Leadership

Without Housing Solutions It's Tough To 'Change The World'

A complete and authoritative "change-the-world organization" list would, we would submit, make it imperative to include real and lasting solutions for these "big social challenges," – and they're out there.

Leadership

Without Housing Solutions It's Tough To 'Change The World'

A complete and authoritative "change-the-world organization" list would, we would submit, make it imperative to include real and lasting solutions for these "big social challenges," – and they're out there.

October 11th, 2022
Without Housing Solutions It's Tough To 'Change The World'
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Sometimes no news is not good news.

Sometimes no news is just that, no news, and sometimes, it's bad news. And that reality impacts commitment and investment in housing as a solution.

Here's an example.

Fortune, arguably an arbiter of relevance in business writ large, this week unveiled its eighth annual Change the World list, which it says is ...

... dedicated to the idea that the creative tools of capitalism—the perpetual quest for a better mousetrap, fueled by the profit motive—makes business uniquely suited to addressing society’s biggest challenges."

Curious, you might want to "explore the list" as I did. There, what you – presumably as someone whose livelihood springs from making homes and neighborhoods for people – will find is "no news."

Among 50 organizations across 29 discrete "industry" classifications and eight separate "impact segments," not a single market-rate residential construction nor real estate nor building technology organization, nor even a nod to the industry sectors of real estate or construction show up.

The closest to the mark we're talking about in the entire list of 50 standouts in Fortune's "Change the World" list are India-based Shubham Housing Development Finance and Egypt-based KarmSolar, a solar energy platform.

Now, again, you could argue about whether Fortune ought to be regarded as an authoritative be-all-end-all intelligence beacon for a change-the-world recognition list at all. The issue is not the platform nor the source of insight here.

The issue is the construct -- "society's biggest challenges" – followed by one of the most enormous challenges of all. Namely, all that white space where there should be focus on a $1 trillion-a-year ecosystem of firms [domestically], from the inner core to the outer fringe radius, from centuries-old to start-ups, from pickup trucks to Wall Street headquarters, from the chemistry lab to the subatomic mineral ore and from the factory to the field whose very reason for being is a person's home.

Would "society's biggest challenges" not include the following?

  • inadequate housing of all types, price ranges, and sizes, almost everywhere
  • local and regional economic growth decline
  • carbon emission-fueled climate disruption
  • healthier buildings
  • an aging population tsunami
  • a choked off channel to a new next generation of talented strategists, problem-solvers, operators, and front-line skilled workers
  • community's role in isolation and loneliness

The mere fact that you can zero in on 50 "change the world" organizational models and their achievements without – during a time period where the economy is rattled, households are hitting a pause button with their spending, and the near-term future is a mess – a full-throated acknowledgment that housing is a solution that nests many others when it comes to "society's biggest challenges" is problematic.

Even when times were night and day different for residential new-construction and development players – when demand far-eclipsed the capacity of a pandemic-challenged construction community to keep up – we wrote of housing's challenges this way in April 2021:

Here are five harshly-framed views of today’s structural symptoms, risks, and challenges. They don’t even count for the uncertainty, doubt, and threat of today’s health, economic, and social crises, which may intensify their impact and add to their urgency:

  • Household income growth has failed to keep pace with costs to produce new residential structures and communities. Results: Underbuilding by well over a million new single-family homes in the past 10 years; average selling prices that price-out homeownership for more than half of today’s households, and make new home prices — averaging over $340,000 — inaccessible for more than three out of four working households.
  • Outdated methodologies, processes, and sourcing of critical resources trap unproductive practices, operational models, and productivity. Results: Productivity in construction lags every other major manufacturing sector, and remains paralyzed — a big constraint on financial equity growth.
  • Local electoral politics and real estate developers’ interests have reached stalemate or worse, with elected officials, who often win votes by promising ever-more draconian controls, fees, design guidelines, approval delays, and encumbrances on would-be developers and investors. Results: 30 cents of every $1 of Average Selling Price for a new home reflects regulatory cost burden weighing on home prices.
  • Skills and talent deficit, on the job-site and in the office and back office, organizations large and small face an ever-more-intense, expensive, and critical constraint resulting from ineffective competition for the nation’s best new entrants into the workforce at the skilled-labor level, data scientists, materials engineers, and business strategists. Results: 6 skilled and experienced trades people retire for every new entrant into the residential construction field, representing a talent cliff that puts all future business models at risk of massive cost and production variance.
  • Business operations and strategic models that focus on their own resources and processes first, and only secondarily on solving consumers’ living challenges. Results: Housing and its business enterprise leaders remain anchored to cyclical swings rather than developing planning, resource investment, and predictability models based on achieving excellence in consumer pull rather than supply push.

Experts estimate that, due to these five pain points, new home and multifamily community development today cost upwards of 25% more in direct input costs than they need to. Further, policy and regulatory burdens at the local, regional, and national level layer up to another 30% into renters’ and home buyers’ monthly and life-time costs.

A complete and authoritative "change-the-world organization" list would, we would submit, make it imperative to include real and lasting solutions for these "big social challenges," – and they're out there.

And it's been our mission to focus on organizations and individuals who toil to do just that – albeit in pockets, in isolation, in the fashion of learning and discovery laboratories, factories, and test sites sprinkled across the U.S.

Please keep coming back to us, as our coverage of people who are changing the world, a home, and a neighborhood, and a business model, and an operations platform at a time lies at the core of who we are and what we do.

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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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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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