HOUSING

How a tech accelerator program is tackling Austin’s affordable housing challenges

Posted November 3rd, 2017

Alex Le Roux has an unusual idea for how to lower the cost of housing in Austin.

He wants to build homes using a 3D printer.

Le Roux, a mechanical engineer, is co-founder of Icon 3D, a company that plans to build a 25-by-30-foot printer capable of churning out sheets of cement.

“We’ll be the first in the U.S. if we can pull it off,” Le Roux said.

Those sorts of ideas are just what organizers of a new Austin affordable housing accelerator program are looking for.

Co-working space Impact Hub, which has two locations in Austin, in October launched a first-of-its-kind-in-Austin, three-month accelerator program for startups or other entities trying to find ways to keep Austin housing more affordable. Le Roux and his team are among those taking part in the program.

“The idea was to leverage the entrepreneurial mindset and skill set on Austin’s most complex social issues,” said Ashley Phillips, managing director for Impact Hub Austin.

Startup accelerator programs are typically geared toward emerging tech companies. Usually these programs offer free rent, mentoring and sometimes money in exchange for an equity stake in the enrolled startups.

Impact Hub works a little differently because it doesn’t take an equity stake or offer money. It provides free space at the co-working facility in South Austin, arranges meetings with fellow members and offers access to Impact Hub’s mentor network, Phillips said.

Phillips said Impact Hub is creating an “issue-specific accelerator without concern for industry.”

“Right now, our sponsorship money is not even covering our programming expenses on this. This is truly born out of our desire and mission to improve the city we live in,” she said.

Nine startups or organizations were picked out of an application pool of 50 for the accelerator’s first cohort, she said. The program has landed some major sponsors, including Google, the Austin Board of Realtors and Chase bank. The sponsors serve as advisers and help craft programming, Phillips said, and have “access to the networks, ventures and entrepreneurs that we are pulling together.”

Stephen Spillman/For American-StatesmanKen Bodman, from left, Monique Stevenson and Matt Heinemann work on the Austin affordable housing accelerator at Impact Hub on Oct. 17, 2017. 

Skyrocketing prices

The rising cost of housing in Austin is consistently ranked as a top concern for residents, along with traffic. 

Over the past six years Austin’s median home price has increased 45.3 percent while median family income has increased only 5.4 percent, according to the Austin Board of Realtors. The median sales price of an Austin-area single-family home reached $291,464 in September. 

That surge in home prices is due to a potent mix of explosive population growth and a tight housing supply. Adding to the problem recently have been labor shortages and rising lumber prices, according to local housing experts and builders. 

Rents are skyrocketing as well. In the Austin region -- spanning from Georgetown to San Marcos -- rents averaged $1,246 a month as of June, an increase of 32.5 percent over five years, according to data from Charles Heimsath with Capitol Market Research.

“If you look at affordability, meaning 30 percent of your income should go to housing, then (many people are) priced out of the market,” said Brandy Guthrie, president of the Austin Board of Realtors. 

She noted that there is a shortage of supply -- meaning less than one month of inventory -- of homes priced below $249,999 on the market. 

“Home ownership is so important to the fabric of the community and the sustainability of the community that we need to come up with ways to address this,” Guthrie said.

Stephen Spillman/for American-StatesmanAlexis Taylor, left, and Leon Vanstone work on the Austin affordable housing accelerator at Impact Hub on Oct. 17, 2017.

Solving problems

Impact Hub’s program aims to apply  tech startup philosophies to solving a social problem. Phillips said the program’s organizers intend to launch additional accelerator programs targeted at other citywide problems, such as transportation and workforce development.

The nine groups that were picked as part of Impact Hub’s accelerator are all tackling Austin’s affordability challenges in different ways. 

Some of the accelerator members think the answer lies in building cheaper and smaller. Developods is a housing start-up that launched nine months ago. President Monique Stevenson said Developods builds housing out of shipping containers. 

The idea of building smaller is certainly not new -- the popularity of HGTV shows like “Tiny House, Big Living,” is a testament to that -- and neither is the idea of using shipping containers as housing

But Stevenson said what makes her company different is its emphasis on using shipping containers to build affordable housing.

“Savings are made in introducing smaller spaces and faster build time,” Stevenson said. “The speed to build helps investors and developers save on holding costs.”

She said the company is working with several developers who already own land to offer their units for sale or lease to people who earn between 30 percent and 80 percent of median family income in the Austin area, which this year is defined as between $19,550 and $52,100 for a two-person household.

That doesn’t mean they won’t also sell their housing product to anyone, even customers who want a higher-end version, Stevenson said.

The idea of building smaller as the answer to affordable housing has merit, said Sam LaTronica, who wrote a research paper on cheaper construction methods when he was a graduate student at Harvard University. He’s now an associate project manager for Fenway Community Development Corporation.

“In theory you can save a ton of time on construction,” he said, because there should be fewer materials and lower labor costs. 

But he found that when one Midwestern city tried to build using pre-fabricated housing it wasn’t cheaper because some materials arrived late and the general contractor was unfamiliar the process.

“The house got built -- but it was way more expensive than it was supposed to be,” he said. That doesn’t mean it’s not worth trying, he said, but he learned sometimes it’s “easier said than done.”

Stephen Spillman/FOR AMERICAN-STATESMANAshley Phillips, managing director irector of Impact Hub, explains the work process of the Austin Affordable Housing Accelerator at Impact Hub on Tuesday, Oct. 17, 2017 

Technology and data

Other accelerator members are trying to tackle affordable housing by developing software.

Startup All Abode is creating software intended to help identify Austin lots that are suitable for accessory dwelling units, also known as granny flats. Co-founder Ken Bodeman said the software could be used to help developers buy half-lots from homeowners.

“What we’re trying to do is facilitate and smooth out the buying process of ADUs and ADU property,” Bodeman said.

Not all of the accelerator members are startups.

A group that calls itself “The Auditors” is trying to gather better data on affordable housing that already exists in Austin. The group is comprised of a university professor, a research associate at the University of Texas at Austin, a strategy analyst with job search firm Indeed, and the director of new startups for 3 Day Startups, which promotes entrepreneurism in higher education.

“The problem is the city does not have the data it needs to track what is going on with affordable housing it supports,” said Amanda Masino, a professor of biology at Huston Tillotson University.

The group went door-to-door at city-supported affordable housing projects in the 78702 ZIP code and interviewed residents, collecting meatier data than a typical online or phone survey. They expect to publish a paper with their findings this year.

Masino said the group’s members wanted to join Impact Hub’s accelerator because they hope to turn this effort from a paper to an ongoing, sustainable effort to gather better data on affordable housing occupants.

“We want to have this last just beyond a study,” Masino said.

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