The Field of Inclusive Housing Innovation — a rocketship you’ve been ignoring

The Rocketship You’ve Been Ignoring

Version 1 of the Inclusive Housing Innovation Map (Map has clickable links)

We’re reminded, on an almost weekly basis, that we are in the midst of an affordable housing crisis. Only the top 2% of America can affordably rent an average 2-bedroom apartment in SF. Homeless camps have spread. And the average millennial has just $1,000 in her bank account, spending much of her income on living costs. But amidst this crisis, policy suggestions — while critical — dominate, as promising private-sector solutions often go unmentioned. Indeed, much discussion in community development circles focuses on the sources of housing funds, such as Section 8. While this discussion is needed, more thinking about how to use that money effectively can result in better affordability outcomes.

A few trends demonstrate why housing affordability is a critical issue: (1) it’s a critical social good, (2) affordable housing will grow scarcer, and (3) there’s opportunity for improvement. Every year, the U.S. economy, economists Hsieh and Moretti calculate, is losing $1.6 trillion due to high housing costs. The world will need $78 trillion in infrastructure investments — including those in affordable housing — to meet the growth in urbanization, according to PWC. Top housing industry players, according to the McKinsey Institute, have been spending less than 0.9% of their profits on R&D, while technology companies, like the Amazons of the world, spend nearly 10% on average.

Inclusive housing innovation is quite broad. To organize my map, as a result, I first distinguish interventions based on the targeted stakeholder: developers, renters, social impact entrepreneurs, and governments. I also discuss two connected niches — efforts to increase income and transit — that also affect housing affordability. Out of the central categories, the most developed areas are innovations targeting developers and renters.

Developer-focused innovations

Developer-based innovations are making various aspects of the development process more accessible or efficient.

Reducing land costs. Driven by a lack of supply in major cities, land costs can eat up 30% to 40% of a real estate development budget.

Design. If housing is redesigned to increase density in a livable way, more people can share the same cost of housing, thereby reducing the unit cost of housing.

I categorize design innovations on two axes: urban/suburban and the extent of space sharing. Most coliving and micro-living companies, which are often combined, fall into the bucket of being urban and sharing more. Some co-living companies, such as Padsplit and HubHaus, focus on suburban, single-family homes.

Despite focusing less on sharing, workforce housing, transit-oriented development, accessory dwelling units, tiny homes, and Missing Middle housing all reduce the cost of housing. They are variations on traditional market-rate housing, but use design to lower the cost and target a specific demographic of renter or owner.

Finally, some companies simply design furniture that allow people to live in smaller spaces. These include Bumblebee spaces, Ori, and Resource Furniture.

Acquisitions. If developers could reduce the cost of purchasing real estate, they could build more affordably. There are four key tools here.

First is using services like citybldr or use large datasets and algorithms to understand which properties to acquire and for how much.

The second is focusing on acquiring underutilized types of housing, such as brownfields, commercial buildings, or naturally-occurring affordable housing.

The third involves partnerships with nonprofits who provide special deals on land, such as Blokable’s partnerships with churches.

The fourth involve separating the land from physical ownership, as commonly seen in manufactured home communities. In exchange for affordable and long-term leases, homeowners who rent from community land trusts are limited in their abilities to sell and profit off increases in home values.

The last are new sales techniques such as iBuyers who reduce the time to acquire buildings or group-buying to buy units in bulk and obtain economies of scale.

Reducing Regulatory Costs. Regulatory costs involved with building a home, the National Association of Home Builders claim, can take up to about 30% of the cost of developing a home. There are a variety of services that exist, such as local engagement tools, such as coUrbanize and Neighborland; navigating permits and rules, such as Gridics; providing regulatory intelligence, such as CivicPro and Vigilant.

Reducing Construction Costs: Labor and construction can eat 30% to 50% of a building’s total costs. There are three main types of housing construction startups. The first are startups that are focused on B2B services for developers, such as Fullstack Modular and Blokable. The second are startups that build standalone units for consumers, such as Module and Kasita. The third are startups that assist consumers with navigating local regulations to help them add units to underutilized land, like backyards. These include Cover, Dweller, and Montainer.

Reducing Financing Costs. Raising enough money for a new project, as one developer emphasizes, is one of his biggest hurdles.

New financing models. Financing interventions come in two main buckets: impact-oriented or crowdsourcing. Social impact funds focus on not just profit but also social impact, such as Turner Impact Capital. Crowdfunding companies obtain financing from everyday people, not just institutional investors, such as Compound and RealtyShares. Some are focused on both social impact and crowdfunding, like Small Change and the Low Income Investment Fund’s Impact Note.

Renter-ownership. Some financing models promote renter-based capital and ownership.

One increasingly common model is the rent-to-own or shared equity scheme, where a portion of the rent goes towards equity investment. Startups in this space include DivvyHomes and Digs.

Another model is the collaborative mortgage model, where residents pool together money to purchase a larger home together. An example here is CoBuy and the baugruppen, an Austrian model of development where future future residents of a development pool financing and become a developer themselves. Similarly, Mietshäuser Syndikat not only pools money from existing residents but also draws from surpluses from other houses in their syndicate to help finance new permanently affordable cohousing projects.

