CARY, NC / ACCESSWIRE / June 23, 2023 / The U.S. is experiencing a severe housing shortage right now. According to a recent report by Realtor.com, the gap between single-family home constructions and household formations grew from 5.5 million at the end of 2021 to 6.5 million at the end of 2022.
The housing picture looks a little less bleak if you account for multi-family construction (which actually picked up in 2022). Then, the gap between household formations and housing construction lowers to 2.3 million. But either way, a lot of homes need to be built in order to meet demand.
Fortunately, modern technology can help. Here are a few different ways it can address the shortage:
1. Accelerating build times
Tech can help build houses faster.
According to the latest data from the U.S. Census Bureau, it takes an average of 8.3 months to build a new privately owned residential building, but it doesn't have to take that long.
For example, according to McKinsey & Company, modular construction can reduce construction time by 20 to 50%.
What is modular construction? It's the practice of building individual sections of a house (aka modules) off-site in a factory and then shipping them to the construction site for assembly. This allows builders to mass produce homes via automated processes within a controlled environment that's less susceptible to outside weather conditions.
Other technologies that are speeding up the construction process include construction robots (for specific jobs like digging and drilling) and 3D printing (which can layer materials like plastic, metal, or cement according to preset computer designs).
2. Lowering the cost of construction
Modern technology can also lower the cost of construction. For example, modular construction helps reduce waste and limits the variability of production factors such as how much material is needed.
Similarly, construction robots and 3D printing technology reduce the amount of human labor needed to construct houses.
But it's not just machines that are lowering the cost of construction. It's also software. For example, builders can use construction enterprise asset management (EAM) software to optimize their use of materials and equipment to drive down project costs.
3. Expanding homebuyers' access to capital
One of the major challenges of the current housing shortage is its effect on housing affordability. According to a report by Redfin.com, housing affordability is at its lowest level in history, with only 1 in 5 U.S. homes for sale in 2022 being considered affordable.
Fortunately, there's been a wide range of tech solutions developed to help solve this issue. For instance, so-called power buyers like Homeward, Knock, and Orchard help people buy houses with cash offers, bridge financing, and trade-in programs. In exchange, buyers agree to get their mortgage through them.
Another creative tech solution that dampens the high cost of housing is shared equity financing, such as that provided by Point. It offers people upfront cash to buy a home in exchange for an equity stake in the home. Other tech companies like Divvy let you rent-to-own, i.e. rent now while you save for a down payment to buy.
4. Lowering the cost of mortgage administration
Home loan administration can be expensive. Between loan origination, payment collection, title searching, and default services, the costs can really add up.
However, companies like Provenance are disrupting the loan administration industry with blockchain technology. They record mortgage transactions on a blockchain to streamline the loan administration process and cut out many of the traditional middlemen who drive up costs.
Other AI-powered solutions help match borrowers to lenders and loan products to reduce the amount of time spent shopping for the right mortgage.
5. Improving risk-prediction methods
The amount of available data in the world is growing exponentially, and this includes data about housing. As a result, data-powered tech is improving mortgage and housing quality.
For example, drones can fly over housing developments to capture video footage, which can then be processed with AI software to detect defects and dangerous construction activity. This leads to greater quality control, which can increase available housing stock.
Data and AI can also be leveraged to better assess borrowers. For example, instead of relying on limited measures like credit scores, mortgage companies can take in other data about applicants' financial situation to get a more holistic picture of how much risk they pose.
Moving forward with housing tech
The current housing crisis won't be solved overnight, and many regulatory bottlenecks like zoning laws can't be addressed by tech alone. However, housing technology can do a lot to improve the situation. So now's the time for the real estate industry to embrace tech.
Media contact:
Company name: Cetaris
Contact email address: [email protected]
Country: United States
City: Cary, North Carolina
SOURCE: Cetaris Inc.