How The Real Estate Market Is Changing With Novel Forms Of Living And Innovations
The real estate market has changed. New forms of living are taking over as the standard, making room for various innovations in urban planning and sustainable architecture.
From micro-homes to tiny houses and container homes to treehouses, people are becoming more creative with how they inhabit their spaces. This episode will discuss how the real estate market is changing with these novel forms of living and innovations.
How The Real Estate Market Is Changing With Novel Forms Of Living And Innovations
We are joined by David Friedlander. He is a very interesting guy. A housing innovation veteran who loves to experiment with lifestyle design and the way he lives. He has been featured in the New York Times, and you might remember him from a Netflix documentary on Minimalism. He's done a lot to impact the way the industry thinks about living. David, thank you for coming to the show.
It’s a pleasure being here.
Firstly, what is a housing innovation veteran?
The veteran part is just I'm getting older. When you do something long enough, you can call yourself a veteran, on the record, with novel forms of housing and living because the two are inseparable. You can't put an old mindset into a new structure and whatever the technology is. The technology in question is housing. Looking at how innovation can be brought to bear to make housing better. From a product standpoint, this is something that can be sustained and equitable.
The housing economics, whichever way you get there, has to be assaulted from a number of ways, the local economics incomes, local businesses, and all of this, that they are in sync with the product that is available. In the case that I'm focusing on, the product is housing. Most of that has been geared towards new forms of architecture like micro-apartments but then that translated to new operating models and new types of modern methods of construction, the Modular, prefab, and ADU. Anything that deviates from the norm, I have researched for good several years.
You have even written articles across some very large publications. I have enjoyed reading some of the things you have said. When we think about housing innovation, where is the core problem? Where do you see it? Some might suggest that it's a global problem targeted or the affordability spectrum where we need more affordable ways to house people.
You've got cities, and I'm in San Francisco, where it costs the state $60,000 for each homeless tent and hundreds of thousands of dollars when you look at the costs fully loaded. On the other spectrum, perhaps the problem might be commercialization and finding better investment opportunities on the institutional side. Where do you see the crux of the problem that housing innovation needs to address?
You have some nice stuff to wrap around. I will parse this out in a few different ways, and they are related. One is the number of people that are at stake with the wrong solution. When you can essentially monetize homeless people for $60,000 a head, that’s one of the more gross examples of this. I like to say to some of my engineer friends that basically, the world is all patches and glue now. It's fixing problems that shouldn't need to be solved. You have a lot of people at stake pushing the wrong agenda.
You can't put an old mindset into a new structure.
I will bring it to my area of expertise, which is housing innovation. In San Francisco, I was trying to push a modular homeless housing project. The developer I was working with was trying to lease back beds with supportive services like $1,000 a head, which is almost a third of the debt service fees on these dilapidated SROs. It was shut down because San Francisco Labor Union didn't have a full stake in the project.
The lot that we were asking for was over a Department of Public Works. It was a platform over a parking lot. This super unloved piece of land and labor shut it down. You could see that everywhere, where there are people who are like, “This is going to mess up our contracts and vendor or whatever.” That's the biggest thing. The people who won't get out of the way of innovation, whether it's from a policy or a technological standpoint.
It's the regulators that are putting all these bureaucratic processes in there. We don't want to make it about California but California is doing great things with this.
I could do that with any state.
You've got the concept of ADU is Accessory Dwelling Units where California is making it quite easy to add or convert structures in your yard to have a one-bedroom apartment, for example. At the same time, there seems to be a resistance to the new, which is shocking because to repeat what's broken is nonsense. It’s insanity, and we have a severe shortage of housing. When we look at the regulation side, the people who are involved in these positions of power or decisions, what are they afraid of?
They are literally afraid of anything being disruptive. It's not the fear of new. I want to be clear. Particularly, in San Francisco, I have a number of hometowns. I'm in Boulder, Colorado but I spent a lot of time in the Bay Area. Nineteen years in New York but strong ties to DC, Boston or everywhere. More or less, the same phenomenon has been going on. This is what I have been talking about in terms of product. They have been building new stuff but it's not the right stuff. It seems like a minor detail but it's not. You are in San Francisco, and they put up the Millennium Tower. We shortchanged on the engineering, and I think I threw you.
For some of our readers. It's hilarious but it's not hilarious if you bought it.
You probably know more about it than I do.
It’s pretty terrifying because I believe that's the building that's slowly tilting, and they have spent or that budgeted hundreds of millions of dollars to repair it off the loss. It's a big building, and it's very difficult to address this problem. I appreciate that there is a requirement now to have a section of your projects to have lower income-affordable.
This is the whole monetization of dysfunction. We shouldn't need that stuff. I'm not talking some esoteric language. Go to Europe, and people of various different income levels live in fairly modest-size multifamily places. It’s not this huge sprawling universe, which is what we’ve got here.
