Will tiny homes or 3D printing make Austin more affordable? Startups work to ease housing crunch – Austin Business Journal

As Austin housing prices continue to climb, finding a fix to the affordability crisis remains elusive.

That’s why Impact Hub, a co-working space catering to socially conscious entrepreneurs, recently brought together nine companies all focused on the same question: How can companies spur investment in attainable housing for those in low-to-middle income brackets? Their solutions range from 3D-printed houses to private equity funds providing low-income financing. And perhaps the most tangible spin-off from the program is a pair of tiny home developments expected to break ground soon in South Austin and Kyle.

The three-month accelerator program will wrap up Jan. 24 with companies showcasing their products to the public at Impact Hub at 5540 N. Lamar Blvd. The event starts at 6 p.m.

Ashley Phillips, managing director of Impact Hub Austin, said the co-working space launched the accelerator program as a chance for businesses to collaborate on one of the city’s most pressing issues.

“Austin is well known for having a booming economy… we’re growing like wildfire and we’re on all these top 10 lists, and yet there is an underbelly to that growth,” Phillips said. “I want Austin to be the city to that gets it right. I want Austin to be the city that enjoys the success in an equitable manner.”

Picked from a pool of 50 applicants, the companies participated in workshops, training, networking and mentorship from leaders in the real estate, finance and nonprofit worlds.

Tiny homes in the works

For Sprout Tiny Homes, the accelerator helped it overcome the big hurdle of financing. Although tiny homes can cost less than $200,000 apiece, that price is still unattainable for many customers because banks have been hesitant to sell mortgages to buyers of tiny homes.

That’s largely because there isn’t much history on how tiny homes depreciate over time, said Alan Kirchhoff, executive vice president of business development at Sprout. As a result, customers typically can only get short-term loans with subprime rates, which is arguably not a long-term solution for affordability, Kirchhoff said.

Through the accelerator, Sprout connected with banks willing to offer 15- and 30-year mortgages at conventional rates for modular tiny homes. The mortgages can then be sold on the secondary market, Kirchhoff said. Residents would also take out a long-term lease on the ground under the homes, which are built to last 30 years or more.

Those connections enabled Sprout to strike a $26 million contract with Texas Site Development LLC and Tiny Home Dwelling Co. for up to 275 homes to be built and installed in the greater Austin area.

Construction on a new South Austin tiny home community, called "Constellation," is slated to start this summer with up to 80 units, said developer James Stinson, CEO of Tiny Home Dwellings Co. The up-scale community at 10400 Old Manchaca Road will feature units from both Sprout Tiny Homes and Austin-based Kasita LLC. Separately, Stinson’s company hopes to break ground in April on a tiny-home community in the Hays County city of Kyle, with 100 units in the first phase, he said.

Sprout still needs to develop financing for tiny homes on wheels — a product that is treated more like a recreational vehicle by the banks than a home, said Jefre Outlaw, vice president of sales for Sprout. But finding financing for the modular homes (which are wheelless and attached to a foundation) were a big win for the company, said Kirchhoff.

Container housing as income generator

Tiny homes weren’t the only creative, minimalist housing options in the accelerator. Austin-based startup Developods designs container-style, modular housing with a dual purpose. Called “accessory dwelling units," the structures meet state building code and can be installed on existing properties similar to a so-called mother-in-law home. With sizes ranging from 160 square feet to 1,100 square feet, the units can offer an affordable rental space for residents and a way for homeowners to make extra income on their existing property, said Monique Stevenson, Developods founder and president.

Developods’ units range in price $32,000 to $150,000 depending on size. The company walks the homeowners through the entire process of permitting and construction, too, Stevenson said.

“So really we’re trying to reimagine the way that housing is being built. It’s being built in a better way and it’s being built faster,” Stevenson said. The modular homes are constructed and inspected in about half the time as a regular house, she added.

Through the accelerator Stevenson said she connected with a local construction company to enhance the product. Developods has about a dozen units ordered with a long waiting list of applicants, according to the company.

Here some highlights from other companies in the cohort:

Icon3D produces homes using three-dimensional printing to build affordable units, with a prototype slated for unveiling at South by Southwest.Affordable Central Texas wants to create a fund for purchasing existing multifamily homes. The nonprofit will lease properties with rent appreciation tied to average wage growth. Separately, Triple Bottom Line Foundation Fund will help finance clean energy projects for low-income housing.Affordable Housing Auditors is collecting and analyzing data to gain insights on affordable housing that better informs policymakers.All Adobe is another company in the market that designs, builds and develops microstudios and homes.

As the accelerator wound down, there at least one lesson stuck with participants.

“It’s not going to be one product that’s going to solve the issue for affordability in an urban area. It’s going to be a combination of multiple different approaches and products and existing infrastructure that is going to be the solution. So that’s what really opened my eyes," Kirchhoff said.

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