How digital technology can play a key role in the housing experience and close the digital divide.
COVID-19 has exposed and amplified the digital inequities faced by millions of households who before the pandemic were already facing severe hardships. As schools closed in response to the pandemic, some students lacked reliable access to the internet at home and struggled to stay connected and engaged in their education. In a 2018 Pew Research Center survey, 17 percent of students ages 13 to 17 said they were often or sometimes unable to complete homework assignments because they did not have access to a computer or an internet connection.
Also, digital health care became the norm as medical practitioners adopted digital technologies such as video visits—or telehealth—to screen, diagnose, and treat ailments and carry out triage. Yet many patients were unable to access telehealth at home because of poor internet connectivity, technical challenges, or a simple lack of modern communication devices. According to a KFF analysis of the U.S. Census Bureau’s 2019 American Community Survey, almost 20 percent of people age 65 and older lacked internet access at home, which, coupled with inexperience with technology and physical disabilities, impaired their ability to access telehealth services during the pandemic.
Today, a staggering 42 million Americans live in areas where broadband is not available—representing a stark inequity especially pronounced among low-income households. In a 2011 poll by Cisco, one-third of respondents said that internet access is just as important as food, water, air, and shelter. Yet, with libraries and schools closed during the pandemic, these families had few options for how to access this essential service.
The lack of internet, laptops, and smart devices during the pandemic unmasked the threats the digital divide poses to employment, education, banking and financial services, health, social services, and socioeconomic development of digitally excluded people.
Housing represents an important opportunity to bridge the digital divide, yet a burgeoning gap exists in the availability of high-quality, affordable housing. That gap will increasingly stymie economic growth, job creation, consumer spending, and more, if not addressed—with provision of high-speed internet connectivity as part of the plan as well.
Financially disadvantaged households face significant challenges accessing affordable and equitable housing. After paying for housing costs, many people simply cannot afford other essentials like food and health care, much less internet service.
Affordable housing, generally defined as housing that does not exceed 30 percent of household gross income, is often misconceived as beneficial only to lower-income households. However, “affordable housing also benefits a communities’ workforce, including entry-level white-collar workers, teachers, firefighters, police officers, seniors, and military personnel,” says Ada Arevalo, chief executive officer of iimpact capital. “More broadly, reducing the burden of housing cost, through affordable housing, increases disposable income that can be utilized for other living essentials and ultimately reinvested into the local economy.”
To bridge the digital divide, all affordable housing residents must have the technology, infrastructure, and support needed in the home to improve and succeed academically and professionally, maintain their health and well-being, and achieve financial success, while also reducing costs to society in the long term.
Solving the housing crisis, which at times seems insurmountable, will require prioritizing digital technologies that address the health, safety, and well-being of residents, as well as incorporating technological innovation into the construction and operation of housing, in order to improve affordability and promote healthy building techniques.
Several asset managers, real estate developers, and institutional investors, as well as advocacy organizations, are using digital technology to boost resident engagement, enhance student learning, and drive positive health and environmental outcomes while delivering quality, affordable housing at scale, particularly in communities facing public health risks.
Prioritizing Resident Health
Global investment manager Nuveen is investing across the spectrum of affordable housing with a focus on providing shelter that is safe and of high quality. The firm incorporates environmentally friendly digital techniques to mitigate climate risk, such as installing smart, programmable thermostats, solar roofing technology, and other green retrofits.
As an industry leader in affordable housing, Nuveen works closely with mission-aligned investment managers to prioritize residential internet access and services, an approach described as “tenant first” by Pamela West, senior director of Nuveen Real Estate’s impact investing strategy. This initiative prioritizes free wi-fi for all residents to enhance and increase access to social services, remote education, health care, and financial services.
An essential service Nuveen provides for residents is telehealth. “Services like Teladoc have been a game-changer for residents in our communities where access to health care might not always be possible,” West says. “Something as simple as free wi-fi allows our residents 24/7 access to medical professionals in the privacy of their homes, which results in better health outcomes for the entire family and ultimately the community.”
Having similar impact is a partnership between real estate investment management firm Comunidad Partners and Esusu, a financial technology platform that leverages data to improve financial equity for renters through credit reporting and other tools that promote financial empowerment for tenants.
“Together with Esusu, we are building a pathway to homeownership for our renters—a path that begins with the foundational building block of credit reporting and sets the stage for better access to credit, economic mobility, and ultimately long-term resident equity and wealth,” says Antonio Marquez, principal and managing partner of Comunidad Partners.
Housing as a vital determinant of health has been well researched and reported in recent decades. Consequently, living in substandard housing can create a major public health issue for already challenged communities. Organizations like Nuveen and Comunidad Partners are not only providing affordable, sustainable, and equitable housing; they are also committed to providing access to broadband and smart devices that will bridge the digital divide.
Boosting Quality of Life for Seniors
People ages 65 and older have been severely affected by COVID, and a particular concern is with older adults living in, and depending on, affordable housing. This group often lacks access to the internet, as well as even basic tech skills, according to a December 2020 report by Harvard University’s Joint Center for Housing Studies, based on an AASC survey of nearly 1,200 members who work at publicly subsidized multifamily properties. The survey also found that only four of 10 older adult residents have internet access, and 15 percent lack a phone.
In the early days of the pandemic—and still today, for many—older adults were unable to leverage social platforms to connect with their children, grandchildren, and friends or post photos, share ideas, or even send emails and texts. They also could not conduct basic online activities such as health care appointments and banking transactions. Referred to as the “double pandemic,” this isolation also led to greater stress, and mental and physical health consequences for senior residents, the Harvard report said.