Are you saying part of the problem is our need for space?
There are a lot of problems. I will bring it back to Urban Dwellings and Millennium Tower. These super tall things seem cool when it's like, “We can do them but,” as you said, we are averse to the new but we are also averse to looking back at the past and seeing what works. I will go back to Europe, where most European capitals don't allow skyscrapers. We go to America, where they are popping up like zits on a teenager or whatever. I'm sorry for the metaphor.
The world is all patches and glue right now, and it's fixing problems that really shouldn't need to be solved. You have a lot of people at stake pushing the wrong agenda.
Go to Miami, Boston, Salesforce, San Francisco, New York, and all these things. They have been popping up these towers. I sent you an essay that I'm hoping to get published soon. Essentially, these towers are not in terms of what we know about product design and how people use their built environment. These are not good buildings. They are not good design.
When you have a three-story foyer that's essentially designed around dark money from countries that I won't name, that's the market base. I'm not talking about poor people. I had a hard time affording my place in New York City and like, “I'm not poor.” This is ridiculous. When you build the Millennium Tower or the super tall tower in New York City around these markets that are detached from who the workers are in the neighborhood, it's so offensive from a product standpoint to say that that's the best that we can do.
This is the assemblage of hard-fought labor and materials. Why don't we build something cool? That has always been my crux. Let's build something different, and that's on point with the data, with some point with the climate data. The seeds are rising. The temperature swings are getting more violent. I'm in Colorado. There are a lot of issues with Colorado health and San Francisco air quality when it bumps up to 250.
We need to start dealing with this stuff, and yet there are no responses. Letting the needs of stable capital market growth trajectories, basically the security of some local council members. Those things need to come way behind housing affordability, climate adaptation and making places vibrant, beautiful places to live, which seems to not be a priority in this day like the peneralization of America.
You talk about cool and new. Some of our readers are going to be skeptical and thinking, “Houses are houses, why do you want to try to build something cool and new?” You want something that works, and surely the current model or methodology works well. That's going to be what you are going to have for many people. You don't want to be experimenting with people's houses. I'm playing the devil's advocate here, and I’m talking about PropTech.
Help me understand what you mean by cool and new because a lot of people struggle to understand what is the need for this. This seems to be a very nichy type of niche, very high-tech forward view, not something that can be implemented at a mass level. I know that's not the case but how do you help get that message across?
The big thing is to differentiate. I try to have a cool guy. This guy is like what a classicist I am. I'm far more into ancient history than I am into current events for a good reason. They seem to be the same thing anyway. I'm not suggesting anything new. In fact, most of the stuff I'm pointing to is very much about classic ways that humans have organized themselves and looked at the data. I heard them back to an article that was ragging on suburbs. I'm from the suburbs. I am the by-product of a Greenfield multifamily real estate developer’s dream for a multicultural suburban dream. It turned out to be a nightmare in the long run.
This article, and I didn't write it, the name is, Why Even Driving Through the Suburbs is a Soul-sucking Experience. Essentially, what the author did nicely is said, “We go to whatever, Florence.” I don't know if you have ever been to Florence or Munich. The historic district of Paris. I have been to Marrakesh. These places that are beautiful. They are not beautiful for no reason. They are the accretive product of Millennia of design. We have ditched that design process because we can build bigger houses but do we need them? Is this the right product?
We could build an iPhone the size of a house but do we need to? It's a lot more convenient to put it in our pocket. I have these suburban-sized iPhones as far as residential needs go. They have these humongous homes that essentially are literally at odds with both nature or capital and nature. There's the way that ecosystems work resource management work but work against the way that people work. Referring back to the article, you go to these old cities, walk down the streets, and there's life. You are in San Francisco, and it’s having problems.
I was in New York for a long time, and I'm in Boulder now, which is a fairly contained area too, and it's nice to be around people that you know. It's nice to be able to walk or bike where you want to go instead of having to drive everywhere. This is not a political thing. It's not even an environmental thing. This is an optimal product design. We have some very good ideas in terms of the scale of what cities and housing units should look like. I use the expression, “You are designing for the ages instead of the times.” Why are there all these housing formats that we are still using in England, Singapore, and Hong Kong? We have been using it for hundreds of years.
They are like, “Why don't we build those but do it with CLT panels and whatever automation we have at our disposal? We can figure out some way of training people. Being skilled in carpentry is a great job. A combination of new and old attacks is what we are craving. This is what we go on vacations to experience and yet go out and resign ourselves to the substandard fair. When we get back home.
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About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.
His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as "Forbes 30 Under 30," "Inc. Magazine's 35 Under 35," and the "SF Business Times Tech & Innovation Award." He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.
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