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Once upon a time, the idea of 3D-printed homes felt like a thing of the future.
But as housing gets less and less affordable — especially in ultra-expensive markets such as the Bay Area — companies are getting creative in their quest to build more affordable homes using technology.
One of those companies, Oakland-based Mighty Buildings, just raised $40 million in Series B funding for its quest to create homes that it says are “beautiful, sustainable and affordable” using 3D printing, robotics and automation. It claims to be able to 3D print structures “two times as quickly with 95% less labor hours and 10-times less waste” than conventional construction. For example, it says it can 3D print a 350-square-foot studio apartment in just 24 hours.
The four-year-old startup’s efforts caught the eye of Khosla Ventures, which co-led the financing along with Zeno Ventures.
Ryno Blignaut, an operating partner at Khosla, believes that Mighty Buildings — which launched out of stealth last August — has the potential to cut both the cost and carbon footprint of home construction “by 50% or more.”
The company takes a hybrid approach to home construction, combining 3D printing and prefab (meaning built offsite) building, according to co-founder and COO Alexey Dubov. It has invented a proprietary thermoset composite material called Light Stone Material (LSM) as part of its effort to reduce the home construction industry’s reliance on concrete and steel.
The material can be 3D printed and hardens almost immediately, according to the company, while also maintaining cohesion between layers to create a monolithic structure. Mighty Buildings can then 3D print elements like overhangs or ceilings without the need for additional supporting formwork. That way, it’s able to fully print a structure and not just the walls.
Robotic arms can post-process the composite, which combined with the company’s ability to automate the pouring of insulation and the 3D printing gives Mighty Buildings the ability to automate up to 80% of the construction process, the company claims.
Khosla was drawn to the Mighty Buildings’ innovative approach.
“We believe in dematerializing buildings and non-linearly reducing the amount of cement and steel used, thereby reducing the cost of construction in order to increase affordable access to housing together with improved sustainability,” Blignaut wrote via email.
Mighty Building’s use of 3D printing, advanced manufacturing techniques, modern robotics and “new lighter and stronger materials” gives it an edge, he added.
Since its launch, the company has produced and installed a number of accessory dwelling units (ADUs) and is now taking orders for Mighty Houses — its newest product line that will range from 864 to 1,440 square feet at an estimated cost of $304,000 to $420,500. (Similarly sized houses in some parts of the Bay Area can sell for upwards of $1 million).
The units are created with a 3D-printed exterior panelized shell while certain elements — such as bathrooms for example — are prefabricated in the company’s 79,000-square-foot production facility in Oakland.
For now, the company is only building in California, but Dubov says it’s open to exploring other markets as its factory can be replicated.
Also, Mighty Buildings plans this year to market its Mighty Kit System and a new fiber-reinforced material for multi-story projects as part of a planned B2B platform for developers. In fact, the company already has secured contracts with developers for its single family housing product line. It also plans to use the new capital in part to scale its production capacity with increased automation.
Ultimately, Mighty Building’s vision is to provide production-as-a-service, with builders and architects designing their own structures and then developers using Mighty Factories to produce them at scale.
Mighty Buildings is not the only startup doing 3D-printed homes. Last August, Austin-based ICON raised $35 million in Series A funding. The company also aims to reinvent building affordable homes with the use of 3D printers, robotics and advanced materials. The biggest difference between the two companies, according to Dubov, is that ICON does primarily onsite construction while Mighty Buildings prefabricates in a factory.
More than a dozen other investors also participated in Mighty Building’s latest round, including returning backers Bold Capital Partners, Core Innovation Capital and Foundamental and new investors including ArcTern Ventures, Abies Ventures, Modern Venture Partners, MicroVentures, One Way Ventures, Polyvalent Capital and others. Mighty Buildings was also included in Y Combinator’s Top companies list, all of which have valuations over $150 million (although the company declined to reveal its current valuation).
For its part, Khosla’s Blignaut believes that buildings are “a big part of our urban landscape and a large consumer of resources.”
“Construction and building account for more carbon emissions in the U.S. than transportation or industry,” he said. Other portfolio companies addressing such challenges include Ori Living, Vicarious, Katerra and Arevo.
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In 2020, nearly $24 billion in venture capital poured into companies creating new technology products or innovative business models for the real estate market.
While things like smart home apps and digital mortgage financing services make life easier for upmarket renters and homeowners, none of these technologies help improve the day-to-day struggles of the vast majority of low-income families.
