Why Isn’t the Housing Industry More Innovative?

What are the barriers or reasons preventing the housing industry from pursuing more innovation faster?

What might incentivize stakeholders to create more innovative design and construction technologies, thereby making housing more affordable and scalable?

And what are some promising innovations or technologies in housing?

Please share any thoughts, comments, links, or examples in the comments below!

Also, are there any case studies you know of where barriers to innovation - whether regulatory, or cost-related, or otherwise - were overcome in a way that was really creative, or stood out to you as a novel approach?

@sinnodk, @Localizedworld, @ymedan, I wonder if you have thoughts on this?

This discussion is related to our Charter Communities Prize Design, which will seek to transform public housing and provide a self-sustaining life beyond subsidized housing.

One thing we’ve been hearing is the construction industry has too much of a focus on customization and too many different siloed actors participating in a single project that is assembled onsite. We’ve only just begun investigating concepts like off-site, prefab construction of entire units, and digital platforms that enable collaboration during the entire design and construction process from beginning to end. What are some examples of these concepts that may already be in action?

@Avideh, @stevenfallon, @tonyaturbanhabitat, I wonder if you agree and/or have additional insights on this question?

@evanloomis, you might also have an opinion on this!

My research as a student is in robotics and AI’s potential effects on architectural design. That, to me, seems to be the most promising way to solve affordable housing. With these new tools, we can decrease the cost of building significantly due to decreased labor and material costs.

A lot of work has been completed in this domain, in both academia and the field of architecture.

In partnership with New Story, ICON, co-founded by @evanloomis is one of the few firms making big moves toward making robotics in construction a reality, and I’ve actually done quite a bit of research into the potential of his 3D printing technology in affordable housing.

In time, with advancements in AI, we can solve those problems where customization and collaboration smoothen out such that its no longer a problem. Architects, designers, computer specialists, and construction managers all have to approach this carefully though.

Other companies and projects working on robotics, AI, and digitization:

MX3D, Fab-Union, Gramazio and Kohler. I’d look further into Fab-Union and Gramazio and Kohler; they’re the pioneers in this. Fab-Union uses various methods and materials for construction, including brick, 3D-printed materials, wood and timber, and weaved fiber structures. Gramazio and Kohler have partnered with ETH Zurich for over 10 years. Their first published work I know of is from 2008. MX3D is just starting to enter the field with some 3D printed bridges and structures.

For more on this, I would suggest “Towards a Robotic Architecture” by Dr. Mahesh Daas. It’s one of, if not the most, comprehensive books on robotics and architecture written to date.

Other thoughts:

-From my research as a student, barriers toward innovation in the housing industry is stemmed in policy and regulation and code in how we design and build our homes.
-Civil/structural/geotechnical engineers are less open to change. They know what works, works, and what might work, might work. But saying ‘this might work’ as a professional engineer that is stamping drawings and plans is a huge risk to yourself and the public.
-Approval processes need to be either smarter or more lenient, and I’d prefer smarter. What I mean by smarter is that, in the current process, at least in my experience, a developer has a goal for a project: X units that brings in $Y; they go to an architect with that goal, and the architect conceives a design. Then, that design is presented to the public, who usually oppose it, due to its scale or design. The architect then has to go back to the drawing board, sometimes starting from scratch again, while still trying their best to reach the developer’s goal. This back and forth communication and design reiterations can cost upwards of 30% in additional design costs. If cities or firms can initiate smarter approval processes that are more transparent and allow for communities to have input on the design and scale of our buildings prior to them being published for approval, the approval process may be cut down significantly. We can also investigate eliminating single-entity ownership from the equation entirely: Dawn of a ‘Smart’ Era. Architecture is becoming smart… | by TMD STUDIO LTD | TMD STUDIO’s Insights | Medium

-Parking requirements need to be eliminated. I don’t have research to back this up, only experience from a project or two in Boston, but the cost of construction gets cut significantly when parking minimums aren’t a mandate that need to be met.

