Leadership

Trailblazers '23: Inherent Aims To Vertically-Integrate Solutions

Consider Inherent's 3-year life span, so far, as its prototype development for a system that would both lower barriers to homeownership, and raise the capability among local workers, area businesses, and infrastructure to develop, build, and sustain viable households in vibrant neighborhoods.

Leadership

Trailblazers '23: Inherent Aims To Vertically-Integrate Solutions

Consider Inherent's 3-year life span, so far, as its prototype development for a system that would both lower barriers to homeownership, and raise the capability among local workers, area businesses, and infrastructure to develop, build, and sustain viable households in vibrant neighborhoods.

October 2nd, 2023
Trailblazers '23: Inherent Aims To Vertically-Integrate Solutions
SHARE:
SHARE:

By some estimates, the greater Chicago-area has some 2,000 acres of vacant property, zoned for residential development. Try to fund and finance a few of them to develop into ground-up residences attainable to people in those communities, and you're looking at years in the effort. In cities everywhere, it's the same story.

It goes far to explaining why the missing middle is missing.

Housing affordability challenges and crises – urban, suburban, and rural – have been around as long as anyone can remember, and may always go with the territory.

Lucky for those who want to regard themselves as solutions-seekers, there are some who may accept that as fact, and yet work undeterred to undo its inevitability.

When the economy and markets are going great, housing affordability is hard, and when the economy and markets are bad, housing affordability is hard," says Inherent l3c founder Tim Swanson, a residential urban development jack-of-all-trades who sees a hard-line need for all of them to be in on the success of any single one of them. "There's a disconnect between what we know, what we have to do, what we're committing to -- both professionally and politically -- and then the actual doing. It's both a crucible and a and a challenging moment, because everyone sees what needs to happen, and everyone sees options for progress to happen. It's the doing that gets mired up in the details."

Swanson and his Inherent team – including Sonia Del Real, VP of sales and economic development – view the housing challenge as a simple one: "hard-working Americans should have a restful night." All the rest of it, Swanson believes, amount to a complex of issues that both need to be disentangled and yet taken together as one. Either not disaggregating, or not reintegrating into one is a no-go, according to Swanson and his Inherent team members.

For both the boldness of its holistic ambition level, and the laser-precision approaches to triggering "network effect" impacts, Ivory Innovations recognized Inherent L3C as one of its finalists as part of the 2023 Ivory Prize for Housing Innovation.

Inherent L3C believes in the power of community reinvestment through the creation of trade careers, homeownership, and community-based businesses. From their community housing production facility delivering all-electric, solar-ready smart homes, to their work with public, private, and nonprofit organizations to prepare households for homeownership, and their suite of support services for a household’s first five years, Inherent L3C believes that by coming together, “we can bring the best of us to the most of us”. – Ivory Innovations

Inherent, now a three-year old Chicago-area enterprise, fuses solutions in building technologies, frontline-worker training and engagement, local, regional, and national policy and zoning, financing and capital investment, and, not least important, a deeply-engaged and supportive role with homebuyers both before and after their purchase threshold moment.

Consider Inherent's three year life-span, thus far, as its prototype development period, for an elaborate system that would both lower barriers to homeownership access and raise the capability among local workers, area businesses, and community infrastructures to develop, build, and sustain viable households in vibrant neighborhoods. Progress points to date: a handful of completed homes, owner-occupied, and measured for energy performance and comfort, have become the learning and discovery-lab ladder-wrungs to Inherent's one-day scale-able platform capability, says Swanson.

"The first house took us eight months," Swanson says. "The second house took us four months. The third house took us two-and-a-half months. We went from a house every half a year, as it were, to now, where we're under production two at a time each month, approximately. At the end of October, we're expanding our space so that we can have some more capacity on that side.
It took us 30 months to acquire 30 parcels in partnership with the city and Cook County. And I now have site control and options right signalling on 130 or 230 parcels. It was a long road to hoe to get there. It's a show-me sort of thing. We couldn't just talk about what we could do or would do, we did it. Now, all of a sudden things start picking up, we have a strategic partnership with Trinity United Church of Christ on the south side to do almost 100 homes with them, because we're focused on job creation, wealth creation, homeownership and black empowerment in that neighborhood.
Then, because that door openied, we've now partnered with some national affordable housing developers who focus on the low-income-tax-credit rental side but who also need to have mixed income developments. Here in Chicago, we have our Invest Southwest programs, and we joint-ventured on a proposal for a wonderful mixed-use mixed-income building with for-sale housing associated with it.
So now Inherent straddles into that space. It's taken a while to get to here. At the same time, we're laying the groundwork and the tracks for actually delivering at a larger scale. We are in talks about shipping our first houses across state lines as a flagbearer of what it would look like to create jobs, housing and economies in Michigan.
The things that we dreamed we could do, we're talking about doing. The things that we talked about doing, we are doing. The things that we were doing, we've done right. Everything has moved an order of magnitude.

In other words, Inherent creates vertically-integrated linkages between training its semi-skilled frontline workers, its modular building factory, its private-foundation-public land-acquisition capital stack, its urban-infill focus, its homebuyer education and support structures, etc. so those very same semi-skilled workers can buy, own, and thrive in the firm's high-performance, low-cost-of-maintenance homes.

Some talk of a "missing middle" housing typology – dense, walkable, variable in size, and connected with mobility and essential services options – that would represent as least part of a solution to expanding housing's attainability radius beyond the daunting price ranges of ground-up development today.

Inherent and its like might be the "missing model" for housing's missing middle, as it tackles not just designing and building an "inherently" more attainable type of neighborhood and house, but the entirety of connected dots around that structure that can make or break who can actually access these homes.