Many of these emergent technologies could be adapted to become “housing tech” solutions — focused on financial resilience, fresh food access, healthcare access and workforce development — which have the potential to transform the lives of our most at-risk populations.
You can make money while serving the public good.
Consider this: Nearly eight million Americans have slipped into poverty since May, according to a study released by Columbia University. Before the COVID-19 crisis hit, approximately half of all American households struggled to pay rent; a problem that is growing larger by the day as pandemic job losses continue to mount.
About 23.5 million people — half of whom are low income — live in food deserts where access to affordable, healthy food is limited or nonexistent. And good health care is almost impossible to access, let alone pay for, if you are poor.
As the global crisis continues to lay bare the deep inequities in our society, it’s clear that we need new ways of thinking to address these systemic issues. Investment in technology innovation in the affordable housing area could help solve these problems.
Local governments and nonprofits are doing what they can. In 2015, New York launched Urbantech NYC to uncover new technology solutions to urbanization problems faced by government, businesses and urban residents, tackling issues related to food, water, medicine, waste management and other problems.
In 2019, Enterprise Community Partners, a national nonprofit, partnered with MetaProp, a leading proptech venture capital firm, to invest in housing tech companies that are developing technology innovations to help families find an affordable place to live.
These efforts are commendable, but it is not enough. The housing tech movement needs more champions.
First, we need a more patient venture capital source, with a better understanding of underserved communities. Most venture capital firms fund what they know, and unfortunately few understand the affordable housing community, which is largely minority with female heads of household. But pay attention: There are lucrative opportunities here.
Affordable housing property managers tend to invest far more in social services for their tenant population than market rate property managers considering the coolest new piece of technology. You can make money while serving the public good.
Second, housing tech is in desperate need of an accelerator. The tech is out there, but most entrepreneurs don’t know how to “sell” to this specific customer base, which they must do if they want to create viable businesses that will attract venture capital. There are numerous existing technologies ready for an accelerator to take to the next level. These are a few of our favorites:
- Financial Resilience. Low-income people who live in affordable housing are often burdened with confiscatory payday loans and check-cashing services. Many don’t have banking relationships and pay rent in cash. The Lifesaver app helps households, especially those without banking relationships, navigate financial services and become more financially resilient. Earnin allows people to access their pay, with no fees, as soon as they work the hours without waiting for the payday to arrive. Research shows that people who take these short-term loans from nonpredatory lenders actually find themselves more financially stable in following months.
- Fresh Food Access. Cheetah, a wholesale grocery delivery app, has placed community fridges as fresh-food pantries. Via, a transit-on-demand provider, partnered with LA Metro and First 5 LA to subsidize food delivery during the pandemic, especially to women-led households with little children.
- Healthcare Access. Roundtrip provides booking for affordable nonemergency hailed rides, wheelchair vans and other specialized medical transports. Healthify offers a database of vetted and curated community resources, as well as information about the social determinants of health. Emerging software apps that facilitate telemedicine could also expand access to necessary health care.
- Workforce Development. Skilling America is a new workforce platform from Goodwill that improves placement, retention and promotion rates, and most people using the platform are doing so on their smartphones.
An accelerator could also connect housing tech to affordable housing owners and property managers looking for ways to magnify the impact of the social services available on site. The top 50 owners of affordable housing developments have the reach to connect tech developers with almost a million households.
These owners and property managers could act as leadership ambassadors of collaborative efforts among tech developers, venture capital investors and potential housing tech users.
We work every day with the inspiring stakeholders in the affordable housing community, as well as local governments and tech entrepreneurs looking to bridge this digital divide. This isn’t a pie- in-the-sky vision. The future is here and the call to action is now.
In the aftermath, some people are deciding to just begin new lives elsewhere. The pandemic and longstanding housing problems haven’t made the choices any easier.
Amazon is planning to spend $2 billion over the next five years to invest in affordable housing in the three cities where its major offices have helped jack up housing prices, the company said today.
The company will be using loans, lines of credit, and grants to “preserve and create” 20,000 committed affordable units for low- to moderate-income families in the general areas around Seattle, Nashville, and Arlington, Virginia, where it has a large corporate presence, Amazon said in a press release this morning.
