Today’s housing affordability challenges—a full spectrum of conditions tucked under the umbrella of homelessness, low- and moderate-income access to good homes and communities, and, increasingly, displacement in neighborhoods undergoing economic revival—have been decades in the making.
They're never, under any circumstances, going to get solved overnight. Especially when it's so hard for a hundred people in a room to agree on why they're there in the first place, and why they're getting worse.
We debate, often vehemently, about root causes, the very beginnings, and the complex, troublesome maelstrom of forces that, together, have made matters in 2019 as profoundly stubborn as ever.
Social and economic mobility, land use regulation and local policy, lagging development and construction productivity, and capital investment’s selective appetite for risks and desire for reward could each and all fairly get blame as causes for the fact that the haves-vs.-have-nots dividing line in new housing development has widened, is widening, and will widen further if no way to transform current trajectories and dynamics emerges.
What arises, for me, are two stark realizations. Housing's problems spill over into the economy, society, and our culture on a broad level, and create a drag on the progress of all three dimensions. At the same time, we seldom look at whether and how those forces and dimensions outside the fences of housing's secular challenges work both as part of the larger problem and potentially part of the solution to housing's ills.
Underlying each reckoning is a big question--even as we cannot fail to recognize a pervasive sense of powerlessness and lack of engagement and agency among private enterprise and private capital market players: Whether market-rate players serve a role in both intensifying the challenge and possibly fueling solutions.
While there's no deception in the question, you might say there's a trick answer to it. It's this.
If market players stick to their current strategic, capital, and operational models, the answer is a flat, unequivocal "no."
Without a material and decisive break in the current value stream, the path forward for market-rate housing leads inevitably into a smaller and smaller universe of qualified, financially-ready, and predictably higher-earning buyers and renters, further separating from the growing ranks of overburdened, under-resourced, and, perhaps never even aspiring population, trapped in their sub-layer of social, economic, educational, and health immobility.
The trick comes when you peer through another lens in making the response.
Disrupted, transformed, and re-invented business models--including those that extend beyond the normal precincts of housing development and investment to healthcare, education, and other non-endemic pillars of business and society--will necessarily play a role.
Here is why market-rate players won't become part of solving housing's affordability crisis as they're currently constituted and oriented toward their stakeholders' interests. They're looking at high barriers--productivity, policy, and capital--and seeing chronic "fails" to structural change in either of the three. In fact:
- You don't change productivity without a holistic process make-over.
- You don't change policy without addressing political will.
- You don't change finance without addressing, in the end, households' earnings capability.
This is why we think an announcement yesterday, from the South By Southwest festival in Austin, by Kaiser Permanente and a number of venture partners teamed up with Community Solutions is big news for market-rate players as well as non-profits.
First of all, what is the nature of the announcement?
At the annual South by Southwest Conference, Kaiser Permanente today announced a partnership with Community Solutions to help accelerate efforts to end chronic homelessness in 15 communities within Kaiser Permanente’s national footprint.
As part of the new partnership, Kaiser Permanente will provide $3 million over a three-year period to Community Solutions’ Built for Zero initiative, which uses real-time data to help local leaders better understand the dynamics of homelessness in their communities. Built for Zero enables communities to adopt problem-solving tools and technologies to end homelessness and the conditions that create it.
“Kaiser Permanente is investing in efforts to reduce homelessness and housing insecurity because there is a proven link between housing and health,” said Bernard J. Tyson, chairman and CEO of Kaiser Permanente. “Addressing affordable housing and homelessness is crucial to Kaiser Permanente’s mission to improve the health of our members and the communities we serve, and to advance the economic, social and environmental conditions for health.”
Here's what's game-changing about this initiative.
- It leverages technology and big data by way of bringing the challenge to a human on the street level, out of the pie-in-the-sky "innovation" land where many talk and few act.
- Secondly, it recognizes that finance and capital necessarily include more than endemic housing development experts and stakeholders, instead recognizing that it's a societal investment to move people out of harm's way living on the streets, into fair, safe, desirable places to live, as part of an ecosystem's way of repairing lives, lowering health costs, and reducing a growing burden on society.
- Third, there's a template for this Built for Zero program, now working in 70 communities. As a "productized" community, municipal, and local benefit, it can turn political will from "against" to "for" because it doesn't need to go through brain damage of inception to operation in each locale.
Here's Lindsey Giblin, portfolio lead for the Built for Zero program on the role of data:
Until recently, most cities had little information about their neighbors experiencing homelessness, relying on annual census data and using this figure to inform decision-making long after. We found that outdated data was limiting communities’ abilities to address homelessness with the skill and precision needed to end it. Instead of collecting data once a year, we created a comprehensive account of every person experiencing homelessness at a given time in a community. We call this data set the by-name list.
Our data team worked with communities and partners to develop a clear, measurable standard for real-time data and tested it over several months. But raw data wasn’t enough—we needed to communicate this standard in ways communities would understand.
Ironically, it's big data that can put a name, a face, a flesh-and-blood human to this issue, and perhaps, change the notion of policy reform toward moving political will from opposition to support.
One key to the process is data, and a visual dashboard that lets agencies track people experiencing homelessness in real time. In Abilene, with a population a little more than 120,000, for example, the city located every homeless veteran, gathered information about each individual situation, and stored this information in a “by-name list” that was continually updated. “It basically just forced us to continuously look to change improvements to our system, and how to use real-time data to improve our performance,” says John Meier, the program manager for supportive services for veteran families for the West Central Texas Regional Foundation. “We’ve always had lots of data sitting around, but haven’t had it in one place and [haven’t been] utilizing it to our advantage.” Every agency in the city began working together and meeting to discuss how to get each veteran–21 people, as of February 2018–into housing. While watching the data, they could test interventions like working with local landlords and the public housing agency to prioritize people on the list. The average amount of time to house a veteran shrank from more than 40 days to 26. By November 2018, 10 months after joining the Built for Zero program, Abilene had reached the goal of “functional zero” for veteran homelessness.
Who and what caused and continue to cause housing's profoundest challenges will likely remain the source of deep disagreement. An issue for those whose businesses play in the macro sector of market-rate housing development and construction is whether there's a place for them in any area other than the shrinking top of the pyramid of demand.
The Built for Zero program suggests a model that looks less at the root causes and more at the entire system of investment necessary to change the calculus of the productivity, policy, and finance challenges for housing.
Technology--in this case Big Data that humanizes an issue, and transforms a conversation from theoretical and amorphous to flesh and blood people with names and faces plays an important starring role in the solutions.
But so too will a fundamental change in mentality. That it took many, many years for housing to face the problems it faces today. And it's going to take more than housing players--organizations with health, education, economic, and cultural outcomes at stake--to work those challenges eventually into solutions.