Technology and the Missing Housing Industry: Interview with WikiHouse’s Alastair Parvin

Published: Sunday, August 14th, 2016 by Lenora

I was excited to speak to Alastair Parvin, Cofounder of the WikiHouse Foundation, at the World Bank’s Global Housing Finance Conference at the end of May in Washington, DC. Parvin is the rare urban visionary who speaks clearly about removing roadblocks in the housing economy and ramping up the missing “long tail” of the housing economy.*

What’s the missing housing economy? It’s self-built, citizen sector driven housing. His practical and democratic housing vision brings the digital revolution to cities and construction. Beyond technology, the WikiHouse vision elevates cost-effective distributed manufacturing as a way of generating jobs and building resilience into local communities.

I highly recommend Parvin’s TED talk and blog posts on his site noted above, especially this one on the capital and land costs of housing, the effect on housing shortages and the potential to democratize housing and community building.

From WikiHouse’s brochure:

WikiHouse is a collaborative R&D project to bring about a digital revolution in the way we make homes. The first WikiHouse building technology is ‘Wren’ – the first building system designed for open digital manufacturing: a kind of digital ‘Lego’. It can be shared – and written as code. This allows us to eliminate the complexity behind design, by designing within pre-set rules. Parametric design uses open data to instantly calculate cost, time, performance and impact and to produce manufacturing information.

Curious about how WikiHouse might scale and address the world’s thorniest housing deficits, I spoke to Alastair Parvin about WikiHouse’s business potential and its deployment in developing markets.

Right now, real estate developers are the main player in housing. Are you trying to hack real estate development and displace developers with WikiHouse?

We don’t think of it that way. It’s more about asking why large real estate developers are the only main player in housing, especially given the scale of the housing challenge that lies ahead of us in this century. When you think about it, it’s strange, because in the real world, speculative real-estate is not the only housing economy.

There is also this ‘other’ housing economy: the distributed ‘long tail’ of micro development and custom or self-build development: people building homes for themselves. It’s just that since the Industrial Revolution, that ‘other’ housing economy has not been considered industrialisable, or scaleable or regulatable or scaleable. We think digital technology is going to change that.

So it’s not about replacing real estate developers. Speculative real estate development will always happen, and it always be an important part of housing supply.

But we need to accept that, on its own, it will never, ever build a sufficient number of affordable, sustainable homes to meet our needs – at least not without first leveraging an unsustainable level of debt. So we have to focus our energies on tooling-up and scaling this other, missing housing industry – the micro or citizen sector – and recognising its vast potential as an intrinsically sustainable, affordable, resilient and democratic force for producing homes and cities at scale.

What’s the right organizational structure for WikiHouse? Why aren’t you doing it as a for profit technology company?

Finding the ideal structure for this enterprise is challenging – we actually saw it as a crucial design decision, once it reached a point where there was quite a lot of interest from potential investors. One thing we realised early on is that what we were building is not a commodity – it is social and economic infrastructure – we’re building tools for all businesses, not just a few. So it would have been strange for it to be beholden to a few shareholders seeking to extract profit from it.

This is why we formed WikiHouse Foundation as a neutral, non-profit vehicle. This allows us to work with all businesses and organisations. Gathered around that neutral core, the project is driven by a cross-sector consortium of partners seeking to develop, use, deploy or learn from these digital housing systems. Beyond that is a wider community of architects, engineers, inventors and entrepreneurs prototyping and piloting the technology.

To some people this might seem an unusual path to choose, but actually it’s quite a well-established model. Behind the world wide web you have the world wide web consortium, behind Linux you have the Linux Foundation, behind Wikipedia you have Wikimedia Foundation. Actually a huge amount of our society and our economy runs on these open, common digital infrastructures, but we don’t really know how to invest in them properly yet.

Our reason for existing is not to make millions from this ourselves, it is to bring about the change: to bring people together to collaboratively build 21st century economic infrastructure that will support many, many businesses and business models: some of which we can barely imagine right now. And we want big organisations, people taking a long term of view of housing and cities, to join us.

Source: WikiHouse Foundation

If WikiHouse’s effort can scale, you could potentially see social investors or social impact bonds that aim to finance pools of community-driven WikiHouse-enabled housing developments.

Yes, exactly, it’s important to enable more democratized financing for these communities. Right now, even if WikiHouse can bring down the cost of building the house, the costs of financing keep a lot of people outside the process and unable to access affordable housing. What’s interesting is to take a hard nosed view of what are the barriers that make micro development risky from a finance point of view, and then looking at what can be done to design out those risks by making it impossible to get wrong. The Japanese call this ‘Poka-yoke’.

The aim of the World Bank’s conference is to address the massive housing deficit of the developing world. Several housing officials here are keen to see if WikiHouse will work in their countries. Do you think WikiHouse could be an effective solution in developing economies?

We know the principles apply almost everywhere, but the technologies don’t. Yet. The initial prototype technologies in the WikiHouse project were designed primarily for relatively developed economies, where materials are quite cheap but labour and system-overheads are high. In, say, India you have almost the opposite situation, in that materials are expensive but labour is still quite cheap.

Our strategy is to ‘start somewhere’ – develop tools and solutions that work in one economy and one climate, then share then for others to adapt. So we’re focusing on developing distributed supply chains, and the first ones are in the developed economies, but meanwhile there are teams around the world looking hard at how the same methods and principles could translate to different technologies, climates, economies, regulatory systems etc. The more partners we have, the faster it will spread!

What I suspect we’ll find is that actually those two worlds are headed towards each other. When it comes to housing, the distinction between ‘developed’ and ‘developing’ economies is becoming harder to make, because let’s face it, all of them now have a housing crisis. The difference is  that the developed economies experience that housing crisis primarily as debt, whereas the developing economies experience it primarily as deprivation.

