Today, the province of Ontario responded (maybe not to my post) by publishing this Housing Affordability Task Force report. In it, are 55 recommendations to improve overall housing supply across the province, with the end goal of adding 1.5 million homes over the next 10 years.
I'm still making my way through the report, but the recommendations can basically be grouped into these five main buckets (taken verbatim from this press release):
Make changes to planning policies and zoning to allow for greater density and increase the variety of housing.
Reduce and streamline urban design rules to lower costs of development.
Today, the province of Ontario responded (maybe not to my post) by publishing this Housing Affordability Task Force report. In it, are 55 recommendations to improve overall housing supply across the province, with the end goal of adding 1.5 million homes over the next 10 years.
I'm still making my way through the report, but the recommendations can basically be grouped into these five main buckets (taken verbatim from this press release):
Make changes to planning policies and zoning to allow for greater density and increase the variety of housing.
Reduce and streamline urban design rules to lower costs of development.
Depoliticize the approvals process to address NIMBYism and cut red tape to speed up housing.
Prevent abuse of the appeal process and address the backlog at the Ontario Land Tribunal by prioritizing cases that increase housing.
Align efforts between all levels of government to incentivize more housing.
Reform is badly needed. And I have gone on and on and on and on over the years about a number of the problems associated with how we build new homes and how we expect them to suddenly become more affordable.
Still, I think that most of the general public would be shocked to learn how long things take, how complicated we have decided to make land use approvals, and how a single person with a vested interested in seeing no development can hold up the delivery of thousands of new homes.
Progress is measured in years and decades. Months simply evaporate while you wait for the next PDF document to grant you access to some other labyrinthian planning hurdle. It doesn't need to be this way.
This discussion between Patrick O'Shaughnessy and Marc Andreessen is a great follow-up to my recent post about the productization of housing. Broadly speaking it's about tech, software eating everything, and the future of the world. But if you skip to around the 15 minute mark, Marc talks about the growing divide in our economy between sectors that are changing rapidly and sectors that are changing slowly.
Examples of the former include things like computers, media, retail, cars, and a lot of the other stuff that we regular consume. Examples of the latter include things like healthcare, education, and housing (you know, the pillars of the American Dream).
The noteworthy problem with this divide is that the fast changing sectors are producing things that have been getting more affordable over time. The specific example that he gives is televisions. Think about how much more TV you can get today compared to when they were first introduced.
In contrast to this, things in the slow changing sectors keep getting more expensive. The same university education is exponentially more expensive today than it was a few decades ago, even though it's far more important for people to have an education than to own TVs.
A similar thing can be said about housing. How much has really changed in terms of the way we build new homes?
One of the common threads across these slow change sectors, Marc argues, is strong government intervention. We restrict supply such that we can't meet demand. We then respond to higher prices by trying to subsidize demand, but this only drives prices up even further. Because, at the end of the day, we haven't addressed the underlying issue.
The result is a doom loop.
If you can't see the embedded podcast above, click here.
Depoliticize the approvals process to address NIMBYism and cut red tape to speed up housing.
Prevent abuse of the appeal process and address the backlog at the Ontario Land Tribunal by prioritizing cases that increase housing.
Align efforts between all levels of government to incentivize more housing.
Reform is badly needed. And I have gone on and on and on and on over the years about a number of the problems associated with how we build new homes and how we expect them to suddenly become more affordable.
Still, I think that most of the general public would be shocked to learn how long things take, how complicated we have decided to make land use approvals, and how a single person with a vested interested in seeing no development can hold up the delivery of thousands of new homes.
Progress is measured in years and decades. Months simply evaporate while you wait for the next PDF document to grant you access to some other labyrinthian planning hurdle. It doesn't need to be this way.
This discussion between Patrick O'Shaughnessy and Marc Andreessen is a great follow-up to my recent post about the productization of housing. Broadly speaking it's about tech, software eating everything, and the future of the world. But if you skip to around the 15 minute mark, Marc talks about the growing divide in our economy between sectors that are changing rapidly and sectors that are changing slowly.
Examples of the former include things like computers, media, retail, cars, and a lot of the other stuff that we regular consume. Examples of the latter include things like healthcare, education, and housing (you know, the pillars of the American Dream).
The noteworthy problem with this divide is that the fast changing sectors are producing things that have been getting more affordable over time. The specific example that he gives is televisions. Think about how much more TV you can get today compared to when they were first introduced.
In contrast to this, things in the slow changing sectors keep getting more expensive. The same university education is exponentially more expensive today than it was a few decades ago, even though it's far more important for people to have an education than to own TVs.
A similar thing can be said about housing. How much has really changed in terms of the way we build new homes?
One of the common threads across these slow change sectors, Marc argues, is strong government intervention. We restrict supply such that we can't meet demand. We then respond to higher prices by trying to subsidize demand, but this only drives prices up even further. Because, at the end of the day, we haven't addressed the underlying issue.
The result is a doom loop.
If you can't see the embedded podcast above, click here.
