This story was originally published in Builder.
Here are tidings of a market need today's residential architecture, engineering, and construction—and real estate and investment—business communities know how to serve well.
Manhattan buyers spent 24.5 percent more on average to live in condos designed by Pritzker Prize winners.
Wall Street Journal correspondent Beckie Strum writes:
The analysis showed that buyers paid an average $3,238 per square foot in Pritzker-designed buildings, compared to $2,599 per square foot in comparable buildings by non-laureates. Buildings by star architects pretty consistently outperform the overall luxury market, said Gabby Warshawer, director of research at CityRealty, which compiles a separate “Starchitect Condo” index that covers 37 buildings by notable designers.
That index is currently tracking above all 28 of the data firm’s various market indices.
“It really shows that there’s a premium that buyers are willing to pay for units in buildings by starchitects,” Ms. Warshawer said.
Now, far, far down the economic food chain is where those businesses lose traction, leaving a growing market need un-served.
Shortages, financially overburdened households, and a growing share of local residents' sheer lack of access to adequate housing options have blown up into bigger problems than housing itself, and at the same time shattered the barriers of locality, of economic strata, of business sector.
They've become systemic, capable over time—and not so much time—of doing structural damage to neighborhoods, metro areas, regions, and beyond, economically, socially, and culturally.
It might be said that "the good news is" that the unmet need in housing is now part of the news cycle and part of the national discourse. Impacts, you see, are not only to one of the basic building blocks of the economy—the American household and its capacity to spend money—but society, culture, the essential fabric of communities.
Here's just a sampling of headline evidence from the weekend's reading:In Vancouver, a Housing Frenzy That Even Owners Want to End (New York Times)
Facebook says it needs to address high-priced housing "if we're going to remain a company in Silicon Valley" (CNBC)
Can a new mayor fix San Francisco’s housing and homelessness problems? (The Economist)
Instead of being a symptom of asymmetries and inequities in economics and oppressive policy, the expanding market of un-served and underserved people who reside outside today's housing economy verges on becoming a root cause of a complex system of vicious circles and Catch-22s in disparities, widening the gap between those who can participate in today's housing market and those who can't.
The Economist piece notes:
San Francisco is an extreme example of a national trend among big cities: demand for housing far exceeds supply. Since 2010 new jobs in San Francisco have outpaced additional homes by a ratio of eight to one. Critics tend to blame the most visible side of the equation. Anti-gentrification activists have shot at tech-workers’ commuter buses with pellet guns and vandalised the whizzy electric scooters dotting the pavements. But they pay too little attention to the supply side.
The city’s zoning laws are among the most restrictive in the country. They limit the height and density of new buildings and give local residents, often property owners, the ability to severely delay new development. Most of the city’s land area, particularly the posh western bits, is zoned for single-family homes, which now comprise one-third of its housing stock. Almost all the city’s land faces height limits of 40 feet, or about three storeys. The result is a city where rents are sky-high but buildings are not.
The question for the San Francisco Bay Area, and for Vancouver, and for an awful lot of other cities, is what will happen to demand when the laws of supply decouple from an ever larger portion of that demand.
CNBC's Sara Salinas quotes Facebook chief policy officer Elliot Shrage, who terms the area's housing woes as "an existential issue."
"Our position is that Silicon Valley has been this extraordinary engine of economic opportunity and if we can't solve the housing and transportation issues, Silicon Valley won't be Silicon Valley," Schrage said at the company's annual shareholders meeting. "These companies like ours will expand elsewhere. So we feel a real sense of urgency around that."
And the Times piece, reported and written by Conor Dougherty, looks at Canadian boom town Vancouver as a cautionary tale, where residents know that prices have swung into a bubble of "too good to be true" levels, and one-in-five hopes for a "correction" of 30 percent or more.
Like many cities around the world, Vancouver is grappling with punishing housing costs that have pushed out large swaths of residents—and are causing distress among young adults who can’t afford rent today and take it for granted that they will never own a home.
For two very good reasons, it would be a mistake for housing's leading market rate enterprises to steer clear of the big messy problem that is housing unattainability in more and more places.
One, is that, inevitably, a disrupter—not just a technological disrupter, but one who can holistically disrupt successful and established incumbent players in construction, real estate, investment, consumer retail, design, engineering, and local policy—will emerge in the space to begin filling the vacuum left by enterprises whose business and operational models are currently too unwieldy to serve.
Secondly, if housing's for-profit, market rate-oriented enterprises do not try to solve for unaffordability among more and more people in more and more markets, they'll remain cut off from the lifeblood of their own longer-term viability: a next generation of leaders.
Check out this Harvard Business Review essay [paid site] from Columbia University public affairs professors Howard W. Buffett and William B. Eimicke, and you'll get the drift here:
Profit and purpose are converging. Over 80% of millennials report that making a positive difference in the world is more important to them than professional recognition. They no longer believe the primary purpose of business should be to make profit, but rather to create social value. On the investor side, more and more shareholders demand tracking and reporting of both positive and negative externalities, compelling some of the largest corporations on earth into action. Customers overwhelmingly prefer products tied to a social cause. A significant majority of citizens want changes to how society governs itself—and therefore how problems get solved—and also changes to the corporate status quo. Not surprisingly, more and more businesses are becoming certified for their social responsibility practices.
Affordable housing for more people in more places. It's one of the biggest areas of risk to America's capacity to maintain a regenerative economy, not just in isolated geographical areas, but nationwide.
It's also one of the biggest areas of opportunity.
Expanding access to housing, thanks to none other than housing's leading for-profit stakeholders, is good business.
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