America and the SDGs – The Affordable Housing Crisis
Author - Kurt Sullivan
Abstract: This report will first present background information on the United States of America, before describing its standing with the U.N.’s Sustainable Development Goals, with specially attention to the affordable housing crisis, which is fueled by growing income inequality. Finally, it will present a business proposal for Japanese prefabricated housing companies to meet the rising need for cheaper construction methods.
The US is the world’s 3rd largest country by landmass. It is also the 3rd largest country by population, with around 328 million people (World Factbook, n.d.). America is rich in natural resources, producing about as much oil each year as Saudi Arabia, and it is the world’s largest natural gas producer (World Factbook, n.d.). The US economy is the largest in the world. It is driven by the health care, technology, construction, and retail industries. The tech industry, dominated by giants like Google, Amazon, and Apple, will continue to play a big role in shaping the future. America’s GPD is projected to grow slowly but steadily for the foreseeable future (World Factbook, n.d.).
America’s appetite for imported goods makes it an important market for exporters. Its main trading partners are China, Mexico, Canada, and Japan (World Factbook, n.d.). U.S. workers rank high in productivity, and they also work more hours per year than most other OECD countries. America is a very diverse country (Johnson, 2017). 38% of the population belongs to an ethnic minority, and 14% of the population of the US is foreign born (World Factbook, n.d.).
It is important to note that unlike other industrialized nations in Europe and Asia, America’s population is not in decline but is actually projected to continue growing in the coming decades, and the economy will continue to grow with it. This is in large part thanks to a relatively high total fertility rate and a steady inflow of immigrants (World Factbook, n.d.).
However, upward mobility in the US has stagnated, as inequality has increased rapidly. Income inequality is greater in the United States than in any other democracy in the developed world. Although the per capita GPD ranks high, the gap between the ultra-rich and the bottom 90% of Americans is huge. 13% of Americans live in poverty (World Factbook, n.d.). With poor access to healthcare and affordable housing for low-income Americans, millions of people struggle to meet their basic needs.
This is a major reason that despite America’s wealth, the country ranks 35th in meeting the SDGs (U.S. National Statistics…, n.d.). America’s progress on the SDGs varies considerable from region to region, with New England and the Pacific states leading and the South lagging behind, but in general there is need for significant improvement in certain key areas. Chief among these are reducing poverty [goal number 1] and reducing inequality [goal number 10] (U.S. National Statistics…, n.d.).
Poverty and inequality are compounded by a lack of affordable housing in urban areas, which brings us to Goal 11, “Make cities and human settlements inclusive, safe, resilient and sustainable.” The first part of this goal is to “ensure access for all to adequate, safe and affordable housing” (U.S. National Statistics…, n.d.).
Amid this growing inequality, increasing homelessness, and need for more housing, America finds itself in a desperate situation. Urban centers continue to experience demand for high-end housing, while low-income residents find themselves unable to afford rent. Indeed, there are only 3 houses available for every 10 low-income renters (U.S. National Statistics…, n.d.).
Cheaper construction methods are vital to combating the high cost of new housing in America. Prefabricated housing, built in factories and assembled on-site, is far faster and cheaper than traditional construction techniques. At present, only 3% of homes in America are prefabricated, but the number is projected to grow to 10% in the next five year (Wilson, 2018). This is a huge business opportunity for prefab housing companies, such as Daiwa House, Sekisui House, and Panasonic Home.
So, what do these companies need to know? First, each state in America has its own laws and regulations regarding the construction of homes. Outside of California, earthquakes are not a concern, which makes structural integrity standards lower than in Japan. On the other hand, houses and apartments are required to have a certain level of insulation to keep interiors cool in summer and warm in winter, for the sake of energy efficiency. Few Japanese homes outside of Hokkaido would meet this standard (Simone, 2012).
Size is also an issue. Apartments in America are getting smaller; however, the average size of a new apartment in 2018 was about 87m2, considerably larger than in Japan (Balint, 2018). Minimum space requirements vary by area, but many Japanese apartments would be too small for American regulations.
Another thing to consider is that single bedroom apartments are relatively unpopular in
America, as more people are living with roommates than ever before. 30% of American adults aged 23 to 65 live with one or more roommates (Rockett, 2017). One reason is the rising cost of housing, but it is partly cultural, as well. The trend has grown fastest among millennials (Rockett, 2017). Rental properties targeting young city-dwellers must take this tendency for cohabitation into consideration.
Assuming designs are adapted to fit American cities, Japanese modular housing companies should have some advantages over the competition. With over 15% of new Japanese homes being constructed in factories, Japan has the world’s biggest and most advanced modular housing industry (Berg, 2017.) Sekisui House’s American branch, called NASH Communities, has entered the American market, as have others, but the focus has been on high-quality, high-end housing and apartments (About NASH, n.d.). The potential of the construction techniques to have a real social impact is not yet being realized. There remains a strong need for truly affordable modular homes.
My advice to Japanese prefab housing companies is to focus on two key groups. First, millennials; that is, those who reached adulthood in the early 21st century. Research shows that a record low percentage of millennials are interested in buying homes, with most of them citing high prices as a reason (Blumberg, 2018). Older Americans will remember a short-lived prefabricated home trend in the 1970s, likely associating it with poor quality and thinking it a failed experiment. Millennials, on the other hand, may not have such associations, especially if the less common term “modular housing” is used. These younger home-buyers are also probably more open to Japanese designs, especially minimalist styles. Note that Kondo Marie is wildly popularity in America right now, and this success may translate to an interest in Japanese-made homes. If millennials are interested in buying modular homes, the effect will be two-fold.
Millennials moving away from urban centers will free up housing, lowering rent prices and helping those urban populations most affected by the housing crisis.
The second target is local governments and NGOs working to help the poorest members of society. Designs for the cheapest possible comfortable homes should be proposed to city planners, who may already have budgets approved for new units, and to advocacy groups, who may be willing to push lawmakers to accept the proposals. Networking on this level may be a challenge for Japanese companies, and brand images could also suffer from being associated with cheap, government subsidized housing, but if companies are able to communicate their stories effectively, the public will certainly appreciate and remember the humanitarian achievements.
Affordable factory-built homes will become increasingly common in the United States. If Japanese companies, struggling with a declining market at home, are not prepared to seriously contend in America and are beaten by new and inexperienced American startups, they will have no one to blame but themselves.
About NASH. (n.d.). NASH Communities. Retrieved from: <http://www.nashcommunities.com/about>
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U.S. National Statistics for the U.N. Sustainable Development Goals. (n.d.). Sustainable Development Goals. Retrieved from: <https://sdg.data.gov/>
Wilson, Nigel. 2018. Affordable Housing: From Postwar 'Prefab' To Modern Modular Construction (Part 2). Forbes. Retrieved from: <https://www.forbes.com/sites/nigelwilson/2018/11/13/affordable-housing-from-postwar-prefab-to-modern-modular-construction-part-2/#26497a606084>