Nabr, which I wrote about last year over here, recently announced its first residential project in San Jose's SoFA district. Named SoFA One, the project is expected to have 125 apartments that will be offered up on a hybrid lease, own, and lease-to-own model. In this latter scenario, the company is saying that people will be able to buy with as little as 1% down. Construction isn't scheduled to start until later this year, but if you'd like to get early access, you can add yourself to their waitlist, here.
As a reminder, Nabr is touting itself as a direct-to-consumer real estate company that aims to bring the same manufacturing and supply chain efficiencies that we have seen in virtually all other industries to the production of housing. This, of course, is not a new ambition. The flatlining of construction productivity is well documented, and lots of architects, builders, and entrepreneurs have tried to innovate in this space over the years. But it's clearly a notoriously difficult problem to solve. So the obvious question here is: What is going to make Nabr any different?
Nabr is trying to productize housing. To do this, they're building a vertically integrated process, going deep into supply chains, and trying to standardize their product offering as much possible. In the case of SoFA One, the base building is expected to consist of a CLT loft-style frame that can then be fitted out with various interior offerings. The idea here is that 90% of the build will be a repeatable system but that the remaining 10% is something that their customers will be able to customize -- similar to when you're buying a new car. The car is the same, but would you like black leather or brown leather?
Continuing with the car analogy, the company is also taking a move out of Tesla's playbook for how they plan to roll out their products. The plan is to start at the top of the market (like what Tesla did with its expensive roadster) and then move downmarket as they drive efficiencies and cost savings in their delivery process. What they are trying to do is find the compounding innovation that has been present in most industries but that has been noticeably lacking from construction.
This all sounds great, but we know that buildings have a myriad of unique challenges compared to other products like cars and smartphones. My iPhone is the same as your iPhone, except for maybe the color and the case I put on it. But each development site is unique. Some have a high water table below it and some don't. Some have adjacencies that will impact how you need to build and some don't.
Each jurisdiction also has unique codes and regulations -- everything from urban design guidelines to more or less stringent seismic requirements. Some cities have snow and some cities don't. The list goes on. So what Nabr is going to have to do is create regionalized products with as much repetition as possible. And if they can generally lock the ~90% base building systems and just adjust the balance as needed, maybe that's enough to do it.
At the end of the day, our industry is not completely void of innovation. It's just a bit slow to change. We never used to build skyscrapers, but now we do. So I've decided to cast my developer cynicism aside. Today, we don't have truly productized housing, but maybe we will.
As an aside, Nabr also recently shared their leaderboard of cities where people want to see a future Nabr building. Those cities are New York, London, Los Angeles, Toronto, and San Francisco.
Image: Nabr
Nabr, which I wrote about last year over here, recently announced its first residential project in San Jose's SoFA district. Named SoFA One, the project is expected to have 125 apartments that will be offered up on a hybrid lease, own, and lease-to-own model. In this latter scenario, the company is saying that people will be able to buy with as little as 1% down. Construction isn't scheduled to start until later this year, but if you'd like to get early access, you can add yourself to their waitlist, here.
As a reminder, Nabr is touting itself as a direct-to-consumer real estate company that aims to bring the same manufacturing and supply chain efficiencies that we have seen in virtually all other industries to the production of housing. This, of course, is not a new ambition. The flatlining of construction productivity is well documented, and lots of architects, builders, and entrepreneurs have tried to innovate in this space over the years. But it's clearly a notoriously difficult problem to solve. So the obvious question here is: What is going to make Nabr any different?
Nabr is trying to productize housing. To do this, they're building a vertically integrated process, going deep into supply chains, and trying to standardize their product offering as much possible. In the case of SoFA One, the base building is expected to consist of a CLT loft-style frame that can then be fitted out with various interior offerings. The idea here is that 90% of the build will be a repeatable system but that the remaining 10% is something that their customers will be able to customize -- similar to when you're buying a new car. The car is the same, but would you like black leather or brown leather?
Continuing with the car analogy, the company is also taking a move out of Tesla's playbook for how they plan to roll out their products. The plan is to start at the top of the market (like what Tesla did with its expensive roadster) and then move downmarket as they drive efficiencies and cost savings in their delivery process. What they are trying to do is find the compounding innovation that has been present in most industries but that has been noticeably lacking from construction.
This all sounds great, but we know that buildings have a myriad of unique challenges compared to other products like cars and smartphones. My iPhone is the same as your iPhone, except for maybe the color and the case I put on it. But each development site is unique. Some have a high water table below it and some don't. Some have adjacencies that will impact how you need to build and some don't.
Each jurisdiction also has unique codes and regulations -- everything from urban design guidelines to more or less stringent seismic requirements. Some cities have snow and some cities don't. The list goes on. So what Nabr is going to have to do is create regionalized products with as much repetition as possible. And if they can generally lock the ~90% base building systems and just adjust the balance as needed, maybe that's enough to do it.
At the end of the day, our industry is not completely void of innovation. It's just a bit slow to change. We never used to build skyscrapers, but now we do. So I've decided to cast my developer cynicism aside. Today, we don't have truly productized housing, but maybe we will.
As an aside, Nabr also recently shared their leaderboard of cities where people want to see a future Nabr building. Those cities are New York, London, Los Angeles, Toronto, and San Francisco.
