Insights · September 10th, 2007

The blog today is about the future of housing in America. I have just finished a keynote speech to the annual Washington Housing Conference, in Spokane, Washington.

The PowerPoint slide program is here:
[slideshare id=510052&doc=gh-final-wa-house-1215829188638882-8]

It is time to reinvent housing in America. This is necessary not simply because a portion of the population can not afford housing. That is, the need to reinvent housing goes beyond the related issue of affordable housing.

Rather, as a society we have gotten ourselves into a terrible fix, and now face an era when one way of life must come to and end, and a new way of life must begin. We can do this deliberately, as though we are grasping an opportunity, or we can do this unwillingly, and if we go that route it will be more difficult.

To understand the fix we are in it helps to contrast the choice between two kinds of societies. In Society A everyone lives in 4000 square foot houses, and has no time for exercise, has time for friends once a month, and has one week of vacation. In Society B, everyone lives in 3000 square foot houses, has 45 minutes a day for exercise, time for friends once a week, and has four weeks of vacation. Using this illustration from Robert Frank’s compelling book, Falling Behind, I polled the 600 people attending. Virtually everyone says they would choose society B, yet understands that we are, in fact choosing to live in Society A. Why? What has happened?

We have been caught up in a historical cycle in which it is a fixed belief that bigger will inevitably lead to better and happier – whether we are talking French fry servings, cars, barbecues, stores, video screens or houses – and we have pursued more and bigger despite the evidence that the pursuit may be self defeating. It was in this societal context, where big has been equated with better that we created the housing crisis of our time. The affordable 950 square foot house of the 1950’s became the 5000 square foot house of the 21st Century which is affordable to most only with massive, life-long debt. Naturally, this has felt like progress. But we have created a world that we cannot afford.

What does the future hold? First the end of the suburban building boom that has been vital to the U.S. economy for several decades. It looks like this will come to an end for three related reasons – peak oil and the climate crisis, the mortgage mess that is connected to income inequality, and the aging population.

Peak oil and climate change will, it appears, require a rethinking of a mass-commuting and energy wasting form of community development, even to the point of stopping most suburban and exurban development altogether(look for “Crunch Time, Sep3, 2007). It will be market forces, not policy alone, that will drive this development.

The mortgage crisis that began in 2007 will last until 2012, according to one forecast, as affordable loans adjust into an unaffordable range. This is taking place within a context of rising income inequality between the top 5% of the society and the bottom. From 1949 to 1979 each wealth bracket saw their income go up at about the same rate. From 1979 forward, market forces and government policy radically tipped wealth generation to the upper end, so that those from the bottom to the middle saw little improvement while those at the top saw a tremendous rise. Half the U.S. population makes less than $30,000 a year, two-thirds makes less than $50,000 a year, while those making a million or more, or one-half of one percent of the population, saw more than half of all new wealth flow to themselves. The nature of the information economy contributed to this split, as new ideas could be capitalized, moved quickly to market dominance, and a new set of millionaires created. But there was no trickle down for wage earners.

Finally, an aging population is confronted with limited housing choices. Fewer than we might guess will want to live in 5000 square foot McMansions, while members of the Millennial generation will not want to and in any case cannot afford to (except for top earners). In fact, one of the future zoning fights will be about how to allow the big houses to be remodeled into multi-family housing, just as the old Victorian mansions once were.

So, we are in a fix. The housing culture we have created will not be sustained, though many believe that we will try mightily to do so. There are however good options, if we could but choose them in a timely way.

First, housing designs and community development can be remade to account for the climate crisis and peak oil. We have lots of examples of how to do this. Second, the small house movement, as well as models like co-housing, can be part of the answer both to the financial challenges of inequality as well as to the housing needs of a senior population and the house preferences of the millennial generation. The building and housing finance industries will be required to make the biggest adjustments to enable these movements to become mainstream. And national policy will be needed to attend to the rising impacts of inequality gone out of control. Re-thinking community design to encourage compactness, human scale, and energy efficiency is not complicated; we must only choose that direction.

“Imagine a place which leaves you enough time to do other things. Imagine a place which will leave you enough money to enjoy your life. Imagine a place where your soul is at peace. This place already exists.”

It is time to reinvent housing…for all of us.

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Nikolas Badminton – Chief Futurist

Nikolas Badminton

Nikolas is the Chief Futurist of the Futurist Think Tank. He is world-renowned futurist speaker, a Fellow of The RSA, and has worked with over 300 of the world’s most impactful companies to establish strategic foresight capabilities, identify trends shaping our world, help anticipate unforeseen risks, and design equitable futures for all. In his new book – ‘Facing Our Futures’ – he challenges short-term thinking and provides executives and organizations with the foundations for futures design and the tools to ignite curiosity, create a framework for futures exploration, and shift their mindset from what is to WHAT IF…

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