Ivory Prize 2019 Takeaways
America is experiencing a housing affordability crisis. Through the Ivory Prize process, we have learned that a key part of the prescription is innovation - one step at a time. Although the housing affordability challenges are great, and there are no simple nationwide solutions, the Ivory Prize process – with 126 nominations and applications -- has demonstrated that there is a great deal of innovation and creativity at the “grassroots” level around the country, and a number of good things are happening. By looking at the participants in the Ivory Prize, it is possible to get a vision of the innovation that is underway and to identify directions that are essential if we are to improve housing affordability. Five paths or directions begin to emerge:
126 APPLICANTS FROM 29 DIFFERENT STATES
Although the housing affordability challenges are great, and there are no simple nationwide solutions, the Ivory Prize process – with 126 nominations and applications -- has demonstrated that there is a great deal of innovation and creativity at the “grassroots” level around the country, and a number of good things are happening.
Solutions were sought in three key award component areas; (1) construction / design; (2) finance; and (3) regulatory reform. On February 7, 2019 the top 10 finalists were announced at the Sorenson Winter Innovation Summit at the University of Utah in Salt Lake City, Utah. The winners were announced April 10, 2019 at the National Press Club in Washington, D.C.
Meet the 2019 Inaugural Winners
The Nation’s Housing Affordability Challenge
The nation faces a significant housing affordability crisis. At the end of 2012, according to the National Association of Home Builders/Wells Fargo “Housing Opportunity Index”, 74.9% of new and existing home sales were affordable to a family earning the local median income, based on standard mortgage underwriting criteria. By the end of 2018, only 56.6% of new and existing home sales were affordable by the same standard.
The National Housing Gap must be adDressed
Underlying the nation’s housing affordability challenge is a shortage of housing. Laurie Goodman and Rolf Pendall at the Urban Institute raised the alarm in June of 2016. “In 2015, we estimate that more than a million new households were created, but only 620,000 new housing units were completed, creating a shortage of just over 430,000 units. This gap has pushed up home prices and rents, a trend that will continue for the foreseeable future absent imminent policy changes.”
ESTIMATED 1 MILLION NEW HOUSING UNITS
COMPLETED 620,000 UNITS
SHORTAGE JUST OVER 430,000 UNITS
More recently, in December 2018, Freddie Mac’s chief economist, Sam Khater, spoke of the major challenge of U.S. housing supply: “We estimate that over the next decade, young adults will add about 20 million households – and those households will need a place to live.“ According to Freddie Mac research, the current rate of construction is about 370,000 units below the level required by long-term housing demand. The housing shortage is further complicated by the rise in house prices and rents — especially compared to income growth — constant labor cost pressures and the cost of building materials, the challenge for potential home buyers to provide a down payment or qualify for a mortgage, government regulations at the local, state and federal level that add significantly to the cost of a house or apartment, and numerous other factors.