To help address these issues, digital wellness apps have become an invaluable resource for affordable housing residents, including seniors. To help residents of all ages remain physically, mentally, and emotionally healthy during unpredictable coronavirus shutdowns, Avanath Capital Management contracted with an on-demand fitness provider to provide residents with content on well-being that could be accessed free when gyms were closed, says Wesley Wilson, a partner and chief financial officer at Avanath. The firm, which acquires, owns, renovates, and operates affordable, workforce, and value-oriented apartment communities, recently created Activate, an innovative residents-only program for seniors through which it works with local hospitals to provide free wellness checks at its communities.
By offering both affordable housing and in-home care technologies such as assisted devices, mobile apps, and medical alert systems—with services from caregivers who embrace the importance of combining technology with the human touch—these augmented housing solutions can be an attractive option for older adults on fixed incomes who value aging in place, at home.
Deploying Smart Construction at Scale
Studies estimate that the United States has a shortage of 4 million to 5 million housing units, and more than 10 million additional U.S. households are expected to form over the next decade, according to an October 2021 report by investment management firm Pretium. Deploying technology at scale has been cited as one way to address the country’s housing shortfall because it addresses two key challenges—the cost and availability of both building materials and labor.
For instance, modular homes, which are built in a factory rather than at a home site, may offer a way to build more efficiently and affordably. The benefits can include increased construction speeds, greater consistency, improved quality control, less waste, and a heightened focus on safety, all of which can result in cost savings.
Some builders are experimenting with technologies like 3-D printing and robotics to bring automation to the construction site. Recent startup Diamond Age is leveraging these two technologies to address the labor shortage by deploying a building automation system that will offset 55 percent of the labor requirements for building a home.
That venture, led by Diamond Age cofounder and chief executive officer Jack Oslan, uses a suite of 26 robotic tools shared among a cohort of robotic platforms at the job site to maximize the use of capital expenditures. Integrated mechatronics and robotics save considerable time—reducing the construction period from months to weeks.
Technology platforms like Diamond Age have the potential to reduce operating expenses for builders—from labor costs, which change over time, to fluctuating prices for raw materials, as well as the cost of converting to an all-electric construction platform.
The housing crisis will require communities to embrace emerging technologies, including robotics, as a way to accelerate construction and improve housing affordability, and thus provide greater access to housing opportunities for the currently disenfranchised or underserved. Oslan is committed to Diamond Age’s mission. “We need to build high-quality affordable single-family homes for the next generation striving for the American dream,” he says, “and the only way we can solve this problem is with automation.”
An entire ecosystem of researchers, inventors, and investors is focused on improving every aspect of housing construction technology—from design and research to fabrication—for creative and social impact that could spur technological innovation and deliver affordable housing. In the United States and abroad, builders are deploying state-of-the-art technological strategies such as in-situ fabrication, smart bricks, and recycled composite materials as an alternative to steel and timber. The result: reduced construction time, lower costs, ease of construction, high-quality materials, improved health and safety, and increased service life of buildings.
These technologies may also solve another challenge facing the housing sector—achieving sustainable carbon emissions. Prefabrication construction firms are currently designing and building houses that achieve net zero energy standards by reducing energy use, repurposing various materials, and minimizing waste.
Addressing the Sustainability Imperative
While the construction industry has long been scoffed at for being one of the least digitized sectors, greater tech adoption is taking place rapidly as the world emerges from the global pandemic. For example, two-year-old ecofriendly builder MultiGreen Properties is exclusively focused on building attainable, sustainable, and tech-enabled multifamily real estate through impact investing.
MultiGreen’s initial approach is to construct 40,000 housing units in 10 states by 2030. A signatory to the Ten Principles of the United Nations Global Compact, MultiGreen founder and chairman Randy Norton says the “world’s urban areas are increasing by 200,000 people per day, all of whom need affordable housing. To rise to this challenge, the construction and development industries must transform themselves.”
One way in which MultiGreen is separating itself from its competitors is the use of digital twin technology. A digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning, and reasoning to aid decision-making. It is rapidly emerging as a tool to help real estate developers reach their environmental, social, and governance (ESG) goals by enabling them to visualize how the asset will perform at every stage of the project’s life cycle.
Use of the digital twin offers the ability to design and performance-test a project by simulating it before hammering a single nail, allowing for a much higher-quality result when construction is complete. It can then improve building operations by monitoring the building’s performance against the original design criteria.
In EY’s May 2021 white paper “Digital twin: the Age of Aquarius in construction and real estate,” the authors suggested that the digital twin technology could cut real estate operating costs by 35 percent. A technology like digital twin could also help reduce greenhouse gas emissions by up to 50 percent and increase energy efficiency in rental homes, which on average consume 15 percent more energy per square foot than owner-occupied homes.
The leveraging of digital twins, which use internet of things–enabled sensors to monitor and reduce a building’s environmental footprint, can drastically reduce energy use and emissions, which is both a cost savings opportunity for tenants, landlords, and owner/occupiers, and a social responsibility to address climate change. The result: disadvantaged communities can achieve equitable energy outcomes that reduce costs and improve the quality of life, health, and the living environment of entire communities, especially those struggling to achieve housing affordability.
Without question, the pace of technology adoption accelerated—within buildings and beyond—as the world slowed down these past two years. Yet, one unintended consequence of this shift to the virtual is the dramatic inequity in technology access and use exposed by the pandemic.
With exposure of the depth and impact of this inequity comes a clear call to action. If there is a lesson to be learned, it is that the solutions available right now for housing and technology are intertwined and must operate together as the world emerges from the pandemic. Both are vital contributors to necessary advances in education, health, and other dimensions of human growth, equity, and economic development.
KYLE BOLDEN, a member of ULI’s Technology and Real Estate Council (Blue Flight), is the U.S. east region market segment leader–real estate, hospitality, and construction sector for EY. He is based in New York City. The views reflected in this article are those of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.