Thank you for sharing your insights, @stevenfallon! This is super helpful. I like your ideas for speeding up the approval process and involving the people who will live in the houses we’re building. Rather than present them with a complete plan for feedback, it makes sense to me to ask them during the design process what they actually want.

I wonder if you, and others, could elaborate on this point:

I realize there are different rules and regulations in every city and state, but are there any in particular you think we should be aware of as we design this prize competition?

Perhaps @atrueblood, @Sarah_Darr and @leahpeker could weigh in on this as well?

Wow, thank you @stevenfallon for providing such awesome feedback! A lot of the industry’s pain points you summarized so succinctly have also been voiced by other experts we’ve spoken with–more positive reinforcement for our team to develop an XPRIZE that can hopefully address many of these areas that are ripe for innovation.

@hikmat, @casagrande, @mickeynorthcutt, you may also have an opinion on this. Please join the discussion!

Why Isn’t the Housing Industry More Innovative?

  1. Introduction

I am first to admit that I do not have practical knowledge and in-depth research on this topic, but I will, however, attempt the contribution from the research we have conducted at Peniel Impact on the subject of innovation.

Baring in mind of course that we are to be rooted in first principles thinking in these discussions, one has to first understand the interplay between innovation and technology and how we shall use these terms interchangeably as they mean the same thing to us.

“Technological change refers to alterations in methods of doing things while innovation is mainly about coming up with and implementing new viable ideas and may include improving on the already existing thoughts” according to researchgate. So we shall address both approaches to advancing our civilisation.

  1. The Global Innovation Watertable

Let’s dive in! I would first like to paint a picture of what has happened regarding innovation over the last 40-60 years, at least in the eyes of Peter Thiel in his speech developing the developed world delivered at Credit Suisse in 2013.

“There is a future that we envisioned in the 1960s, that future has not quite lived up to what the people expected, one could argue”. And maybe only until recently, say the last 10 years has our utopia been rekindled again, this part of the comment is mine.

He continues "If we are about to look outside of the computer, it’s actually been pretty much disappointing since the late 1960s almost everywhere. The utopian thinking people had about energy in terms of nuclear power, or electricity that would be ‘too cheap to meter’ in the words of Eisenhower in his “atoms too cheap speech of 1963” have not been realised.

And also in the last few decades, the drive for cleantech in Silicon Valley was in many ways quite disappointing until recently. Food technology increased in the 60s and 70s with the Green Revolution only to decelerate again.

In the biomedical area, we are still seeing a steady expansion in lifespans that is going up by about 2.5 years a decade in the most advanced nations but there is a big leg in these things. Because of this and a whole host of other shortcomings, the failure in all these domains has resulted in radically reduced expectations. We are not literally moving faster in travel speed, and we have decelerated with the decommissioning of the concord in 2003, and at least in the US extremely low tech airport security systems have taken travel speed back to like 1960.

Now the one extra-ordinary exception to this has been the ongoing computer revolution, which in the last 40 years has continued. It has gone from the semi-conductor phases, through personal computers, internet, web 2.0, smartphones, and that has certainly been the driver of continued gains and technological progress in the last 40 years".
With that being said I hope to highlight a point that not only has innovation been scarce in housing, but indeed throughout our civilization as a whole. And it has only been through these advances that we are only recently witnessing accelerated innovation across the board.

  1. Advances In Computing As A Driver

While studying the exponential advances in computing I could not help but notice the following that all our current innovations that is: AI, Computational Power, Blockchain, IoT, AR/VR, Nanotechnology, Biotechnology, Additive Manufacturing, Drone and Robotics, Satellite Imagery, Geospatial, Networks, Battery Technology, Autonomous Cars, Hyperloop, Tunneling by The Boring Company could not have accelerated had it not been for the Moore’s Law. My assumption is that maybe we had to organise knowledge (information) before we innovate in all the other areas. Evidence is, we now have 3D printed housing, AI-enabled property development with Deepbocks, we have Avvir using laser scans (AR) and AI to minimise waste in construction, we have VR meetings for Architects Engineers and Contractors by InsiteVR and a host of other innovations all thanks to the Moore’s Law.

