, this approach is already paying dividends, with a total of 64 housing units developed at an unused fire station. The local government in Arlington, Virginia, is exploring the possibility of utilizing land adjacent to a metro station for a potential housing project.
California lawmakers also recently enacted a set of laws that seek to convert commercial areas such as retail centers, office buildings, and parking lots into countless housing units.
3. Get the trains running
Once the limit is reached on how many people can be housed within a productive city center - and we need to acknowledge that you can’t have an unlimited number of people within spaces - the focus has to shift to effective public transit to ensure suburban populations can easily reach productive centers.
The Boring Company, an Elon Musk invention, is a tunnel construction and transportation company that aims to alleviate traffic congestion by building a network of underground tunnels that can transport vehicles and pedestrians at high speeds using electric sleds or pods.
The answer, however, might be less exciting. Sensible investments in and upgrades of public transports systems, such as subways and suburban train systems, might be all that is required. It is also essential that commuters feel safe on public transport - a recent lesson from New York City - to ensure that commuters actually use the system and roads do not become clogged up.
Capital is needed throughout the housing process. Occupants need capital for down payments on houses or rental deposits, and for the upkeep of the property after acquiring it. Housing developers need capital to acquire land and build new housing. The government needs capital to fund affordable housing projects.
However, there just isn’t enough capital to tackle the crisis of access to housing. More than half of households in the US are unable to afford a home priced at $250k, despite the median home price across the nation over $400k. We look at some solutions below.
How do we improve access to capital?
1. Fractional ownerships
Fractional ownership is an up and coming approach to homeownership, where you essentially buy shares in a house. Fractional ownership can vary in terms of the approach, but there are always certain common factors - a flexibility that traditional home ownership doesn’t afford, and a lack of downpayment.
Roots Homes, an On Deck company, is one such startup that offers a fractional ownership model, disrupting the traditional approach to homeownership. Through them, renters can purchase shares in their home every month. They never have to buy the home from Roots if they don't want to, but they can do so, giving them the middle way between renting and ownership.
The equity that renters accumulate over time can be used in different ways - towards a down payment on the property, held in the property, or even cashed out if they decide to move out. Lauren Self, the CEO of Roots, recently spoke to The Deep End and shared how the Roots Home approach might be the solution to unlock homeownership for millions of Americans.
Point is another platform that offers homeowners the opportunity to sell fractional interests in their homes in exchange for a share in the property's future appreciation. Unlike traditional lenders, Point can underwrite to more forgiving standards and cater to people with lower credit scores, as there is no monthly payment or interest rate. This approach to home financing provides homeowners with greater flexibility and helps to expand the pool of buyers who can enter the housing market.
Lauren is the CEO of Roots, a platform helping making home ownership flexible.
.webp)
2. Make it cheaper to build
The theory, at least, is that cheaper construction costs will drag down the cost of housing for buyers. This is not always the case, as the cost of access to housing and the cost of construction is not always correlated. For example, in San Francisco, the production cost for a developer for an average house is $281,690, but that same house will sell for around $800,000. However, the cost of building does have a direct impact, particularly when building your own home.
One company taking an innovative approach to decreasing housing costs is Module. Module's approach to home building allows for buyers to start with a smaller prefabricated home and expand as needed. The company specializes in constructing one, two, and three-bedroom homes, with a median size of approximately 1,000 square feet, which is smaller than the average single-family home built by traditional builders. By utilizing modular and incremental building techniques, the company aims to create customizable housing on vacant land within Pittsburgh's urban core.
Some other solutions are less obvious. The construction industry is heavily dependent on immigrant labor. In both the United States and Europe, there has been a tremendous shortage of the required labor in recent years. The World Economic Forum has suggested that relaxing immigration policies will be instrumental in reducing housing costs by lowering development expenses and mitigating labor shortage.
Peter Light is the co-founder and CEO of Lumen, a company that helps you uncover the clean energy fortune hiding in your buildings.
3. Properly assess and tax the value of land
Accurately assessing and taxing the value of land is one of the most complex problems to understand, and solve, but also one of the most important. The theory stems from the American philosopher Henry George and his 1879 work, Progress in Poverty. In brief, George argued that the value and worth of land ought to be shared among the whole society, not just the landowners. This would be achieved through a tax on the value of land.
As George came to understand, enhancements made to a specific neighborhood, such as the construction of a new road or the installation of streetlights, would also accrue wealth to local landowners, whose property value increased, but would be paid for by the general population. One of the consequences of the current housing crisis is that the overall impact has been the concentration of wealth in the hands of homeowners.
Taxation of the land can lead to more affordable housing by discouraging land speculation and encouraging more efficient use of available land. Additionally, revenue generated from property taxes can be used to fund affordable housing programs and infrastructure improvement.
ValueBase, an ODX company, is using land-first models to value property more accurately, bringing George’s theory into the 21st century. They automate much of the appraisal process for municipal property tax assessors by using data from various sources, such as weather balloons and aerial photography vendors. Valuing the land first, instead of the buildings on the land, can result in greater accuracy of the value of the land, as it provides access to more comprehensive information about the land's characteristics, such as proximity to schools and jobs, level of street noise and pollution, and availability of scenic views.
Will is the co-founder and CEO of Valuebase, a company building land-first models to provide mass appraisal modeling and property valuations with unparalleled accuracy.
.webp)
NIMBY is short for “not in my backyard", a term that emerged in the 1980s to describe neighbors who resist nearby development, especially if it involves apartments. This resistance often takes the form of inundating developers with complaints and objections to slow down or deter construction.