New lending models also exist to help specific types of residents obtain capital to purchase homes. Landed, for instance, provides down payment assistance to teachers. ROC Capital secures loans for low-income mobile home residents, who then use this loan to collectively purchase a mobile home community from a landlord.

Operations: Aside from developing housing, operating housing costs also increase the cost of rent.

Utility costs. Various startups use alternative energy sources, such as solar, and financing mechanisms to make housing consume less energy.

Property management costs. Property management companies can charge anywhere from 7% to 10% of rent just to manage daily operations, and, even then, offer variable service. Keyo and Zenplace attempt to automate key aspects of leasing and maintenance to reduce costs.

Renter-focused innovations

Roommates. Renters can save anywhere from 12–20% off their rent by living with roommates. Finding a roommate is a time-honored way to pool resources, increase bargaining power, and obtain economies of scale. Roommate apps range from tools that help you reduce transaction fees, find roommates, vet roommates, and match with roommate that meet your preferences.

Landlord-tenant. Even if someone lives in more affordable housing, there’s no guarantee that housing is high quality. Various tools exist to equip renters to navigate laws and obtain information to ensure their housing is up to par.

Social Impact innovations: These innovations differ based on the social problem they seek to target. These innovations attempt to address health outcomes, such as Kaiser Permanente’s $200 million investment into housing, homelessness, such as the Housing First movement; rehabilitation for vulnerable populations, such as the Delancey Street Foundation; and Education, such as National Housing Trust’s initiatives to place affordable housing next to good school districts. To promote long-term affordability, community land trusts and limited-equity cooperatives, often together, are used. In limited-equity cooperatives, housing is collectively owned by residents, units of which are limited in their resale value to promote affordability for future residents. They are often paired with community land trusts who own the ground leases and veto residents who wish to remove resale limitations.

Government innovations: While this is a broader topic that can warrant its own map, there are financial and regulatory innovations that can increase the supply of housing. One financial innovation, Neighborly, helps governments finance new types of infrastructure projects, such as affordable housing. and Symbium help government regulations, such as the development permitting process, easier to navigate.

Innovations that increase income: One reason housing is not affordable is because people do not make sufficient income. Initiatives to help people make more income include efforts to de-risk small business creation, such as co-working, low-cost shops, co-retail, and on-demand services that remove the need for physical space; to develop new income sources through sharing economy initiatives, such as Airbnb, Rover, and platform cooperatives; and to increase worker bargaining power, such as tech that enables worker power and collective bargaining.

Innovations that increase transit accessibility: Housing also can become more affordable when it’s cheaper for people to live in more distant, yet more affordable neighborhoods. While transit innovation is something that could be its own map, I believe that some innovations will increase housing affordability. These include micro-mobility options, such as bicycles and scooters; new infrastructure methods, such as bus-only lanes and bicycle-lanes; and bus-like alternatives, such as dollar ride, Via, and UberBus.

Organizations that support the housing innovation ecosystem: Beyond initiatives that directly affect housing are organizations that fund or incubate innovations, such as; help produce research and content to understand the problem or new solutions, such as Shareable, Shelterforce, or the Terner Center for Housing Innovation; and partnerships to advocate for new policies and share best practices, such as 100 Resilient Cities and the Housing Innovation Alliance.


My landscape reviewed ~200+ initiatives to come up with these main categories, across 14 key domains. It’s challenging to put many business in one category as some are expanding their scope to affect additional categories.

I’m personally closely watching the following initiatives.

Resource pooling efforts. Our economic system is stacked against many and I’m curious about ways people can pool resources to increase their bargaining power and capture economies of scale, like big corporations.

  • In the realm of housing, for instance, Mietshäuser Syndikat not only pools money from residents but also draws from surpluses from other houses in their syndicate to help finance new permanently affordable cohousing projects. Some roommate and co-living platforms help renters form groups and obtain cheaper rents, such as Welcome Home.
  • In efforts to increase income, platform cooperatives allow participants to co-own the platform and profit more from their activities. Co-retail or on-demand platforms allows small businesses owners to reduce the cost of operating what would otherwise be capital-intensive businesses.

Efforts to help new actors become developers. Housing development has typically been done by a few. New technologies that “democratize” development to allow more consumers and new actors to build and own things are exciting. For instance, Cover provides a one-stop shop for homeowners to build units in their backyards and other underutilized spaces. The baugruppen model involves future residents to pool their resources and become developers

Housing as social intervention. Housing is a critical resource that promotes physical stability, relationship-building, and access to resources, such as jobs and schools. Many housing innovations, however, focus on creating cheaper housing, without specifically designing their housing to address social problems. As a result, I find housing efforts to promote housing with socially-motivated goals to be promising, and helps bridge the gap with the social impact and nonprofit sector. Examples here include new financing tools like Small Change, Blokable’s partnerships with nonprofits, and efforts to use housing to promote health, community, rehabilitation, and long-term affordability.

Please feel free to let me know about others you’d like to see on this map and other cross-cutting trends you find exciting.

☞ Note: See a version of this piece on TechCrunch ☞ Agree or disagree? Add me on LinkedIn with a note . .

Originally published at on March 10, 2019.



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PadSplit Inc.

PadSplit’s mission is to solve the affordable housing crisis one room at a time.