In 2012, I was asked to write a ‘Vision’ piece projecting where housing would be by 2020, relative to codes, standards, and rating systems. I predicted “by 2020, the housing industry will adopt a ‘house-as-a-system’ perspective addressing energy-efficient, healthy, durable, water-conserving, and disaster-resistant performance. As a result, new homes will be built zero-net-energy ready, with energy loads so low that small renewable energy systems will offset most or all of the balance of annual energy demand. Builders, manufacturers, and architects will collaborate to deliver these ultra-high-performance homes in markets across the country. This market transformation process will be driven by codes, standards, and rating systems working together to embrace proven innovations.”
There are over 22,000 zero-energy and zero-energy-ready homes in the U.S. and Canada, according to Team Zero, a coalition that promotes a path to zero-energy homes. The U.S. DOE Zero Energy Ready Home program has had certifications double for three straight years and is set for growth in 2019. Some states, like California and Oregon, have committed to zero-energy and zero-energy-ready codes, with others on track or planning to move in this direction. Our national energy codes have gotten more rigorous, providing a solid foundation for zero-energy-ready performance where annual energy consumption can be offset by on-site or purchased renewable energy. So, I feel good about my 2012 vision.
However, for the past six years, I’ve been engaged in an unintended research project. Based on my book, I invite builder executives to events where we explore a framework for optimizing the consumer experience. My goal has been to ensure high-performance home builders are positioned to be successful. Extensive vetting of the content, feedback, and ongoing research has informed a more comprehensive vision of the housing industry. It’s clear changes are looming ahead, driven by five crises converging on the industry.
First, the more-informed home buyer is creating a consumer experience imperative. Think of other products or services—if you don’t deliver compelling, five-star peer reviews, your business is at a disadvantage.
Second, affordability has reached its tipping point. Nearly 80% of U.S. households are living paycheck to paycheck, and 40% cannot afford an unexpected $400 expense. Even more compelling is the disparity in the escalating costs of homes versus the slight increase in household income.
Third is the pervasive skilled labor problem, which includes lack of availability, training, and quality, while costs keep rising.
Fourth, Labor Department statistics reveal that all other nonfarm industries have about three times more productivity gains since the ’70s. A McKinsey study reports this productivity gap for the construction industry adds up to $200 billion.
Finally, there is an innovation crisis as housing lags behind other industries in leveraging digital technology. The compelling benefits of speed, quality, accuracy, efficiency, and system integration can no longer be ignored.
So what disruptions loom ahead in response to these crises? They are a transformation from a first cost to a consumer experience–driven business model, with mass customization that optimizes repeatable design building blocks integrated with world-class expert solutions, off-site construction, and software as a service providers who deliver digital solutions to the industry.
