We need a revolution in the real-estate industry. Modular, eco-sustainable, affordable housing is on the rise.
A vision on how to build a better and more sustainable way of living. In the 21st century, an era that is fast paced and full of young eclectic millennial that adventures on a global scale. Finding a solution to the problem of growing demand for affordable homes will be a decade long uphill battle.
Shortage in affordable rentals
From Stockholm to Barcelona, affordable apartments are hard to find. If you managed to find one, consider yourself lucky. For the rest of us mortals, the reality is more harsh. In Stockholm getting a contract on a rental apartment currently takes about nine years on average. Prime locations could be as long as 20 years waiting. Living in the suburbs might be a matter of waiting some four years.
In Amsterdam, things are not very different. Average waiting time is 8 years, although housing regulations differ from Sweden, they have yet to found a solution.
For example, the emphasis on student housing through projects by BIG and Urban Rigger created 12 floating student units in the main harbour of Copenhagen. These are well built, modular units. However, for the 12 units developed, 3500 students applied. That leaves 3488 students without a place to live during their tenure at University.
In Sweden there are 1.2 million people in a housing queue. Of those, some 50% are actively seeking a place to live. The rest were probably fortunate to be put on a list by forward-thinking parents. These waiting lists are everywhere, with demand is disproportionate to supply.
But there’s another problem. The average newly developed apartment price has almost doubled from 2.5 million SEK (255k €) to 4.4 million SEK (441k €) since 2010. This is data from the units that have been sold, and numbers are average for the entire country.
To buy something at €441.000, banks require at least 15% down payment. That’s minimum €66k of liquidity, or saving more than 2 years of the average yearly income in Sweden.
So from a market perspective, you get an idea of the trajectory we’re moving in. There’s simply not enough affordable housing in Sweden. It’s also getting harder and harder to get into the real-estate game if you’re young — unless you have an inheritance.
This prevents people with less wealth from accumulating it in the first place, and fosters more social segregation.
Who wants to be in debt?
Contrary to popular opinion, “buying” a home doesn’t mean you own it. You owe the bank, so the bank really owns the home. You didn’t buy an asset; you have a liability. You might have the economic ability to invest in a €441k apartment, but some people don’t want to owe the bank €380k and be locked into a specific location. You might think this lack of commitment comes from a small demographic, but the amount of people currently breaking the traditional cultural norms of ownership are increasing at a staggering rate. (sources: 1,2,3,4)
These are young, free individuals who don’t put much weight in owning things, especially property. What’s the long-term outcome of this behaviour? Economists are crunching the numbers, but it doesn’t look good.
However, with affordable housing solutions, this behaviour could reverse. What if you invested in your own modular property, that could be upgraded or downgraded on demand?
What if when you move, you can move your home with you, or simply rent it out while you are gone? And what if this was all done automatically through a service provided by the project? Think in lines with what Airbnb has done for homeowners. When you are going on longer holiday or not using your home, let someone else rent it. Airbnb have already paved the way and opened up a potential future market. The social barriers of renting out your home has crumbled and in 2020 Airbnb are looking at a hitting $10 billion annual revenue.
So taking 30 years to dig yourself out of debt you’ll invest just one third of your annual income, and probably get a loan that’s closer to a year’s worth of income. You’ll own your first home within 5 years — completely debt free. This home could be 100% sustainable, up cycled, smart, cheaper to run, and in the end, be able to pay for it self if you leave on holiday.
Co-living, not just room sharing.
Deploying units does not mean they have to be inhabited in singular. The units them selves can have the private spaces and your own little safe zone. Around the units, you can create a vast variety of spaces. Commune kitchens and dining areas, co-working spaces and common living rooms and outdoor space for activities. Yoga and meditation spaces and much more. Studies now shows that one of the most important things for longevity is social bounds. And what better way to try to solve modern day isolation than co-living.
Learning from the automative industry
Today’s building costs are at all time highs, even though the industry has seen countless innovative step changes. One core problem are middle men. Like any supply chain, there are too many people that eat from the cake. Tesla made it their mission to cut down on supply chains. Although they can’t reduce it to zero, they can come pretty close. One obvious area they cut down were dealers.
The same is true for affordable housing. If we’re to be successful in the “affordable” category, then we need to remove real-estate agents from the equation. Sell directly to customers, to also ensure an absolutely flawless consumer experience.
If I had asked people what they wanted, they would have said faster horses.”
In a small survey I conducted some weeks ago, people find it more important that there is high speed internet at home (9.2 out of 10). Than the home being pre-furnished (4.1 out of 10). or contain smart features (5.3 out of 10). People also valued sustainability (8.4 out of 10). Interior Design and Architecture on the other hand score slightly lower (7.8 out of 10). Surprisingly modularity, being able to add or subtract space from your home on demand was rated quite high (7.2 out of 10). If you are interested you can see the report here.
These findings might surprise you. Adding a very good internet connection is a lot cheaper than having high end furniture in each apartment, but people would probably value the internet connection more than furniture. Also, there’s no need to make an iron man tech house, but instead, focus on having a sustainable and environmental home — because that’s something people will value more.
Before jumping to conclusions, consider Henry Ford’s quote. People may not understand what they’re looking for, nor really know what they want. But that wasn’t the point of the survey — I just wanted to have an idea of what amenity was more valuable.
From my research, I can make interesting mockups, proposals, renders, and tech-specs that are focused around these insights. My goal? Keep costs of production down, but the perceived value high.
Moving forward, what else can we learn? We could start producing our modular units in a mass production way, utilising the assembly line as a starting point. We can streamline the way we build by placing assembly lines close to — or even on site — depending on the scale of the projects.
