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Friday, January 23, 2009

The Future of Housing: Two Perspectives

Toward the Open Source Home

Smaller Houses reports: How modular DIY designs will bury the McMansion and usher in a new era of sustainable housing.

The housing market is in shambles. Thanks to years of unsavory lending practices, home foreclosures are at record highs across the country, and what was once a safe, reliable investment -- or at least something to "flip" for a quick profit -- has become an outright liability.

But from the ashes of this current housing meltdown, a new model for building and designing homes is poised to emerge, one fueled not only by technological innovation and a desire to reduce our footprint on the planet, but ultimately a complete re-imagining of what the home can and should be.

Whereas the craft-based approach to home design has yielded more suburban sprawl and cheaply-built, cookie-cutter McMansions, under this new model, residential design, fabrication, and technology integration will be used together to build high-performance, low-energy homes that are cost-effective, flexible and ubiquitous.

"Think of it as the iPhone approach to home design," says Michelle Kaufmann, a leading green architect, and founder of Michelle Kaufmann Designs. "The iPhone isn't just one thing. It's a phone, an e-mail device, a music player, all in one package. Even more importantly, it's customizable for each person. That's what we're trying to do with homes."

In other words, instead of a place to store all your shiny new technology, your future home itself will be the next great gadget.

DIY Design
Every era has its "future home." Whether it's Richard Buckminster
Fuller's Dymaxion Dwelling Machine or the Monsanto House of the
Future, these architectural flights of fancy speak more to the conceptual preoccupations of designers than any realistic vision of future living.

Yet a new generation of architects, builders and entrepreneurs are hoping to change this clichéd notion with practical and (most importantly) scalable solutions for building and designing houses.

Rather than any singular overriding design or vision, this new model aims to adopt what is basically a flexible, mass-customization home design system -- one that gives homeowners themselves the tools to design their own living spaces. Think Apple and Dell instead of Toll Brothers.

"The future of housing is really much more of an industrial design process than a craft," says Kent Larson, an architect and director of the House_n Research Consortium and the Open Source Building Alliance (OSBA) at MIT.

"Ultimately, we're moving toward an open source (home design) system that's very distributed. The end user will be empowered with web-based tools and configurators to construct something unique and singular."

In essence, Larson is talking about something analogous to Apple or Dell's online stores -- but understandably a bit more complex.

Under this new DIY design model, architects don't actually design houses anymore, he says. Instead, they'll simply provide the tools that allow people to build their own. Similarly, manufacturers will be transformed into tier one suppliers and builders will become the assemblers. Like today's consumer electronics industry, the system as a whole will be connected with standards to ensure quality and drive down prices.

The Upgradable Home
While this notion of flexible, DIY design will be key to reshaping the housing industry, so too will the actual materials being used to build these homes. According to Paul Warner, president of Michelle Kaufmann Designs, we'll continue to see a profound shift in the materials we use to build our living spaces.

Better insulation, high quality laminated woods, even repurposed or recycled materials -- all will play an increasingly important role in home fabrication.

But rather than a piecemeal approach to using these new materials (greening up your home by using bamboo flooring or installing LED lighting), precedence will be given to how all these materials work in congress.

"One of the things you do in gadget design is you balance all the product requirements," notes Warner. "All these parts need to be worked out into a system that performs well as a whole."

Like any gadget, the future home will only as good as its weakest link. And as the housing industry moves towards this new mass-customization model, it'll ultimately be the sum of the parts (the "experience") that counts.

In drawing inspiration from the electronics industry, it's important to note that there will be one major difference in building future homes: turnover. Rather than the planned obsolesce that dominates the CE industry, people will want the homes they build or renovate to last.

As such, upgradability will become even more important as future houses are built. Inevitably, newer, improved materials will emerge. So like swapping out your hard drive on your laptop or upgrading its memory, the home of the future will also be built with the assumption that newer materials will be incorporated over its lifetime.

"The upgradability of homes and buildings will play a huge role in future design, and creating a kind of smart spine or shell that can be easily updated with newer parts will be another part of the overall housing system," says Warner.

Process, Not Craft
Imagine if your car was put together by someone who not only didn't make the parts, but who also had absolutely no hand in its overall design. Strangely, this is how homes have been built in the U.S for the better part of a century. By almost all standards, it's been a miserable failure, encouraging only the proliferation of "dumb boxes" that are haphazardly nailed together. Pre-fabrication promises to change this. While the idea of the pre-fabricated home is far from new, many architects see the current housing plight as the catalyst that could finally spark a thriving pre-fab industry here in the U.S.

Indeed, as designing homes becomes more and more like designing gadgets or cars, mass production will become integral. Not only does this system set a reliable bar for quality and scalable base, it also lowers overall costs.

Turns out, a proof of concept model already exists. In parts of
Europe, homes are already built in these modern, automated factories.
Such factories churn out completed walls, floor and roof panels (complete with siding, windows and insulation) and all are assembled with the help of computerized, automated equipment.

Once completed, the parts are simply loaded onto trucks, shipped to the site and erected by in-house trained crews.

