Philanthropy Could Help Fast-Track Adoption of Manufactured Housing, JPMorgan Says

New kinds of home construction inherently carry risks. But philanthropy could make a big difference in bridging the gap.

In a recent statement, JPMorgan Chase's housing research group highlighted a few ways that philanthropy is accelerating new construction methods. That includes modular homebuilding and new emerging technologies that need money and partnerships to get off the ground.

Banks are responding to the nationwide housing supply shortage, with JPMorgan investing $750 billion into the housing market through its "American Dream Initiative" to build or preserve 1 million affordable housing units through 2035.

Housing finance leaders think systemic reform to encourage more homebuilding is the path to broader affordability. And of course, philanthropy can't sustainably buoy the housing market. But JPMorgan says there are certain niche spaces where philanthropy can make a big difference.

“Innovative homebuilding techniques help to lower costs and shorten timelines, delivering more affordable homes at a lower price," said Laurie Schoeman, executive director of Housing Access and Affordability at JPMorgan Chase's philanthropy arm.

JPMorgan said there are four places where the philanthropic dollars it's announced are making a major difference:

• Helping finance tests and design work for early-stage pilots of new building technology.
• Helping developers scale to build their capacity and experience.
• Expanding their access to flexible financing and bring ideas to market faster.
• Building public-private partnerships to make sure new housing ideas are well-received.

"Philanthropy has the power to support early pilots, help fill funding gaps and scale what’s proving effective, and we’re excited to see how innovative construction contributes to a more accessible and resilient housing market," Schoeman said.

Modular advantages

In Portland, OR, JPMorgan announced late last month it is backing a pilot program to reconstruct homes out of mass timber, a framing style that relies on large, engineered wood panels. The pilot, Mass Casitas, is replacing homes that burned in the 2020 Echo Mountain Fire.

Developer Hacienda Community Development Corp. is testing out six new mass-timber homes. The studio, two-, and three-bedroom modular homes are made of prefabricated sections of thick, compressed wood. They take less energy to build and are faster to assemble on site compared to standard construction, Hacienda said.

And it's far faster. Hacienda completed all six homes in four months. A standard home can take 18 months or more to build.

It's an example of a new kind of construction material that needs financial backing to test out before gaining widespread adoption. Mass timber could also be more energy efficient and more fire resistant, but Hacienda and other builders need time and experience before they can build at scale.

With the affordability crisis straining American homes, more major companies are willing to invest in solving the kitchen-table issue. And that starts with expanding housing supply and making building cheaper.

Bank of America, for instance, has provided $15 billion in loans and grants since 2019, and Citi launched its "Blueprint for Housing Opportunity Initiative," a $60 billion plan to support the preservation and construction of 250,000 homes. But philanthropy isn't just for banks.

Short-term rental company Airbnb also announced it would invest $250 million into financing affordable housing projects across the country.

Sam Sheets, a strategy executive for Community & Affordable Lending at JPMorgan Chase, told Realtor.com® that high interest rates and the supply shortage of new homes makes it harder for people to break into the housing market. But he says first-time buyers and move-ups have a better financial future when they can afford homes.

"If you had to distill the problem statement on the homeowner side, obviously housing affordability is challenging via taxes and insurance," Sheets said. "But probably the biggest issue is people trying to buy for the first time, and navigating an environment that is unique."