The voices of Urban Institute's researchers and staff
April 10, 2018

Four questions that will guide the future of homebuilding innovation

April 10, 2018

The residential construction industry is often seen as slow to change and trapped in tradition. But that unfairly characterizes the builders who are championing new approaches and developing innovations to boost efficiency and improve home quality.

While the private sector works to improve innovation within the industry, the federal government can also play a role in spurring innovation and scaling what has already been discovered.

To take advantage of that role, the US Department of Housing and Urban Development (HUD) asked the Urban Institute and the Virginia Tech Center for Housing Research to update a 2003 RAND report, Building Better Homes: Government Strategies for Promoting Innovation in Housing, which explored the contributors and barriers to housing innovation and helped shift the narrative around what an implementation model could look like.

But a lot has changed since 2003, and HUD wants more insight into what a housing innovation program could do, how it could accomplish those goals, and how to measure success.

To tackle those questions, Urban and Virginia Tech researchers reviewed scholarly work and media coverage about housing innovation, analyzed the contexts of previous public-sector interventions, identified public-sector decisions that should be considered to manage innovation, and garnered feedback from housing specialists and stakeholders.

The feedback included a workshop on March 29, where representatives from the building industry, academia, government, media, product manufacturing, research, and nonprofit spaces gathered to discuss their experiences with technological innovation and their recommendations for what role HUD can play in accelerating its adoption.

The stakeholders offered their take on four main questions that the report aims to answer.

Why is innovation critical for the residential construction industry?

Housing accounts for a large share of the national economy and employment, and it plays a crucial role in people’s health, stability, and well-being. Homes should meet people’s needs while being safe and affordable, but not all new or existing housing stock meets those goals.

There are also pressing national needs that only bricks-and-mortar housing can address. The recent wave of hurricanes that hit Texas, Florida, and Puerto Rico highlight the need for improved construction methods to make sure new homes can withstand another disaster. “There will be another hurricane. We know that, so we need to plan for it,” Pamela Hughes Patenaude, deputy secretary of HUD, said during the event.

Pamela Hughes Patenaude, deputy secretary of HUD speaks at the Strategies for Promoting Innovation in Home Building event. Photo by Emily Peiffer/Urban Institute.

Pamela Hughes Patenaude, deputy secretary of HUD speaks at the Strategies for Promoting Innovation in Home Building event. Photo by Emily Peiffer/Urban Institute.

What are the biggest barriers to innovation in homebuilding?

Before public agencies can remove the bottlenecks to housing innovation, they must understand what the bottlenecks are. Urban and Virginia Tech researchers point to housing’s boom-and-bust cycle as a deterrent of steady research and development funding.

Other barriers include the skilled-labor shortage and an overall lack of education and awareness of new innovations. “We need to make our industry a place where people want to engage in innovation,” said Andrew McCoy, director of the Virginia Center for Housing Research. Educating the public, the real estate industry, the insurance industry, and local officials about the importance of building better homes remains an ongoing challenge.

Which areas of innovation matter most?

Innovation is a broad term that can range from healthy housing to smart home technology to material efficiency. Stakeholders at the event pointed to resilience and healthy housing as two of their top priorities in housing innovation. “Resilience is defined as a broader, more positive concept than disaster mitigation, and it is open ended for research opportunities,” said Carlos Martín, a senior fellow in Urban’s Metropolitan Housing and Communities Policy Center.

Attendees also noted that many of the technologies and standards needed to improve construction already exist—it’s more a matter of figuring out how to expand those innovations to the broader market and convincing people that the potentially higher initial cost is worth it for a better home and a lower life cycle cost. Federal agencies need to figure out which areas they value most as they create policies to spur innovation.

How can HUD and other public agencies increase capacity for innovation in homebuilding?

Stakeholders at the workshop suggested that HUD could leverage policies that help bring innovations to the broader market. The agency could use its existing grant programs to provide incentives for certain building standards and codes after disasters, and it could expand data collection on the nation’s housing stock or collect new data on the activities and behaviors of housing industry actors.

“One of my top policy priorities is ‘rethink American communities,’” HUD Secretary Ben Carson said in a video to event attendees. “It is my hope that we can do this by considering every innovative idea to make our homes and our neighborhoods more affordable, healthier, and more resilient.”

HUD’s Office of Policy Development and Research will publish a final report including the workshop’s input later this year.

Construction workers lift a house frame. Photo by Blend Images/Getty Images.

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