Beyond costs, what else can we do to make housing affordable?

This week on Extra Crunch, I am exploring innovations in inclusive housing, looking at how 200+ companies are creating more access and affordability. Yesterday, I focused on startups trying to lower the costs of housing, from property acquisition to management and operations.

Today, I want to focus on innovations that improve housing inclusion more generally, such as efforts to pair housing with transit, small business creation, and mental rehabilitation. These include social impact-focused interventions, interventions that increase income and mobility, and ecosystem-builders in housing innovation.

Nonprofits and social enterprises lead many of these innovations. Yet because these areas are perceived to be not as lucrative, fewer technologists and other professionals have entered them. New business models and technologies have the opportunity to scale many of these alternative institutions — and create tremendous social value. Social impact is increasingly important to millennials, with brands like Patagonia having created loyal fan bases through purpose-driven leadership.

While each of these sections could be their own market map, this overall market map serves as an initial guide to each of these spaces.

• Social impact innovations
• Landlord-tenant tools
• Innovations that increase income
• Innovations that increase transit accessibility and reduce parking
• Innovations that improve the ability to regulate housing
• Organizations that support the housing innovation ecosystem
• This is just the beginning
• I’m personally closely watching the following initiatives
• The limitations of technology
• Move fast and protect people

Social impact innovations

These innovations address:

• Health outcomes, such as Kaiser Permanente’s $200 million investment into housing and the Building Healthy Places Network;
• Homelessness, such as the Housing First movement and Community Housing Partnership’s use of modular building techniques for homeless housing;
• Rehabilitation for vulnerable populations, such as the Delancey Street Foundation; and finally
• Education, such as the National Housing Trust’s initiatives to place affordable housing next to good school districts.

To promote long-term affordability, community land trusts and limited-equity cooperatives — often together — are used. In limited-equity cooperatives, housing is collectively owned by residents, units of which are limited in their resale value to promote affordability for future residents. They are often paired with community land trusts, which may own the ground leases and veto efforts by residents who wish to remove resale limitations and profit from increases in home values.

One example combining the features of these two forms is the East Bay Permanent Real Estate Cooperative (“PREC”). Given the complicated legal nature of these arrangements, law firms like the Sustainable Economies Legal Center assist innovators like PREC.

There are also innovators who target affordable housing operators. Boodskapper, for instance, uses artificial intelligence to help optimize inspections and maintenance requests for public housing projects. Haven Connect helps broader affordable housing operators fill their units faster, by providing “Turbo Tax for affordable housing” for applicants and modern waitlist management for operators.

Landlord-Tenant Tools

Even if someone lives in more affordable housing, there’s no guarantee that this housing is high quality. Various tools exist to equip renters to navigate laws and obtain information to ensure their housing is up to par. Justfix.nyc services tenant organizers who hold landlords accountable.

Heat Seek documents temperature data for residents who do not have sufficient heat in their apartment and can use the data as evidence for legal claims against their landlords. Community.lawyer offers document workflows to help tenant lawyers. Rentlogic grades buildings on their ability to respond to formal complaints about violations of building codes that impact safety and cleanliness.

Eviction Lab is a nationwide database about evictions, whose purpose is to help housing activists and policymakers make better decisions (though it has been subject to various critiques about its community engagement and data collection strategies). DoNotPay is using its technology that famously contested 160,000 parking tickets to help the “newly evicted file for housing aid.”

Innovations that increase income

Housing affordability is a function of the cost of housing against a resident’s income. As a result, if incomes can increase without significant raises in housing costs, housing becomes more affordable.

The first set of innovations reduce the risk of small business creation, which is one critical way residents may increase their income.

These efforts include affordable coworking that reduces the cost of office space for businesses (e.g., ImpactHub and Kettlespace), co-retail that reduces the cost of space for service businesses (e.g., Underground Market, night markets and bazaars like Brooklyn’s Smorgasburg, Makerhoods, and Mercado La Paloma), services that help entrepreneurs reduce the need to rent expensive physical space (e.g., CloudKitchens for restaurants and Shortcut for barbers), and services that ease remote work and virtual offices (e.g., OwlLabs).

