Sun. Sep 24th, 2023
    The Rise of Affordable Smart Homes: Addressing the Housing Crisis

    The U.S. housing market continues to face challenges such as rising mortgage rates and a shortage of supply, leading to soaring home prices. In June, the S&P CoreLogic Case-Shiller national home price index showed a 0.7% month-on-month growth after seasonal adjustment. Meanwhile, home sales in July experienced a 16.6% decline year over year, the slowest pace since 2010. The median home prices crossed the $400,000 mark in July, reflecting a 1.9% increase from the same period last year.

    The global real estate crisis has particularly affected younger generations, as home affordability reaches record lows. This has raised concerns among millennials and Gen Z about their prospects of ever owning a home. Skyrocketing rental rates have only worsened the situation.

    However, several startups have emerged to address the housing shortage by creating affordable mobile homes specifically designed for nuclear families. ZenniHome, a disruptive robotics and technology company, manufactures fully furnished smart homes in factories, streamlining the manufacturing process. These factory-made homes are equipped with smart technology and designed for easy transportation and assembly. They can be used as stand-alone units or stacked into multifamily apartment buildings, reducing the cost of home ownership.

    ZenniHome’s solution to the housing crisis has garnered significant support, with soft orders exceeding 40,000, primarily from developers of low- and mid-rise multifamily developments. Additionally, the government has shown interest, with 22% of the soft orders coming from governments aiming to provide affordable housing for marginalized communities and disaster-stricken areas.

    With an addressable market of $600 billion, focusing on homes under 1,200 square feet, ZenniHome estimates an obtainable market of $150 billion within a day’s trucking distance from its factory in Page, Arizona. The company has launched prototypes of its Denizen and Citizen housing models, which are open for public tours in Arizona. The customizable homes allow buyers to select interior finishes and colors, thus driving demand.

    ZenniHome aims to open a second factory in Arizona and is in discussions with the Native American-governed town of Navajo Nation to manufacture and install homes in the region. The company also plans to expand its services to high-visibility regions in California, Utah, Idaho, Colorado, and Canada.

    According to projections, ZenniHome is on track to generate $23 million in revenue this year from a 90-unit multifamily project called ZenCity in Arizona. The company expects its revenue to triple next year, surpassing $70 million.

    As the Federal Reserve continues to raise interest rates to combat inflation, the housing shortage is expected to persist. Companies like ZenniHome offer a potential solution to address the supply shortage while providing affordable housing options. ZenniHome’s crowdfunding option also allows retail investors to gain an equity stake with an investment as low as $250.

    – (2023)
    – S&P CoreLogic Case-Shiller national home price index