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Affordability

Area: Design, planning and building

Affordability is defined as the state of being cheap enough for people to be able to buy (Combley, 2011). Applied to housing, affordability, housing unaffordability and the mounting housing affordability crisis, are concepts that have come to the fore, especially in the contexts of free-market economies and housing systems led by private initiatives, due to the spiralling house prices that residents of major urban agglomerations across the world have experienced in recent years (Galster & Ok Lee, 2021). Notwithstanding, the seeming simplicity of the concept, the definition of housing affordability can vary depending on the context and approach to the issue, rendering its applicability in practice difficult. Likewise, its measurement implies a multidimensional and multi-disciplinary lens (Haffner & Hulse, 2021).

One definition widely referred to of housing affordability is the one provided by Maclennan and Williams (1990, p.9): “‘Affordability’ is concerned with securing some given standard of housing (or different standards) at a price or a rent which does not impose, in the eyes of some third party (usually government) an unreasonable burden on household incomes”. Hence, the maximum expenditure a household should pay for housing is no more than 30% of its income (Paris, 2006). Otherwise, housing is deemed unaffordable. This measure of affordability reduces a complex issue to a simple calculation of the rent-to-income ratio or house-price-to-income ratio. In reality, a plethora of variables can affect affordability and should be considered when assessing it holistically, especially when judging what is acceptable or not in the context of specific individual and societal norms (see Haffner & Hulse, 2021; Hancock, 1993). Other approaches to measure housing affordability consider how much ‘non-housing’ expenditures are unattended after paying for housing. Whether this residual income is not sufficient to adequately cover other household’s needs, then there is an affordability problem (Stone, 2006). These approaches also distinguish between “purchase affordability” (the ability to borrow funds to purchase a house) and “repayment affordability” (the ability to afford housing finance repayments) (Bieri, 2014).

Furthermore, housing production and, ultimately affordability, rely upon demand and supply factors that affect both the developers and home buyers. On the supply side, aspects such as the cost of land, high construction costs, stiff land-use regulations, and zoning codes have a crucial role in determining the ultimate price of housing (Paris, 2006). Likewise, on the policy side, insufficient government subsidies and lengthy approval processes may deter smaller developers from embarking on new projects. On the other hand, the demand for affordable housing keeps increasing alongside the prices, which remain high, as a consequence of the, sometimes deliberate incapacity of the construction

 sector to meet the consumers' needs (Halligan, 2021). Similarly, the difficulty of decreasing household expenditures while increasing incomes exacerbates the unaffordability of housing (Anacker, 2019). In the end, as more recent scholarship has pointed out (see Haffner & Hulse, 2021; Mulliner & Maliene, 2014), the issue of housing affordability has complex implications that go beyond the purely economic or financial ones. The authors argue that it has a direct impact on the quality of life and well-being of the affected and their relationship with the city, and thus, it requires a multidimensional assessment. Urban and spatial inequalities in the access to city services and resources, gentrification, segregation, fuel and commuting poverty, and suburbanisation are amongst its most notorious consequences.

Brysch and Czischke, for example, found through a comparative analysis of 16 collaborative housing projects in Europe that affordability was increased by “strategic design decisions and self-organised activities aiming to reduce building costs” (2021, p.18). This demonstrates that there is a great potential for design and urban planning tools and mechanisms to contribute to the generation of innovative solutions to enable housing affordability considering all the dimensions involved, i.e., spatial, urban, social and economic. Examples range from public-private partnerships, new materials and building techniques, alternative housing schemes and tenure models (e.g., cohousing, housing cooperatives, Community Land Trusts, ‘Baugruppen’), to efficient interior design, (e.g., flexible design, design by layers[1]). Considering affordability from a design point of view can activate different levers to catalyse and bring forward housing solutions for cities; and stakeholders such as socially engaged real estate developers, policymakers, and municipal authorities have a decisive stake in creating an adequate environment for fostering, producing and delivering sustainable and affordable housing.

 

[1] (see Brand, 1995; Schneider & Till, 2007)

References

Anacker, K. B. (2019). Introduction: housing affordability and affordable housing. International Journal of Housing Policy, 19(1), 1–16. https://doi.org/10.1080/19491247.2018.1560544

Bieri, D.S. (2014). Housing Affordability. Encyclopedia of Quality of Life and Well-Being Research, pp.2971–2975.

