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How Affordable Housing Can Actually Succeed on the Open Market

I was tired. It was midday through my third day covering the 2016 REALTORS® Conference & Expo, and I had just wolfed down lunch while trying to have a reasoned conversation about news judgement and real estate. Finally, I knew I was going to have to rush back to get a decent spot from which to cover Gen. Colin Powell’s speech at the General Session later that afternoon (spoiler alert: I was way in the back anyway).

Screen Shot 2016-11-11 at 1.38.17 PMBut I wasn’t about to miss a session titled, “The City We Need is Affordable: Urbanization and Global Housing Solutions.” That’s because I firmly believe that oftentimes, the best innovations come about when smart people merge multiple concepts and try to predict how they’ll shape our future. This session combined two important trends that I believe will affect the housing market in 2017. More and more people are moving to cities: The U.N. predicts 66 percent of the population be in urban areas by 2050. And though the luxury market has been leading our slow exit from recession, that imbalance can’t continue. It’s time for the real estate industry to weigh in on affordability and urbanization.

What I did not know, however, was the impetus for the session, so let’s take a step back and I’ll fill you in on that. Every 20 years, developers, urban planners, politicians, and real estate thinkers get together to discuss the future of cities and residential housing at the bequest of the United Nations. So far there have been three such meetings, with the first happening in Vancouver, Canada in 1976 and the second in Istanbul, Turkey in 1996. Habitat III, as they called the most recent iteration of these meetings, happened earlier this year in Quito, Ecuador and there are important lessons for real estate professionals in the outcome. One reason for that is that each of the 162 nations present at Habitat III pledged to abide by the new urban agenda that was unanimously approved at the meetings. That’s going to affect how real estate is developed all over the world.

That’s why FIABCI, the International Real Estate Federation, created a book of examples of how these efforts are being realized on scales small and large around the world. And that’s why Bill Endsley, secretary general of FIABCI-USA, was there at the REALTORS® conference to explain not only their involvement in Habitat III, but what ordinary real estate professionals can get out of it.

It may seem like all real estate development is meticulously planned these days, but Endsley said that the number of cities that actually have a formal plan has decreased around 20 percent since the 1970s. He says that lack of a plan can lead to everything from the proliferation of shantytowns to social unrest.

“If you don’t have a plan, then you have informality,” he said. “Urbanization is going to continue. It’s not going to reverse, and we as real estate professionals need to insist that our cities have a plan.”

The aforementioned book that came out of FIABCI’s participation in Habitat III, “The City We Need Is Affordable,” features examples of companies, municipalities, and nonprofits around the world that are already working toward the values of innovation, inclusivity, resilience, and vibrancy expressed at the U.N. meeting. Download it here, and perhaps you’ll be inspired to bring these ideas to your city planning board or mayor.

FIABCI’s book gathers ideas that are helping cities construct affordable workforce housing more quickly, efficiently, and in a more sustainable way. One example Endsley mentioned in the session was Builders of Hope, a group that takes perfectly good homes scheduled to be demolished (usually in areas where the land is worth much more than the structure, and owners want to build bigger), takes them apart, and moves them to other areas where housing is badly needed. But there are many more examples profiled therein, everything from new building materials and techniques to innovative ways that real estate can solve endemic problems in any given city.

The book shows examples of how these projects are being funded through public-private partnerships, tax credits, and crowdfunding, among other methods. Endsley also noted that real estate professionals and developers can make a great living working on these projects, because demand is so high. “It’s not charity,” he told attendees at the session. “The more vibrant our city is, the more money we make.”

Endsley also said he believed that those who work toward this new developmental vision now will be on the front lines of change, and that it only makes sense for real estate professionals to lead the charge. “This is a sea change in how the world is going to look in the coming years. Take advantage of it,” he said. “After all, we’re the only organization who has members in every community in this country.”

Indeed. Here’s hoping REALTORS® will have a whole new toolbox to share with the world by the time Habitat IV comes around.

Meg White

Meg White is the multimedia web producer for REALTOR® Magazine and administrator of the magazine's Weekly Book Scan blog. Contact her at mwhite[at]realtors.org.

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