“Affordable housing” is generally defined as priced to be within reach of families making 80 percent or less of the area median income. Amazon specifically is targeting households coming in between 30 and 80 percent of the area AMI. The AMI for the Washington, DC, metro area, including Arlington, is $126,000, and so basically any household making between $37,000 and $100,800 falls within that range. In Seattle, the AMI is $119,400, and so that window would include households making between approximately $35,800 and $95,500.
The first step to addressing the country’s housing affordability problem is to repeal the Faircloth Amendment.
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Apple announced this morning it’s allocating more than $400 million toward affordable housing projects and other homeowner assistance programs in California, as a part of its earlier multi-year pledge of $2.5 billion to address the state’s housing crisis and homelessness issues.
The funding is expected to support thousands of Californians with first-time homebuyer assistance or new, affordable housing units, Apple says.
Projects launching in 2020 include 250 new units of affordable housing across the Bay Area — the first affordable housing developments funded in a private-public partnership with Housing Trust Silicon Valley. The units will span the North, East, and South Bay regions, and will include many units reserved for veterans, the homeless or formerly homeless, and residents with developmental disabilities.
Apple is also offering a mortgage and down payment assistance fund and an affordable housing investment support program, both created in conjunction with the California Housing Finance Agency (CalHFA). Apple has provided mortgage and down payment assistance to hundreds of first-time home buyers to date, it says, with additional benefits reserved for teachers, veterans, and firefighters. The CalHFA’s assistance program is typically diverse, as well, with over 65% of borrowers identifying as Hispanic, Black, Asian, Pacific Islander, or American Indian.
This month, Apple will launch an affordable housing investment support program with CalHFA, aimed at funding the development of new, very low to moderate-income housing at a lower costs. The program is expected to produce a number of affordable housing units in California over the next five years.
In addition, Apple is supporting the construction of affordable housing units through a partnership with Destination: Home, which supports the homeless in the Silicon Valley area. This initiative will help fund the construction of over 1,000 new units of deeply-affordable and supportive housing, including 80 units in a project in Santa Clara for seniors who are homeless or nearing homelessness.
Apple says its support has helped Destination: Home keep 1,500 families annually from losing their homes, up 67% over a year ago.
“At a time when so many members of our community are facing unprecedented challenges, we believe it’s critical to make sure that their hopes for the future are supported through tangible programs and results,” said Kristina Raspe, Apple’s vice president for Global Real Estate and Facilities, in an announcement. “As cities and states have been forced to pause many of their long-term affordable housing investments amidst the current public health crisis, Apple is proud to continue moving forward with our comprehensive plan to combat the housing crisis in California,” she added.
Apple in November 2019 first announced its plans to commit funds to address the housing and homelessness crisis. It’s not the only major tech firm to do so. Amazon, Facebook, and Google are also spending money to address these problems. But these moves aren’t just about charity and good works. Apple, Amazon, Facebook and Google are partially responsible for the housing crisis to begin with, as their expansions in the region have displaced long-time residents from their homes. Over the years, tech companies have been increasingly criticized for the negative impacts they’ve had on communities, as residents that make cities function — like firefighters, nurses and teachers, for example — had to move out due to rising housing prices.
Of course, like most complexities, a number of other factors also contributed to the housing crisis, outside of tech’s impact. There are also the area’s local laws, zoning regulations, protests against building vertically, NIMBY-ism, rental control’s impact on the market, the restricted housing supply, scarcity of available land, and more.
The additional funds toward affordable housing arrive at a time when some of the Bay Area’s wealthier residents and tech employees are fleeing the city, amid the coronavirus pandemic and its related impacts, such as layoffs. According to a recently released report from Zumper in July, one-bedroom rent prices in San Francisco fell 11.8% year-over-year — the largest drop in the U.S. and beating the prior month’s record. Two-bedroom rents fell nearly 10% year-over-year.
But even a double-digit decline won’t help solve the housing crisis, as rents and home prices were already so high as to be unattainable for many of the city’s residents. Plus, the pandemic’s longer-term impacts on the region’s housing market are yet to be seen. For example, it’s unclear to what extent companies will continue to embrace remote work if a vaccine were to emerge, making it safe to return to offices.
Apple’s initiatives in the $2.5 billion commitment remain unchanged, despite the pandemic. They include $1 billion affordable housing investment fund with the state of California, $1 billion first-time homebuyer mortgage assistance fund, $300 million in Apple-owned land made available for affordable housing, a $150 million Bay Area housing fund, and $50 million to support Destination: Home’s efforts.
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