Brand, S. (1995). How buildings learn: What happens after they’re built. Penguin.

Brysch, S. L., & Czischke, D. (2021). Affordability through design: the role of building costs in collaborative housing. Housing Studies. https://doi.org/10.1080/02673037.2021.2009778

Galster, G., & Ok Lee, K. (2021). Introduction to the special issue of the Global crisis in housing affordability. International Journal of Urban Sciences, 25(S1), 1–6. https://doi.org/10.1080/12265934.2020.1847433

Habitat for Humanity. (2019). What is housing affordability? [online] Available at: https://www.habitat.org/costofhome/what-is-housing-affordability [Accessed 14 Jul. 2021].

Haffner, M. E. A., & Hulse, K. (2021). A fresh look at contemporary perspectives on urban housing affordability. International Journal of Urban Sciences, 25(S1), 59–79. https://doi.org/10.1080/12265934.2019.1687320

Halligan, L. (2021). Home Truths: The UK’s chronic housing shortage – how it happened, why it matters and the way to solve it. Biteback Publishing.

Hancock, K. E. (1993). “Can Pay? Won’t Pay?” or Economic Principles of “Affordability.” Urban Studies, 30(1), 127–145. http://www.jstor.org/stable/43195877

Maclennan, D., & Williams, R. (1990). Affordable housing in Britain and the United States. York: Joseph Rowntree Foundation.

Mulliner, E., & Maliene, V. (2015). An Analysis of Professional Perceptions of Criteria  Contributing to Sustainable Housing Affordability. Sustainability, 7(1), 248–270. https://doi.org/10.3390/SU7010248

Paris, C. (2006). International Perspectives on Planning and Affordable Housing. Housing Studies, 22(1), 1–9. https://doi.org/10.1080/02673030601024531

Schneider, T., & Till, J. (2007). Flexible housing. Architectural press.

Sidewalk Labs, 2019. 6: Affordability by Design. [podcast] City of the Future. Available at: https://cityofthefuture.libsyn.com/6-affordability-by-design [Accessed 14 July 2021].

Stone, M. E. (2006). A Housing Affordability Standard for the UK. Housing Studies, 21(4), 453–476. https://doi.org/10.1080/02673030600708886

Created on 03-06-2022 | Update on 06-10-2022

Related definitions

Mass customisation

Author: C.Martín (ESR14)

