Architecture

Last Crisis, Builders Blasted Into 2020s Tech — Next Up Now?

In the building technology, finance, real estate, and policy axis lie solutions consumer households will embrace and value 'for financial reasons.'

Architecture

Last Crisis, Builders Blasted Into 2020s Tech — Next Up Now?

In the building technology, finance, real estate, and policy axis lie solutions consumer households will embrace and value 'for financial reasons.'

July 29th, 2022
Last Crisis, Builders Blasted Into 2020s Tech — Next Up Now?
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Could the economic squeeze and correction in residential real estate trades expected in the 12 to 36 months ahead become a cauldron of opportunity, adaptiveness, and business resilience?

Crisis -- remember, at its root -- means a turning point toward either worse or better.

Every business leader only needs to take a moment to think back 24 months to a surreal moment this time of year in 2020 – even without foreknowledge that COVID-19 would go on to infect more than 92 million Americans and take more than 1 million lives – a crisis, indeed. And one that spawned one of residential real estate's most profoundly innovative six-to-12 month periods – where data and technology that matched customer experiences with homes and communities finally caught up to 21st Century online dating-, appointment-, video game-, fitech, and concierge-style services – in memory.

What got done then was extraordinary, and a huge credit to the ingenuity, focus, teamwork, and leadership of builders, developers, investors, lenders, manufacturers, and their partners. A gigantic, now-or-never crisis kicked it all into gear, and everybody on virtually every team rose above and beyond the challenge.

Customers now can enjoy simple, elegant, transparent buying and renting shopping, decision, and agreement experiences. Before they couldn't.

Big win.

That was then. This is now; a new threshold, with a whole new gamut of challenges. And, boy, what great opportunities lay ahead for these same organizations to wrestle with and ignite now, when they have two choices. One, to ride the market trends down to the level they'll find and hang on for dear life.

Or, maybe, what about taking a look at some of those other ideas that have been rattling around in the business's echochamber and look at them differently?

Ideas like:

  • Where modern manufacturing, real estate development, and local policy can – even in many of today's zoning rule books – impact housing attainability.
  • Where building technology, materials science, digital-twin building information modeling – with today's capabilities – impact housing's carbon output.
  • Where human capital value strategies – training, on-the-job development and upskilling, and career resilience – impact construction's current and future talent pool.

These areas remain on the table as largely undone, and it make take a crisis – even threat of an economic and jobs contraction – to move them from back-burner nice-to-do lists right up to top priority.

Here's how this might look in the real world, for example, on converging operational, tech, design, and consumer household trends that could very well lead to innovation step-change gains for housing attainability.

The example starts here.

A comment from one of the executive-strategist level respondents to our just-completed The Builder's Daily survey illuminates a use-case path forward.

The past few years saw consistent outperformance across all markets. We are now seeing diverging results by submarket. Understanding local dynamics will be critical to optimizing performance.

Unpacking this in even the most obvious sense, and the use-case you're looking face-to-face with is precision. Precision as a business use case recognizes the crossing-over point in the economy.

Now, following on our strategists' view above, nothing screams "local dynamics" more right now – and matching up with them precisely – than households' underlying motivation for most of what they're doing in an environment of runaway inflation.

"For financial reasons."

Beginning two years ago, accelerated by COVID and the go-for-broke policy response, too-much-money supply chased too-few-places-to-park-it-profitability, causing too many bidders for every trade, which bid up prices on everything. Now, money's getting tighter and tighter, and credit of any kind is more and more costly, which reduces the number of bidders for everything, which will relieve pressure on prices – fast in some cases, and slowly in others.

Consumer households are getting hit not only with having to pay more for everything, but having less recourse to borrow and pay for some of what they need over time. They're left with having to earn more – which some of them are doing – and to spend less to tread water.

Which brings us to the moment's cauldron of innovation opportunity for builders, developers and their partners on a convergence of technology, real estate, and consumer value creation.

Combine a consumer macro trend – multigenerational households that form themselves "for financial reasons" – and a real estate investment, development, and construction trend, built-for-rent single-family communities, and there's a precision solution that can catapult an overdue technology advance that – if things weren't so urgent now – could take another five to eight years to get real traction.

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Per Pew Research, multigen household composition is evolving fast, and it's doing so "for financial reasons."

Source: Pew Research
As successive generations of young adults in the United States cope with rising student debt and housing costs, multigenerational living is increasingly providing a respite from the storm. A quarter of U.S. adults ages 25 to 34 resided in a multigenerational family household in 2021, up from 9% in 1971.

Precision in residential real estate and construction, we learn from those who've  comes down to three essential requirements for a business.

  • Product
  • Price
  • Place

Those three essentials ... and critically, timing make for success or failure, and timing now demands that builders and developers and their partners lean way into to the wherewithal of households trying to do more with less.

So, what if purpose-built single-family-for-rent communities – availing as many of them are, of public and private homebuilders' high-volume construction capabilities – started including multi-gen floor plans?

What if those floorplans or even the lot plan could include an ADU?

Multigenerational households could in many cases build greater local community support as local residents gain a new option to remain in or near the town they've been living in, in a combined household with children or children-in-law.

Multifamily new development  is experimenting with revenue-units as part of traditional vertical apartment configurations and offerings, recognizing the "for financial reasons" driver among potential customers.

No reason that multi-gen floorplans and backyard ADUs couldn't scale as an attainability solution for many households that chose or have to rent on the single-family side as well. What this would mean from a construction, manufacturing, and assembly standpoint is that low-variability branded multi-gen models could start being produced offsite, just like many apartments are now, speeding the role of modern manufacturing in single-family production.

Everybody has some sense of appreciation for the notion of necessity being the mother of invention. Here's a case in real life that could evolve as consumer households continue to drive typologies and living arrangements and designs that may one day define a new normal.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

MORE IN Architecture

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Mining Building's Timeless Icons Amidst Upheaval And Change

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