  1. Other Factors Driving Current Innovation Trends

Climate change. A lot of climate mitigation initiatives have come onto the mainstream only in the last 10 years, with the Paris Agreement only adopted by consensus on 12 December 2015. 
Sustainable Development Goals. The Millenium Development Goals were established in 2000 and only iterated into SDG’s in 2015, which would then include sustainable cities and communities (housing). 
Rapid Urbanisation. According to “Our World in Data” in 1960 only 1 billion of the population was urbanised compared to 4 billion today. My opinion is that urbanisation grew faster than our ability to innovate first in computing and eventually other fields.

  1. Conclusion

I am compelled to also believe that our inability to innovate can be attributed to a lack of leadership. And that the minimal innovation there has been in the field, has primarily been absorbed by higher net-worth sectors of the society and was not enough to enter the 6D’s of exponential growth.

I’ve thought about this question repeatedly over the past few years. I have a few theories from my observations in both Michigan and Washington DC, as well as attending numerous housing/real estate development/urban planning conferences across the US. I am focusing these comments on the for-profit housing industry, because the non-profit industry is to some degree a different story.

Why isn’t the housing industry more innovative?

  1. Lack of profit incentive, aka a surplus of success - since the Great Recession, the housing developers who survived have been doing very well churning out their standard products. There is high demand and undersupply in most markets. So why would they rock the boat by innovating?
  2. Fear of risk - most developers are still shaken by the Great Recession and most lenders have changed their comfort with risk, so there is very little tolerance for anything risky. To the extent that innovation = risk, it is discouraged.
  3. The impact of government regulation - housing development, more than most businesses, is heavily constrained and directed by multiple levels of regulation, most powerfully local zoning. As someone who worked in local zoning, I can say it is an extremely innovation-averse system. So anything innovative will run up against a regulatory system that discourages it.

And for the affordable housing industry specifically, I’d add a #4:
Heavy reliance on state and federal funding programs, like LIHTC, to make the project pro forma work. Those programs in most cases are even MORE averse to innovation than local zoning.

Couldn’t agree more with @HousingMichigan
But adding to that, I’d say one of the main reason there’s little/slow innovation is because a bulk of the affordable housing stock across the world is championed/built by the state or non-profits. By definition, these are risk averse. So, innovation in housinG will have to first come from innovations in the business model towards financial sustainable and lucrativeness.
There simply aren’t enough private players in the industry. And those that are, are bogged down by rigid regulatory frameworks. Capitalism and private industry must be encouraged for there to be any significant innovation in affordable housing.

Two words: building codes.

They’re complex, they’re local, and they do not encourage innovation. Example: currently my wife and I are planning a remodel of our bathroom, and wanted a Japanese soaking tub. We were unable to find one that was acceptable to the Massachusetts building code. Now, the Japanese have been bathing in these tubs for centuries without mass catastrophe, but if it’s not in the big list of acceptable tubs, we can’t use one.

@stevenfallon thank you for these fantastic references! Absolutely enjoying @bngejane’s breakdown of global innovation and lack of leadership. Totally agree with @HousingMichigan’s high-level view of housing developments.

I’ll attempt to expand on your points from the point of view of the designer, and hopefully try to answer the question, “why isn’t the housing industry / the AEC sector more innovative?” Please bear with me here as I’m not making this immediately explicitly specific to housing.

I’ll start with presenting the perspective of just one player in the design side of this multidisciplinary industry.