The second set helps residents make more money through sharing economy initiatives, such as room rentals (Airbnb), pet services (Rover and Wag!), parking (Silofi), and storage (Neighbor).

Some take sharing economy ideas even further. So-called “platform cooperatives” encourage mutual ownership of the technology platform. Stocksy, for instance, is mutually owned by artists who sell their services on the platform. Platform cooperatives are tech-inspired versions of historical efforts to increase worker and employee ownership so that these underserved groups can develop more wealth. These include worker-owned cooperatives and employee-owned stock ownership programs.

The final set increases worker bargaining power to help them raise their income and benefits. Coworker.org uses a platform to help workers voice their concerns and create changes in their environment. Inspired by labor unions, The Workers Lab, more generally, funds initiatives like these.

Innovations that increase transit accessibility and reduce parking

Housing also can become more affordable when it’s cheaper for people to live in more distant, yet more affordable neighborhoods. Especially when residents can get around without the expense of a car, they have more money in their pocket to spend on housing or other life necessities.

Some innovations target consumers directly. Bus-like or carpooling alternatives, such as Dollaride, Via, and UberBus, may allow residents to live further away without significantly increasing mobility costs. Car-sharing, such as those of Getaround, Turo, and Zipcar, also reduce car ownership. For short-to-medium-sized distances, micro-mobility innovations like shared bikes and scooters help residents travel without a car.

The uncertain future of shared electric scooters

Developers can do more too. Smart growth and transit-oriented development are a set of strategies to link housing and transit, thereby reducing mobility costs for residents and parking costs for developers. Coord, which provides transit, bike-sharing, and curbside data, can help developers find such lots.

Furthermore, as one developer found, partnering with transit innovators can save costs by avoiding parking requirements. Finally, developers may consider organizing community-oriented investments into bus rapid transit or bike-only lanes, partnering with tools like Neighborly. Cash-strapped cities may be grateful for the help, which provide more affordable mobility options.

Innovations that improve the ability to regulate housing

Some technologies improve the government’s capacity to govern housing, which can accelerate the production of quality housing. Camino.ai and Symbium help make government regulations, such as the development permitting process, easier to navigate.

Numina, ZenCity, and ClearRoad use data to help governments build more responsive policies with regards to housing and transportation. Efforts like CoProcure, Startup in Residence, Avisare, and Atlas’ procurement toolkit are addressing the procurement and innovation problem. UrbanLeap helps governments, such as those in Las Vegas and Pittsburgh, assess their vendors and pilots better.

Organizations that support the housing innovation ecosystem

 

Beyond initiatives that directly create housing innovations are organizations with national reach. These include those that:

• • Fund or incubate innovations, such as Urban.us (Shaun Abrahamson and Stonly Baptiste), MetaProp (Zach Aarons and Leila Collins), Urban Innovation Fund (Clara Brenner and Julie Lein), Enterprise Community Partners (Matthew Hoffman), Kairos (Ankur Jain), Urban-X (Micah Kotch and Greg Lindsay), Dreamit Ventures (Andrew Ackerman and Charles LaCalle), Hub at Company (Robinson Hernandez and Matt Harrigan), NYC Economic Development Corporation (Jonathan Lane and Karen Bhatia), Urban Futures Lab (Pat Sapinsley), Blue Ridge Labs (Hannah Calhoon), NYC’s Civic Hall (Andrew Rasiej and Jessica Quinn), Boston’s Housing Innovation Lab (Marcy Ostberg and Mayor Marty Walsh), Oakland’s Civic Design Lab (Kiran Jain and Mayor Libby Schaaf), City Innovate’s Startup in Residence (Jay Nath), Terner Center for Housing Innovation’s Innovation Program (Michelle Boyd), Chan Zuckerberg Initiative (Ruby Bolaria), and Fifth Wall (Brendan Wallace).
  • Produce research and content to understand the problem or new solutions, such as Shareable (Neal Gorenflo), Harvard University (Ed Glaeser), Shelterforce (Harold Simon), CityLab (Richard Florida and Kriston Capps,), CityLab’s Technopolis Podcast (Molly Turner and Jim Kapsis), NextCity (Oscar Abello), New York Times (Emily Badger and Conor Dougherty), HIVE (Jennifer Castenson), Market Urbanism (Adam Hengels), PolicyLink (Michael McAfee and Angela Glover Blackwell), Urban Institute (Sarah Rosen Wartell), Brookings Institute (Amy Liu), TechCrunch (Kim-Mai Cutler, Danny Crichton, Arman Tabatabai), Fels Policy Research Initiative (Diana Lind), Bloomberg Tech (Joshua Brustein), Curbed (Patrick Sisson), CB Insights (Construction Tech and Real Estate Tech), Wall Street Journal (Laura Kusisto), McKinsey Global Institute (Jonathan Woetzel and Jan Mischke), Change Order Podcast (David Friedlander), Trulia (Issi Romem), and the Terner Center for Housing Innovation (Carol Galante).
  • Advocate for new policies and create partnerships, such as NewCities (Sebastien Turbot and John Rossant), Tech-Equity Collaborative (Catherine Bracy), NYC’s Housing Data Coalition, California Renters Legal Advocacy and Education Fund (Sonja Trauss), Urban Tech NYC’s The Grid, NeighborWorks (Marietta Rodriguez), Adrienne Arsht Center for Resilience (Kathy McLeod), Aspen Institute’s Center for Urban Innovation (Jennifer Bradley), What Works Cities (Simone Brody and Jennifer Park), Meeting of the Minds (Gordon Feller and Jessie Hahn), Living Cities (Ben Hecht and Brinda Ganguly), 100 Resilient Cities (Michael Berkowitz), HR&A’s Inclusive City practice (Andrea Batista-Schlesinger), Rethinking.RE (Dror Poleg), and the Housing Innovation Alliance (Betsy Scott).

This is Just the Beginning

This is the first attempt at putting such a dynamic and cross-cutting set of companies onto a map — I will continue to iterate.

I’m personally closely watching the following initiatives

Democratizing housing ownership and production. As I discuss in Shareable, most housing is owned and produced by a few. I’m excited about methods to help low- and middle-income people pool resources to produce permanently affordable housing.

By pooling resources together, they can increase their bargaining power and capture economies of scale, like what big corporations do every day. Promising methods include increasing renter ownership (e.g., ROC USA and community land trusts), helping consumers to finance and build housing (e.g., Cobuy and Cover), and bolstering resident income (e.g., platform cooperatives and co-retail).

Housing as social intervention. Housing is a critical resource that promotes physical stability, relationship-building, and access to life-changing resources, such as jobs, schools, and mobility. Given how difficult housing innovation is to do, most innovators, understandably, focus on creating cheaper housing.

Nonprofits and governments — which are often resource-strapped — lead most of this work. Finally, Millennials, whose buying power will soon outpace the generations before it, increasingly care about social impact where they work and buy.

With these trends in mind, innovations to design housing as “social intervention” are promising, a term popularized by Karen Kubey. Examples here include new financing tools like Small Change, Blokable’s partnerships with mission-driven nonprofits, and efforts listed above to design housing to promote health, mobility, and rehabilitation.

Mobility is of special note. When density arises without sufficient ways to travel freely, support for more housing will drop. See, for instance, opposition to housing due to effects like increased traffic. As a result, addressing the second-order effects of more housing is critical for long-term support of an inclusive housing agenda.

Legal and regulation technologies for the masses. With the help of legaltech and regtech, new startups can help more navigate zoning and building codes and obtain legal help in housing disputes, as I document in TechCrunch. Rarely do low-income tenants use the law to their advantage. 86% of civil legal problems in the U.S. are reported to have received inadequate or no legal help.

As Matt Desmond’s 2016 book Evicted makes clear, the privileged, such as landlords, use one critical legal tool — evictions — to maintain the profitability of slum housing. This tool has devastating consequences for the reproduction of social inequality. Look to Justfix, Heat Seek, Cover, Symbium, and Camino, for instance, to help everyday consumers navigate laws more effectively.