Missing middle housing is a solution, but the typology alone is a solution in isolation, whereas the ground beneath it, and the development funding and finance structure, and the community-based business commitment, and the tax breaks, and the sustaining community and homeowner benefit, are all necessary parts of housing-as-a-solution equation, says Swanson.

The first principle around expanding the box of homeownership is really simple, but it creates this massive drag system that has to be put in place to sort of get to that," Swanson says. "Inherent can be seen as a networking diagram, right, where you realize that it requires the whole network to make the thing work. Some of the challenges that I've had in previous careers, whether it's architecture, policy, or modular building, or others, was 'we know what we do, so we're going to do that thing, and then we'll try to do it.' For me, it became the other way around.
In other words, it was 'alright, if I'm really solving for how to have families own homes, I know parts of that. I have knowledge and experience in sort of adjacencies and other parts of that. But if that's the thing that I'm pulling towards, then what are all the other things that have to be put in place?'
Then I find myself talking about housing policy and HUD guidelines and becoming an expert in that because it's exactly policy and HUD guidelines that trigger all these other forces that have limited this thing. So now we have to do that. Then we have to look at supply chain relationships and negotiation – not because I'm a builder, necessarily, but because I'm trying to disaggregate some of the players that are in the market.
The disconnect, in my thinking, is an answer like 'we'll just connect it.' But, it's not that simple. So what if we see disconnects between construction and finance and mortgage and lending and ownership and credit and policy? Logic says, well, we should connect those things. And some of them are easier. Some of them are harder. From where we sit with the housing crisis, what I'm seeing is more people willing to have the conversation now. We've started to witness this 'everybody wins' or 'we don't want to screw anybody over' mentality.
This means that there's a lot of onramps for players, whether they be public, private or philanthropic.

Inherent partnerships include the City of Chicago, Cook County Land Bank Authority (CCLBA), Google, ADT, Northwestern Mutual, Chicago Women in Trades, Neighborhood Housing Services (NHS), Imani Village, Wintrust, Schneider Electric, The Will Group, Revolution Workshop. Here's the framework of how Inherent pieces together disparate and disconnected linkages in the housing attainability cycle:

  1. Target underutilized spaces/retrofit existing spaces
  2. Educate families and customers in the housing pipeline
  3. Build smart homes in a controlled indoor production facility (modular). The interior of each module is entirely finished upon delivery, including appliances, trim, electric, plumbing, and paint
  4. Multiple check-ins with homeowners following the move-in process
  5. Inherent homes include a 5-year quarterly maintenance support plan, five years of monitored home security and five years of life and disability insurance

From a would-be customer's standpoint. The Inherent maps out roughly like this:

  1. Customer connects with Inherent through other nonprofit organizations, housing agents, and homebuyer education workshops
  2. Customers attend open houses, meet with Inherent, and enter pre-approval process
  3. Inherent works with customers on financial planning and home maintenance education
  4. Customer chooses home style and design from pre-set options
  5. Home is manufactured in Inherent’s facility and delivered to job site
  6. Home is installed and ready to occupy by the customer in two-three weeks
  7. Customer moves in and home management app is set up
  8. Inherent helps customer understand mortgage payments and other homeownership tools after move in

Following move-in, Inherent provides residents with a five-year suite of support services, including quarterly maintenance, life insurance, disability insurance, home insurance, and a security system. Further, their focus on establishing buyer pipelines with their community programs and partners also adds to the innovative structure of Inherent. Inherent may not be a perfect fit for every city, but their approach, which addresses both housing affordability and lack of workforce demand, could be implemented in many urban areas across the country.

For me, the product is the system," says Swanson. " When I speak with other cities, the conversation is not around the houses that you see that I manufacture on the west side of Chicago by Westside Chicagoans. That's not what I ship. That's not the product. That happens to be the result of the product, which is the ecosystem relevant to this neighborhood, this community this financial fabric, but if there's those 10 things that good placemaking has to have, eight of them are relevant at any given time, depending on which group you're talking with. And we oftentimes just think I'll just focus on one of those instead of the membrane between them."

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 Leadership

Late-Spring Selling Softens: Speed-Bump Or Inflection Point?

The depth, geographic pervasiveness, and readiness among "haves" to become new-home buyers have created a Goldilocks era for homebuilders in 2023 and, so far, through mid-2024.


We Salute Donald R. Horton, Founder Of 'America's Builder'

Through his career, his customers, his team member associates, his shareholder investors, and, by and large, an ecosystem of business partners, local community stakeholders, etc., learned that D.R. Horton was, is, and will be synonymous with winning.


Four Teams Win The 2024 Ivory Prize For Housing Affordability

A competition in its 6th year celebrates the work of innovative organizations making an impact in housing affordability in three areas of focus: construction and design, finance, and policy and regulatory reform.


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 Leadership

Late-Spring Selling Softens: Speed-Bump Or Inflection Point?

The depth, geographic pervasiveness, and readiness among "haves" to become new-home buyers have created a Goldilocks era for homebuilders in 2023 and, so far, through mid-2024.


We Salute Donald R. Horton, Founder Of 'America's Builder'

Through his career, his customers, his team member associates, his shareholder investors, and, by and large, an ecosystem of business partners, local community stakeholders, etc., learned that D.R. Horton was, is, and will be synonymous with winning.


Four Teams Win The 2024 Ivory Prize For Housing Affordability

A competition in its 6th year celebrates the work of innovative organizations making an impact in housing affordability in three areas of focus: construction and design, finance, and policy and regulatory reform.