Area: Design, planning and building

Mass customisation (MC) is a process by which a company approaches its production in a customer-centric manner, developing products and services according to the needs and requirements of each individual customer, while keeping costs near to mass production (Piller, 2004). MC establishes a new relationship between producers and customers which becomes crucial in product development  (Khalili-Araghi & Kolarevic, 2016). Alvin Toffler (1970, 1980) was the first to refer to the MC concept in his books “Future shock”  and “The third wave”. Stanley Davis (1987) later cemented the term in his book “Future Perfect”. But it was not until 1993, when Joseph Pine  developed its practical application to business, that the concept started gaining greater importance in research and practice (Pine, 1993; Brandão et al., 2017; Piller et al., 2005). Nowadays, MC is understood as a multidimensional process embracing a combination of mass production, user-driven technologies, big data, e-commerce and e-business, digital design, and manufacturing technologies (Brandão et al., 2017). In the last twenty years, almost every sector of the economy, from industrial production to consumer products and services, has been influenced by mass customisation. The difference between mass customisation and massive customisation is the ability to relate the contextual features to the product features. This means that a random generation of design alternatives would not be sufficient; these alternatives should be derived from the cultural, technological, environmental and social context, as well as from the individual context of the user (Kolarevic & Duarte, 2019). As a business paradigm,  MC provides an attractive added value by addressing customer needs while using resources efficiently and avoiding an increase in operational costs (Piller & Tseng, 2009). It seeks to incorporate customer co-design processes into the innovation and strategic planning of the business, approaching economies of integration (Piller et al., 2005). As a result, the profitability of MC is achieved through product variety in volume-related economies (Baranauskas et al., 2020; Duray et al., 2000). The space in which it is possible to meet a variety of needs through a mass customisation offering is finite (Piller, 2004). This solution space represents the variety of different customisation units and encompasses the rules to combine them, limiting the set of possibilities in the search of a balance between productivity and flexibility (Salvador et al., 2009). The designer’s responsibility would be to meet the heterogeneities of the users in an efficient way, by setting a solution space and defining the degrees of freedom for the customer within a manufacturer’s production system (Hippel, 2001). Therefore, an important challenge for a company that aims at becoming a mass customizer is to find the right balance between what is determined by the designer and what is left for the user to decide (Kolarevic & Duarte, 2019). Value creation within a stable solution space is one of the major differences between traditional customisation. While a traditional customizer produces unique products and processes, a mass customizer uses stable processes to provide a high range of variety among their products and services (Pine, 1993). This would enable a mass customizer to achieve “near mass production efficiency” but would also mean that the customisation alternatives are limited to certain product features (Pine, 1995). As opposed to the industrial output of mass production, in which the customer selects from options produced by the industry, MC facilitates cultural production, the personalisation of mass products in accordance with individual beliefs. This means that the customer contributes to defining the processes, components, and features that will be involved in the flow of the design and manufacturing process (Kieran & Timberlake, 2004). Products or services that are co-designed by the customer may provide social benefits, resulting in tailor-made, fitting, and resilient outcomes (Piller et al., 2005). Thanks to parametric design and digital fabrication it is now viable to mass-produce non-standard, custom-made products, from tableware and shoes to furniture and building components. These are often customizable through interactive websites (Kolarevic & Duarte, 2019). The incorporation of MC into the housebuilding industry, through supporting, guiding, and informing the user via interactive interfaces (Madrazo et al., 2010), can contribute to a democratisation of housing design, allowing for an empowering, social, and cultural enrichment of our built environment. Our current housing stock is largely homogeneous, while customer demands are increasingly heterogeneous. Implementing MC in the housing industry could address the diverse consumer needs in an affordable and effective way, by creating stable solution spaces that could make good quality housing accessible to more dwellers. Stability and responsiveness are key in the production of highly customised housing. Stability can be achieved through product modularity, defining and producing a set of components that can be combined in the maximum possible ways, attaining responsiveness to different requests while reducing the complexity of product variation. This creates customisation alternatives within the solution space which require a smooth flow of information and effective collaboration between customers, designers, and manufacturers (Khalili-Araghi & Kolarevic, 2018). ICT technologies can help to effectively materialise this multidimensional and interdisciplinary challenge in the Architecture, Engineering and Construction (AEC) industry, as showcased in the Sato PlusHome multifamily block in Finland[1]. Nowadays, there are companies that have integrated a systematic methodology to produce mass customised single-family homes using prefabrication methods, such as Modern Modular[2]. On the other hand, platforms such as BIM that act as collaborative environments for all stakeholders have demonstrated that building performance can be increased and precision improved while reducing construction time. These digital twins offer a basis for fabricated components and enable early cooperation between different disciplines. Parametric tools have the potential to help customisation comply with the manufacturing rules and regulations, and increase the ability to sustainably meet customer requirements, using fewer resources and shorter lead times (Piroozfar et al., 2019). In summary, a mass customisable housing industry could be achieved if the products and services are parametrically defined (i.e., specifying the dimensions, constraints, and relationships between the various components), interactively designed (via a website or an app), digitally fabricated, visualised and evaluated to automatically generate production and assembly data (Kolarevic, 2015). However, for MC to be integrated effectively in the AEC industry, several challenges remain that range from cultural, behavioural and management changes, to technological such as the use of ICTs or those directly applied to the manufacturing process, as for example automating the production and assembly methods, the use of product configurators or managing the variety through the product supply chain (Piroozfar et al., 2019).   [1] Sato PlusHome. ArkOpen / Esko Kahri, Petri Viita and Juhani Väisänen (http://www.open-building.org/conference2011/Project_PlusHome.pdf) [2] The Modern Modular. Resolution: 4 Architecture (https://www.re4a.com/the-modern-modular)

Created on 06-07-2022 | Update on 06-07-2022

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