In some cases, NIMBY opposition has taken more unusual forms, such as a town in California that designated its entire area as a protected mountain lion habitat to block new housing. Another example is a single council member in New York City that is obstructing the construction of a housing development in the Bronx. The development consists of roughly 350 units, including apartments for older people and veterans.
NIMBYism complaints primarily focus on issues such as parking availability, strain on community resources, environmental preservation, and preserving the character of the neighborhood. It might seem trivial, but as California Governor Gavin Newsom told the San Francisco Chronicle, “NIMBYism is destroying the state.”
The type of NIMBYism that one most often thinks of are wealthy enclaves resisting the development of affordable housing closeby, similar to what has happened in Atherton or Huntington Beach.
But objections to any housing problem considered to worsen gentrification by community groups has also reached a level where developments are stalling to a halt. Consider the story of Bob Tillman, who had to spend almost five years and $1.4M to transform his San Francisco laundromat on Mission Street into housing units against community objections related to gentrification.
We look at some solutions to these problems below.
How do we overcome NIMBYism?
1. Get your ducks in a row
NIMBYism objections and delays often revolve around insufficient or incorrect permits, planning documents or environmental surveys. Take the previously mentioned San Francisco laundromat, who had to conduct a 137-page historical resource evaluation, costing $23k, based on a claim that community groups previously had offices in the laundromat. Some objections to permits are valid, but it's also an easy opportunity for those looking to delay the project based on technicalities.
One startup helping to overcome this barrier is PermitFlow, an On Deck Company company. PermitFlow is a software startup that automates the permit application and approval process for businesses, contractors, and government agencies. The software streamlines the workflow, simplifying the application process and expediting the approval of construction permits, environmental permits, and business licenses.
2. Address legitimate concerns
Some NIMBYism attempts are illegal. California Governor Gavin Nelsom has recently started enforcing these anti-NIMBYism laws more aggressively, including a first-of-its-kind investigation into San Francisco's development process, which is known for its complexity and slow pace.
But not all complaints related to a development are without merit. When attempting to address the concerns of those who are opposed to a development project, it is important for developers to evaluate the legitimacy of the objections, and address those with merit.
However, if all legitimate concerns have been addressed and opposition still persists, the opposing parties can be deemed to be making illegitimate objections. In this case, any further opposition can be deemed inappropriate or even unlawful by the local government when making its final decision about the land use proposal.
Engaging the community in the early stages of a development project can also lead to less resistance from neighbors. Providing clear and objective information can help alleviate concerns and reduce the likelihood of contentious debates, and can ensure that development is tailored to meet the needs of the neighborhood
Housing designs and the cost of housing are directly correlated. Some of it is intuitive - a bigger house is more expensive and costs more to heat and maintain. But the type of materials used, the type of architectural designs employed and the construction methods of the house all play a role. We explore some of the ways we can increase access to housing through changing the way we design homes.
How do we overcome design challenges?
1. Use new materials
New materials can play a significant role in making housing more affordable and sustainable by improving the durability and energy efficiency of homes, reducing maintenance and repair costs, and lowering the environmental impact of construction. There are a multitude of new materials and construction designs constantly being developed and tested, including cigarette butt bricks and rammed earth.
One such material is cross-laminated timber (CLT). CLT is a sustainable, engineered wood product that can be used to construct buildings efficiently by gluing layers of wood together at right angles to create a strong, stable panel. CLT has excellent insulation properties, which can reduce heating and cooling costs for homeowners. Effective insulation is critical to reducing energy consumption and thereby lowering energy costs for families. Many of the new materials do this effectively.
Another example is insulated concrete forms (ICFs). ICFs are blocks or panels made of foam insulation that are used to construct walls and foundations. Concrete is poured into the ICFs, which provide excellent insulation and strength. ICFs can reduce heating and cooling costs by up to 50%, making them an excellent choice for energy-efficient homes. Habitat for Humanity has recently announced they will be building their homes with this material.
2. Mass production
The mass production of housing is essential in the quest to increase access to hosting. Housing components can be made in a factory setting where they are subject to quality control and can be produced more efficiently than during on-site construction. The components can then be transported to the building site and assembled quickly, reducing the time and cost of construction.
Zero Homes, an On Deck company, specializes in crafting custom smart homes. With their innovative approach to home design, they have plans to expand their business and move towards mass production in the near future. Listen to their Deep End episode here.
Another intriguing startup working on mass production of modular homes is Cover. Cover's approach involves producing fully assembled wall, floor, and roof panels in their factory and delivering them to the construction site on a standard truck for on-site assembly - all without the need for a crane.
Apex Homes is another company aiming to perfect this system of construction. In their manufacturing facility, a house can be completed in a matter of weeks - a marked improvement from the standard seven-month duration. After the modules were transported from the factory, the construction of the house on-site can be accomplished in a few days or even hours.
The New York Times recently covered the rise of the tiny house - noting innovative designs that require less space without necessarily reducing utility, questioning whether it might be a solution to the housing crisis.
Riley Meik is the co-founder of a stealth, yet-to-be announced company building net zero homes at scale.
3. Design technologies
The rise of AI and the improved quality of software are already playing a role in reshaping the way we design homes. Computer-aided design software like Figma can help reduce housing costs by streamlining the design process and making it more efficient. Digs is another software startup specifically designed to make the construction industry more collaborative and digitally native.
Architects can create detailed digital models of buildings, which can be analyzed to reduce waste and save resources. These technologies also enable effective collaboration between team members, regardless of their location, allowing experimenting with different design options from across the globe.
.png)
.png){kind=logo}
.png)
.jpg)
