How housing tech can unlock opportunity for community stakeholders

We’re in the midst of an affordable housing crisis that has only intensified at the start of the pandemic. Consider this: housing is a basic human need but finding affordable housing options, especially in popular cities throughout the U.S., has become increasingly difficult.

In fact, nearly half of the 43 million renter households in the U.S. are what we call “housing cost-burdened,” which means that these renters spend more than 30 percent of their paychecks on housing alone. Severe cost-burdened renters are spending over half of their income on housing.

While U.S. housing policy has focused on supply constraints and attempted to alleviate this growing problem, it’s abundantly clear more needs to be done for marked progress to be made. Community stakeholders may hold the key to furthering that progress and unlocking the opportunities that exist for smart development on the local level within each of their municipalities.

Roadblocks ahead
One of the major problems that plagues new development projects is that it often takes many years to get off the ground, but our need for new housing is now.

According to a report from the National Apartment Association, one factor contributing to the lack of housing options is the complexity and lengthy timelines associated with the approval process. On a national basis, this is putting a strain on more affordable and accessibly priced housing projects and what ends up emerging is more “larger, scaled and higher-rent projects.”

The pandemic has also made it more difficult than ever before to get these projects off the ground, further impacting the dearth of supply. Nearly every major contractor and real estate company has experienced construction delays, while material shortages and price hikes have also added a layer of difficulties.

In some major cities, staffing shortages are also causing a snowball effect and creating additional delays. In the second quarter of 2021, a U.S. Chamber of Commerce report found that “88 percent of contractors report moderate-to-high levels of difficulty finding skilled workers.”

With all these challenges ahead, we need to look at this issue from a bigger picture perspective and determine the need across sites, neighborhoods, and cities. We can no longer think on a project-by-project basis, as the dire need for more housing is compelling us to find ways to build more efficiently. 

Leaning into tech
While there is no magic bullet that will fix many of the challenges we are facing today, there are solutions that can be implemented which could have a tangible and lasting impact on our housing crisis and increase the supply of multifamily developments and living spaces at more accessible price points.

As technology continues to innovate just about every aspect of commercial real estate, we have yet to see real progress in technology’s impact on how multifamily properties are executed. But we believe strongly that technology holds the power to “productize” development, essentially making it much easier for projects to get off the ground.

Technology such as the REDtech platform facilitates a streamlined start-to-finish approach to multifamily modular development that can be used by anyone. Users can quickly and easily underwrite a new project, connect with one of trusted factory partners, source the debt and equity needed to fund a project, visualize what the property will look like (both internal and external), create an Offering Memorandum (OM) and even determine the property managers that will oversee properties post-development. Therefore, you don’t have to be a full-time professional developer to get into the driver’s seat and help get projects going.

The beauty of this tech is that it can be adapted by location. So, for a city like Los Angeles, that’s in dire need of more low-rise housing, there’s a modular model for that. In Denver, where there’s a need to quickly ramp-up mid-rise housing development to account for the massive population growth of the past decade, there’s a modular model for that.

What’s next?
The key to solving this wide-ranging issue is in our hands—by accessing technology that exists today, we all have the power to streamline multifamily development and meet the tremendous need for more quality and affordably priced housing across our nation’s cities.

By productizing the development process, we can break down the bottlenecks that hinder multifamily development today and pave the way for more modern living spaces at accessible price points.

Dane Andrews is co-founder and chief operating officer of Madelon Group, a housing company that streamlines the development process for modern, urban living spaces. Andrews started his career at The Vanguard Group in the high-net-worth investor division and co-founded Roam International Inc., the first global co-living network.