How Business Innovation Can Help Solve the Housing Crisis
CEO of National Housing Trust Priya Jayachandran shares recommendations to advance the housing sector.
According to MIT Sloan School of Management, housing advocates are feeling hopeful that next year may finally bring change.
“Come January 2025, we’ll have a new administration, and there will be pressure and an opportunity for, hopefully, major housing legislation. Because the reality is that we haven’t had major housing legislation in nearly 40 years,” said Priya Jayachandran, CEO of National Housing Trust.
In a keynote address at the MIT World Real Estate Forum in June, Jayachandran attributed part of the problem to restrictive zoning that limits the amount of room for new housing.
“The statistic I like to use is that the city of Los Angeles is home to 10 million people, but current zoning would allow for 4 million,” Jayachandran said. “Zoning has become a weapon of exclusion in this country.”
Compounding the problem are cumbersome regulations that can slow the development process — which currently averages about five to 10 years from inception to move-in day, Jayachandran said. “Not only are there usual hoops that you have to jump through — water permits, sewage lines — but there’s a lot of NIMBY opposition. All of those approvals that are needed, every one of those is an opportunity that invites neighborhood opposition,” she said.
But Jayachandran said she feels the timing is finally right to make real progress over the next few years. A confluence of factors are working in the sector’s favor.
“We finally have the political winds at our back to do something about this problem,” she said. “We’ve got partners in the tech sector [and] in the academic sector. Venture capital is finally interested in fintech for housing.”
Innovation can help drive the sector forward, Jayachandran said. Some of her recommendations:
Embrace modular housing to help address demand
There’s a desperate need to update the affordable housing stock in the U.S. Jayachandran said, with many properties now decades old “and showing their wear and tear just like any home that we live in is.”
Part of the problem is that productivity in the construction industry has declined by half since 1968, despite the fact that nearly every other industry has become more productive.
Enter modular building, a way to lower construction costs and speed up the building process by fabricating buildings off-site at a factory, then transporting those components to a construction site where they’re assembled.
“We have now several factory-built construction companies that are serving the affordable housing market, some in Europe, some in the U.S., and you’re finding more affordable housing owners experimenting and trying it,” Jayachandran said.