The limitations of technology

But as much as technology can help, it has its limits. Those with the most resources may use technology to serve their own interests.

One way forward are policies that encourage new actors to participate in housing development and management, as I discuss in the Columbia Public Policy Review. These policies can incentivize public benefit developers, such as community development corporations, and community-driven developers, such as baugruppen and homeowners who want ADUs, who build housing that is affordable by design.

Furthermore, these policies must further encourage testing to ensure innovations actually improve people’s lives, while mitigating harms.

Preliminary research shows such methods may garner community support necessary for more housing supply. When new developments include units that serve those with more modest incomes, voters — both conservative and liberal — are more likely to support them, according to MIT and Harvard research.

Yet simply having more affordable units is insufficient. Residents ask who gets to develop and benefit from housing. When potential voters see that a major developer will likely earn a large profit from their new building, their opposition to the project increases by 20 percentage points.

Voters are twice as likely to oppose development for this reason than due to traffic congestion. By answering such questions about distributive justice can we gain further insight into the opposition against increasing housing supply. Many urban residents, as UCLA urban planning professors contemplate, may perceive that “only deep-pocketed and aggressive developers can afford to build.”

Future work could discuss government innovations like the above. Others in this vein include pilots, public-private partnerships, and new policy and taxation frameworks from around the world. Tokyo’s Urban Renaissance Law of 2002, the land value tax or tax increment financing, and Minneapolis’ recent ending of exclusionary zoning policies come to mind.

Other housing policy innovations are surveyed here. While the focus of this piece is on business innovations, these policies form regulatory opportunities that entrepreneurs cannot ignore.

Other topics ripe for exploration are neighborhood and city-building efforts. So-called smart cities and housing, for instance, aim to improve municipal services and livability, using data and emerging technologies like machine learning. Sidewalk Toronto and UNStudio’s Brainport Smart District are prominent examples.

Writers like Ben Green, however, demonstrate the dangers of prioritizing technological efficiency above all. Building on such critiques, some efforts explicitly frame themselves around sustainability, justice, and community.

The “Sharing Cities” and “Circular City” movements are examples of this sort. Neal Gorenflo, Sheila Foster, Julian Agyeman, and Duncan McLaren extend this work, often focusing on innovations driven by residents and community-based organizations, rather than large corporations.

Finally, future work can delve deeper into many of these topics. Of particular note are social impact innovations that connect housing to multiple social aims.

Many nonprofits are taking the lead in using housing to bolster sustainability, rehabilitation, and welfare for the middle-income and underserved, such as the homeless and low-income populations. Inclusivity goes beyond cost.

It acknowledges the critical social circumstances that enable or block people from building happier, healthier, and more meaningful lives. If designed appropriately, the home — and the neighborhood in which it is embedded — has the potential to do so.

Move fast and protect people

Ultimately, innovations here can generate both economic and social value.

Housing is a basic human need — one that will become harder to access as population and property values continue to grow. Every year, the U.S. economy is losing $1.6 trillion to high housing costs. We lose wages and productivity because people cannot afford to live where they’re best suited.

Yet as much as innovation is sorely needed, it must be responsible. When human lives are at stake, innovators cannot just move fast and break things. Instead, they must engage with communities, protect stakeholders, and meticulously test that their solutions work. In spaces like housing, innovators may need to move from minimum viable to minimum virtuous products.

Emerging research, for instance, details that simply increasing housing supply may have harmful effects on neighborhoods. Instead, more housing can be built to be affordable by design using many of the tools discussed here. This housing can then be connected to initiatives that sustain permanent affordability, like community land trusts.

Innovators have an opportunity to create a better world. When more can meet their basic needs regardless of their circumstances, more can achieve happier, healthier, and meaningful lives.

The billion-dollar financings of Opendoor, Katerra, and Compass are just a taste of what’s to come.

Please feel free to let me know what else is exciting by adding a note to your LinkedIn invite here.

If you’re excited about this topic, feel free to subscribe to my future of inclusive housing newsletter by viewing a past issue here.