What is WikiHouse’s price point and how much density is necessary to break even?

Ultimately WikiHouse is density agnostic. That’s to say we’d eventually expect digital, distributed fabrication tools to be capable of making anything from a single story home to a thirty story tower. But when it comes to the cost, of course the answer is: ‘how long is a piece of string?’. It varies from country to country, city to city, from street to street and even from project to project, depending on how much work people want to do for themselves or pay others to do.

In the UK we’re finding it’s possible to build a two bedroom home for around GBP 50,000-60,000 – and that’s to a very high standard of quality and energy performance. But really it’s still at piloting stage – we haven’t yet developed a full supply chain that can give us more data for where costs come out. The key thing is to make sure we’re constantly lowering the barriers from the status quo: making it ever-easier for ever-more people to build ever-better homes for ever-less money.

It’s also very important that the homes at the end are something almost anyone can view as attractive and desirable. We’re not interested in ‘homes for rich people’ or ‘homes for poor people’ as separate categories.

Isn’t land an important constraint? If land costs are very high, might it limit the benefit of low cost building technology? And if you’re forced to build rural because of land costs or shortages of well-located urban land, then is it really solving the problem that you’re aiming to solve?

You’re right. WikiHouse tools don’t do anything about land cost. But they reveal something quite interesting about them. When you say ‘land’, what you really mean is land connected to infrastructure and jobs, land with popular consent for development (via planning systems), and land upon which development is economically viable.

What you’re really saying is that even if we make it easier for citizens and local economies to procure housing on-demand, ordinary people won’t be able to afford to buy the land for themselves, because the developers own it all, waiting to develop it in order to then sell it back to those same people, plus profit.

Actually we’ve just been using developers as an expensive intermediary to absorb the risk and difficulty of development. At either end of the process you have the same amount of land, and the same number of people who need homes, but in the middle you have this impossible knot that ties in the land and ties the people into mortgage debt.

The moment you can lower that risk, the moment you can take the away the ‘too damn difficult’ problem – that is to say, the moment people realise quite how easy it could be to build good homes for themselves, or employ a local company to build it for them, they start looking for ways to bypass that knot: to see if there are other streams of land they can unlock.

For example, in the UK we’re finding there are a surprisingly large number of small, underutilised sites where speculative development just isn’t profitable anyway, or where some degree of community consent is required to unlock that land. Local governments start asking how they can get plots directly into the hands of local businesses and citizens, backed perhaps by recognised community land ownership models or long term plot rental / bond models.

Investors such as pension funds start looking at how they can finance land costs for communities over 25 years, instead of taking a risk speculating on housing that people can’t afford anyway.

We can see some really promising signs of this in Germany, the Netherlands, and even now the UK, where the government has committed to growing the custom build sector to 20% of housing supply. That might still seem low, but it was previously just 7%!

Does WikiHouse align with green building standards? How sustainable is the product?

The short answer is ‘very’. No one has actually used Wikihouse to build a house to verified Passivhaus standards yet, but it can be done. The important thing is that it can be done at a much lower cost than previously. Our approach is that sustainability should be non-specialist; it should just come as standard.

Everyone agrees we need to build more sustainable homes and cities, and yet at present sustainability still comes with a cost and skill premium, and that won’t scale. We need to put the tools and solutions to build low-energy homes into the hands of everyone, and fast. We also need to spread the cost of R&D by open sourcing those solutions, so they are being constantly improved.

Of course this isn’t just about the energy required to run the home – it’s about the the whole supply chain: looking at the whole-life-cost of the house in terms of carbon, water, waste etc. How easy is it to replace parts during a building’s lifetime? These first WikiHouse technologies are designed for this from the outset, but more importantly, they are continuously being tested and improved, and we invite anyone to help do this.

Again, we can’t talk seriously about a circular economy unless we’re also talking about open source knowledge-sharing, open standards and distributing the tools to everyone. This is how we will achieve it.

One member of the World Bank conference audience expressed concerns about mobilizing people to be their own builders, emphasizing unforeseen process challenges, like unpredictable community dynamics, inconsistent materials and poor execution by unskilled people. How does WikiHouse address these concerns?

These are basically the problems which WikiHouse works with everyday, and is designed to help mitigate. In a nutshell, one of the most powerful things any technology (hardware or software) can do for almost any process is to make it almost impossible for the user to get wrong. This is how IKEA furniture works, it’s also how digital platforms like Airbnb try to work.

But the comment from the audience was right – it is incredibly complex, because with development you’re dealing with such a varied array of things, from culture to regulation to different site conditions, and this varies everywhere you go. But at least we know that it can work. Right now, there are millimetre-precise homes being built in days by complete amateurs using WikiHouse.

That’s only one part of a solution. The next challenge we’re interested in is to apply the same principles not just to the process of physically assembling homes, but to the whole procurement process, so we can lower the barriers of risk and communication, for example, to lenders or local government across a full supply chain.

If we can make it even 5% less difficult or less expensive to build sustainable, affordable homes, the difference it makes to society, and to the economy, will be huge. What I think the audience member was really saying was ‘this problem is too huge, too difficult, it simply can’t be done’. And I’m minded to agree with him. But that’s no reason not to try, and see how far we get.

* For those interested in the concept of “the long tail” in business, this comes from a book written by Wired editor Chris Anderson entitled The Long Tail. The book sets out the idea that online retail platforms open up the possibility of infinite inventory which can serve “countless niches.” Selling “more of less” is now the business model that online platforms can build. The application here is that one-off projects by communities or associations or cooperatives, for instance, could become bankable and buildable with technology that facilitates and dramatically lowers the cost of execution.