A Necessary Evil
If nothing else, the recent meltdown in the housing market has forced everyone to rethink the fundamentals of what a house is and what it can be.

"In some senses, the collapse of the housing industry is the best thing that's ever happened," says Larson. "The industry was fat and happy, doing sloppy things while churning out garbage and making tons of money."

"What is becoming evident to a lot of people in the industry is the old model doesn't work. And probably never will again."

Sure, it will take plenty of future investment and some further changes to regulatory laws for the housing industry to undergo the necessary metamorphosis, but we appear to be on the right path.

"I'm optimistic about the future," says Nabih Tahan, an architect who's building one of the first passive houses in the U.S. in Berkeley, California. "People are becoming increasingly savvy about their homes, and I think they are going to take the opportunity to do things in a different way now -- producing buildings and houses that are healthy and sustainable. This movement is starting."

In the meantime, the good news is that people are continuing to implement some of these new principles and concepts themselves, thanks to a wealth of free information from organizations and companies.

Like a gadget that doesn't quite live up to its full potential, savvy home owners are increasingly hacking their homes to fit their individual needs. It may be a temporary band-aid until a new housing market finally emerges, but as Warner notes: "A band aid is good if you're bleeding."

Think Small
Housing reports: The air has gone out of the real estate bubble, prompting a return to more modest housing, lending, and development.

A year ago, economists predicted 2008 would be a challenging year for the struggling real estate industry. The property market had just come off what seemed then like its worst year ever and signs of a recovery were faint. A year later, after watching property values plummet further, foreclosure rates soar higher, and home sales shrink lower, real estate professionals from Florida to California are now predicting far worse for an industry in ruins.

“The very future of how real estate is bought, sold, and financed is under tremendous pressure,” says veteran Florida real estate economist Lewis Goodkin. “There’s no question that the years ahead will be sharply different from years past.”

One of the biggest questions swirling in property circles these days is how a reeling real estate industry will reshape and redefine itself for the future. Few signs of a quick reversal of fortune exist, but a closer look at the future of the industry reveals important trends and, surprisingly, reasons for optimism.

Falling sales means a dwindling number of brokers. That, experts say, will be good for business. Like mortgage brokers, shrinking rolls of agents will eventually mean brokers are brought in only to do specific parts of a transaction for far less money.

After several years of escalating home prices, construction costs are falling. Lower construction costs will make it easier for developers to adapt to the current market by offering more affordable apartments and condos, rather than aiming for the high end.

The internet will, of course, continue to be a critical and growing part of real estate, as brokers and firms pour more resources into building smarter, more accessible websites. More listings online means more access for consumers. Eighty-four percent of buyers use the internet to search for a new home, and that number is expected grow, according to the 2007 National Association of Realtors Profile of Home Buyers and Sellers.

Homebuilders, meanwhile, are predicting the continued movement toward smaller homes, with more buyers opting for less square footage as a means of saving more. This is likely to result in cheaper homes on the market in many places.

Finally, tighter credit means some will no longer be able to line up easy financing to buy a home. That will lead more prospective buyers to rent rather than own, thus possibly sparing the industry another quick boom-bust scenario anytime soon.

To be sure, the real estate industry will have to dig itself out of a deep hole. Existing home sales fell last year to levels not seen in years, and the median price of a single-family home was off 13.2 percent in November, to $181,300. That’s the lowest price since February 2004, the biggest year-over-year drop on record going back to 1968 and most likely the biggest drop since the Great Depression, according to the National Association of Realtors. Foreclosures also ballooned, with one in 10 American households with mortgages now overdue on payments or in foreclosure, according to the Mortgage Bankers Association. The trade group predicts more foreclosed, vacant homes will be added to already bulging inventories this year, sending home prices spiraling down and putting more mortgage borrowers deeper under water.

The widening credit crisis is sure to have the greatest impact on real estate’s future. Big developers will be particularly effected, as banks pull back from a fast-deteriorating market. In New York, where a forest of glossy, new condominiums are in various stages of construction, nearly $5 billion in development projects has already been scrapped or delayed because of the banking crisis, according to the Urban Land Institute. A lack of construction financing forced British developer CPC Group to default on a $365 million loan for prime land it bought in Beverly Hills as part of a plan to build luxury condominiums. In Las Vegas, the $3.9 billion Cosmopolitan Resort went into foreclosure late last year and was taken over by Deutsche Bank.

"Massive projects are in real peril,” says Laurence Hallier, chairman of Hallier Properties in Las Vegas. The firm has built several condos, including Panorama Towers, where Leonardo DiCaprio owns a home. “Banks will no longer lend as freely and that will certainly force big changes on developers and ultimately reshape the way business is done.”

There is no quick fix to the credit problems, say experts. Until frozen markets thaw, banks will simply not be able to fund as many projects. But that, too, can be good, say industry veterans. “A slowdown is creating more time to plan and tempered expectations,” says Richard Green, a professor of real estate at the University of Southern California. He predicts that developers will be forced to downsize the scope of many projects. “Projects that do get funding will be sound, which will ultimately be good for an ailing industry.”