The typical architect has spent probably most of their life obsessed with art, geometry and the physical building of society; spent 10 years in a very conservative, strict and harsh architecture school; and then come out into the world to secure a job in their dream profession, only to find that the vast majority of projects don’t require them to apply their creativity. This is largely about developers and clients wanting to build quick and cheap, and about building regulations seen to be overly restrictive (see @Cambias’ Japanese soaking tub example). Architects fight against these factors long and hard within their careers, struggling to feel useful and rarely receiving validation. (This is broadly the same issue in every industry where people feel that they’re not allowed to bring their “whole selves” to work - going back to @bngejane’s point on leadership.)
After a few decades, the typical architect finally gets to a certain level where they actually can choose projects that allow them to be creative. By this point, their decades of experience has usually created a sort of tunnel-vision - a barrier to innovation and creativity.
This is one of the many many reasons why digitalisation of the AEC sector has been so slow and laborious (Find “Construction” in this graph Which Industries Are the Most Digital (and Why)?). BIM is causing huge change management problems in the sector worldwide. (Spain for some reason adapted to it like fish to water - a testament to their less-conservative, more open-minded architecture schools about the role of the architect in the real world.)
The point here is about architects struggling to adapt to technology because they want to retain creativity and pride, and were generally taught how to be creative without employing the processes technology requires. When humans are not able to use the tools we’re given, and are not offered proper training but rather are told to maintain our expertise in communicating the ideas others are paying us for, we feel reduced and disadvantaged. Like a man who desperately needs a wheelchair being given a banjo instead.
On top of that, there is typically a very small “innovation budget” within design firms, i.e. it’s simply not architects’ jobs to innovate - they haven’t been given that mandate. Most architects come to work to make a living. The passion’s been quashed by decades of limiting factors.
And now we’re starting to see parametric design, 3D printing, etc. essentially making most of the work in architecture redundant. There’s obviously a lot of worry over this within the industry, and architects struggle to remain relevant and prove their worth.
Considering all the above, when we consider parametric design, robotics and AI, architects are more likely to reject them than embrace them. There is a lot of hope in the young generation of architects being able to actually be curious of and make use of these new tools and find creativity in the process - while they are still not yet being paid to be an architect in the way that the industry largely defines.

The reason why I lay all this out is absolutely not to lay any blame on anyone actor, but rather to try to piece together how the system arrived at this point. Here’s what I think we can do, given this understanding, to help make the housing industry more innovative:

It’s firstly to loosen up regulations to allow more creativity and innovation - e.g. rewrite them to focus on actual performance (the Aussies have done this shockingly well with the NABERS standard, and rapidly too - https://www.buildingrating.org/file/1249/download).

Secondly, it’s about approaching change management with humanity - supporting people within the industry to really adapt to change through an investment in training and innovation - and not just architects.

Finally, it’s about having a good hard look at how we’re educating people who are then going into the sector.

So, that’s the AEC sector.
As for housing, who says we need the industry?

@samanthasuppiah As noted from HBR and McKinsey who are obviously among the most believable in Analytics Translation & Research, the Construction sector rates low on the Industry Digitization Index (IDI).

But we also note Architecture, Engineering & Consulting as professional services category, that is knowledge-based versus labour-intensive. But from experience, we also know that they work very closely with the Government, also noted with a low (IDI).

I also believe in the bottom-up approaches like “decentralized” aka distributed systems. I think the Aussies example is rather a testament to the philosophy.

So there is an opportunity for decentralised digital platforms of Architects, Engineers & Consultants who pursue a common interest (co-operative style).

Absolutely, totally agree @bngejane - this is simply one sector that is not typically well-represented in global analyses such as on the IDI… Another case where reductionism brings us nowhere closer to a better understanding.
The few scenarios I’ve seen architects, engineers and consultants working together in common interest is where they are entirely local, i.e. people who grew up in their cities and have embedded relationships with others in governance, housing, infrastructure, etc. to breed familiarity and reliability. The whole system tends towards a strong stewardship mindset where longevity and resilience is the goal. So what I’m really talking about is trust in multidisciplinary collaboration being the “platform”.