If we look around at public spaces, hotels, airport or big industrial buildings, they’re moving towards an industrial finish. This is not just cutting down costs, but a good design choice. People all over the world seem to connect more with a building that reveals some of its functionality to inhabitants. By finding a good balance between high-end finish and raw building materials, it is reducing costs even more. Future proofing the units for zero environmental impact will also have the long term effect of being cheap to maintain. More freedom for the inhabitants.
Deploy modular homes in urban environments
We have small and large urban cities with intense economic growth that eventually pushes out the original tenants to pave way to a wealthier demographic: gentrification. Currently there’s no solution for this that doesn’t require a mass number of people to change their habits in quite drastic ways.
With a modular building approach, you could easily and quickly deploy units to these vacant lots and give homes to people faster than regular development. When real estate appreciates and land becomes too expensive to rent, you won’t lose your home On the contrary, you’ll either be able to sell it for a profit or take the home with you to another place.
There’s also opportunities around old shipyards, industrial areas that are largely under-utilised. You could place homes on a 10 year contract, until cities decide what to do with the reclaimed this space. In the meantime, people will have a home. This is a sustainable solution to a growing problem, and it will buy cities time to find a better long-term solution.
Deploying modular homes in less urban environments
Suburban or less urban areas share similar problems as cities, particularly, a lack of a strong community. For example, simply by changing the way a home is positioned could create a sense of belonging. This is extremely powerful.
Using placing methods is another way to keep costs down. Because it does not affect the production methods.
Because there is no need for a foundation, there is way less environmental impact. This means you can place units on protected land, because there’s no impact on the land itself.
Learning from software development and digital product design
The real-estate industry is a dinosaur. It’s a place where you put dumb money at work with very little or close to zero risk, and feeds a bunch of fat cats. There are edge-cases and there is movement on the horizon, but nothing really tangible has disrupted the way we think or act around housing.
Having spent the past 8 years in and around startups, I’ve witnessed how insanely hard it is to beat failure. Having failed in my first startup, I know what it’s like to make tough decisions. When shutting a service down is the only right thing to do, even though it might feel close to turning off the oxygen of a sick family member who’s beyond help.
I’ve also witnessed success. I spent the last two years building amazing products with very talented people over at Typeform.com — we’ve kept growing at an almost 3x year-on-year for the past 3 years. I witnessed the growing pains, too.
It’s caused me to look at housing problems with a fresh mind. How? By thinking more like an assembly line, smartphone production or car manufacturing has brought a possible solution one step closer.
Having quick feedback loops, where ideation, prototyping, validating, producing and ultimately shipping is part of your job. This production model has worked magic in the software industry, and I’m sure that it will disrupt how the real-estate industry operates very soon.
Rather than designing a one-off solution, Habitat seeks to design a system. A modular system of components and modules that creates the perfect home for you. We can focus on the core functions and modules and trim them of any excess weight or costs. A unified system that uses the same building blocks to create customised solutions for just about anyone’s tastes.
Imagine your house getting updates that will decrease the energy consumption, or increase the output of fresh water. Or perhaps tweaks the usage of appliances more cleverly throughout the day.
Or having your home renting itself out when you’re not using it, with your permission of course. A home maybe the most Human Experience of them all.
What are the next steps?
Currently I’m working on a more inclusive white paper that will define the problems and the assumptions. That white paper will also serve as a key part in selecting a starting point, or writing a master plan. I want to have respect for the problem(s) that exist, and try to select the ones that could yield the greatest benefits. Maybe there’s not a once-size-fits-all kind of approach. I’m certain that choosing the right set of problems to solve will give us the right strategy to pursue
Trying to cut the average cost by a factor of 10, but still have the same or higher quality in the builds, is potentially the greatest innovation. Use all green products or up-cycle, with a minimal carbon footprint. We want to show, like Tesla has shown with the move to electric, that housing too is ripe for a major revolution. A revolution that will empower people with more freedom and less economic pressure. A revolution that will ultimately help us live with less things, ultimately helping us relieve pressure on planet earth.
I’ve named the project “Habitat”. We look to solve the growing problem with affordable & sustainable housing.
It’s driven by a solid market economy foundation, and some socio economic ideals. I’ve always liked project/businesses that are profitable from the get go. However I don’t like when capitalism takes advantage of weak markets to maximise profits, but nor am I a Marxist.
I strongly believe there is a more sustainable way of doing things. I’m still not sure how these solutions will manifest, but I’m still working hard on defining the right set of problems to solve.
The first part of this journey has been to collect extensive amounts of data on existing situations. Local and nonlocal problems. The housing markets are different across Europe and the globe, however there is a similar pattern across all borders. Housing is getting proportionally out of control when it comes to affordability. And young people tend to own less and less things. This will eventually have a huge impact on the global economy and economic mobility. Our future is at stake.
Up next.
I’m building a prototype micro-cabin in downtown Barcelona. It will feature some basic amenities, it will be sub 10 square meters. Mainly I’m building this to test a modular building system I’ve designed but also to gage peoples interest and occupy my december month. I’ve set a very tight dead-line. 3 weeks to, design, manufacture and assemble the cabin that leaves me with 1 week to do a public display. Follow the progress at http://linusekenstam.com/habitat
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Big thanks to Paul Campillo for helping me with edits on this post.
If you feel strongly about the problems touched in this article, or simply want to join in on discussions or share ideas. You can find me on twitter @linusekenstam or on Facebook Messenger or you can simply send me an email at linusekenstam@gmail.com
