At a time when housing is drastically under-built, due to construction costs and an uncertain real estate market, it’s more important than ever to create housing that is sustainable to mitigate climate change, all without breaking the bank.

What happened to real estate in 2022?

According to Realtor housing costs across the U.S. rose an average of 43% in 2022. This was because of a rebound in housing costs caused by high rates of remote work and real estate sales during the pandemic. When the Federal Reserve raised interest rates, housing sales fell off a cliff in fall 2022. Many would-be sellers now are hesitating to list their homes, because they would be buying in a market with much higher interest rates than their current loans acquired often near 2% to 3% over the last few years. The result: housing is stagnant, even though demand is still high. Homes no longer sell for thousands over asking in most markets, and they don’t sell the same week they are listed.

Related: Why alternative homes are becoming increasingly popular

Prices have still climbed slightly into 2023, however, resisting predictions that a housing crash might be imminent. The reason for this is that inventory is low. Many buyers and sellers are waiting out the rate hikes to see what happens next. The upshot of all this is that the U.S. housing market has never been less affordable than it is now. New housing starts are down double digits at a time when the population needs more housing, and needs it to be built sustainably to fend off the worst effects of climate change to build for a cleaner future. Is a solution to this problem even feasible?

Where the sustainable housing market is headed in 2023

As of early 2023, several real estate markets are starting to lower prices by a few percentage points, including Denver, Austin, San Francisco and other hot destinations for remote workers during the pandemic.

Sustainable housing, meanwhile, is growing slowly, with new projects approved in a number of locations for neighborhoods built with geothermal in Texas. Additionally, there are solar-powered housing projects slated for locations such as Ann Arbor, Michigan, where local municipalities are working with developers to find ways to make affordable housing sustainable as well.

The risk to developers is this: if they build sustainable housing, can anyone afford it with materials costs fluctuating? The cost of lumber has come back down in 2023, but now the prices for electrical wiring, PVC pipe and other materials needed for housing have risen sharply. It’s hard for builders to predict costs and avoid bankruptcy in this scenario.

Could dorms point to affordable housing solutions?

One project stands out as a leader in sustainability and affordable housing. Brown University recently developed a sustainable dorm for students for the fall 2023 semester. This Deborah Berke Partners-designed Brook Street Residence Halls is comprised of 125,000 square feet with 353 beds intertwined with green spaces that help with stormwater retention.

Could following the lead of a laminated timber dorm building like this provide a clue as to how to solve the homeless and affordable housing crisis in a sustainable way? It’s possible that future shelters or affordable apartments could follow a space-efficient model like a student dorm, and thus save on the extra cost of making the building sustainable.

The Brown University dorms have natural light corridors, kitchenettes and study nooks. The building is an all-electric and combined CLT hybrid steel design, which contributes to Brown’s 2040 net-zero plans. The planned community in Ann Arbor, Michigan, is similar, based on the idea of co-housing with shared gardens and solar power on rooftops to keep the cost of a new neighborhood in this expensive college town to a reasonable level.

How much more expensive is sustainable housing?

HGTV says that building a sustainable home is about 20% to 30% more expensive than a traditional home. One way to make this more affordable is to build at scale. So, instead of individual homeowners trying to solve the affordable housing crisis on their own, larger sustainable developments that can save money at scale on solar installations and sustainable building materials could make sustainable housing more affordable.

HomeAdvisor says that solar panels cost the individual homeowner between $16,000 to $35,000 currently, but these costs can be brought down by powering entire neighborhoods or cities with clean power. Also keep in mind that sustainable housing is part materials and carbon footprint of construction, and part energy usage.

If sustainable housing is built with a mind to designing for natural light, for example, or passive rainwater harvesting, the costs can go down while the benefit remains high. LEED certified homes may be expensive up front depending on how they are built, but they are cheaper to maintain. Ideally, we will see sustainable affordable housing projects pop up that reduce operating costs: housing could be affordable because it is built at scale and built to be affordable to maintain.

Cities can’t legislate away the homeless crisis

Meanwhile, cities around Los Angeles are creating backlash for recently passing legislation attempting to ban temporary structures erected in public spaces across the city. It’s an attempt to remove unsightly homeless camps, but where will homeless people go when the shelters don’t have enough space and many homeless choose to not live in shelter conditions?

Cities need solutions to the affordable housing crisis. With millions now unhoused across the U.S. and that number growing, the urgency of climate change and affordable housing pair to create a perfect storm.

Enter imperfect solutions: solar and wind power are now more affordable than ever before, but it takes legislation to get those technologies on rooftops and into homeowners’ hands. And of course that does nothing for the homeless.

A federal tax credit to municipalities for making sustainable housing affordable would go a long way to solving this crisis, but housing isn’t built in a day and people need solutions quickly.

The current sustainable housing projects are merely a guide that can shape future policy and building projects that might seem to ambitious to date. The U.S. needs affordable housing and fast. And it needs future housing to be required to be sustainable, for the sake of the planet and for the sake of residents who can’t afford higher energy costs.

With solar and other clean energy sources paired with sustainable building methods and materials slowly becoming more affordable, we will eventually see a partnership between affordable housing and sustainability solutions. But will it be anywhere near soon enough to relieve the current crisis? Some brave souls will have to risk it all to make it happen, but they will rake in the profits if they succeed.

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