Meet The Texas Startup Aiming To Solve The US Housing Crisis

Must read

Cedar co-founders Rahul Attraya, Kyle Vansice, Nate Peters

Cedar

Why is the US suffering such an acute shortage of housing? The National Association of Realtors says the time it will take the inventory of housing stock to run out at the current rate of sale has fallen to just 3.1 months – more than 25% below the 2015-2019 average of 4.2 months.

Kyle Vansice, Nate Peters and Rahul Attraya, the co-founders of Austin-based start-up Cedar, believe one major contributory factor in the current crisis is the length of time it takes developers to secure permits to begin construction. “It can take two or three times as long to reach this point than to actually build a new development,” explains Vansice.

Cedar, which is today announcing a $3 million seed found round, has therefore focused its value proposition on one of the most time-consuming aspects of this initial stage of development. Having identified potential sites for construction, developers must navigate a plethora of regulations and real estate considerations to work out which of them they can build on, and what they can build; this can take six to 12 months. Cedar has developed software that provides answers to these questions in 72 hours.

“We put publicly available data into our own proprietary model in order to analyse each site,” Vansice explains. “Then we have a generative design platform that sits on top of this, running multiple scenarios to identify the best option for a given site.”

The service is primarily aimed at developers that are considering and exploring multiple potential construction projects. Cedar says it can very quickly identify which sites developers will be able to gain permits for – and what to build on these sites in order to generate the maximum financial return. “We’re helping them to solve a three-dimensional puzzle,” Vansice adds.

Right now, Cedar is working with architects and developers on projects across Austin but has imminent plans to launch a similar service in Dallas. It has also identified Los Angeles, Seattle and Portland as ideal cities to launch in, though ultimately Cedar wants to be in every major city across the US.

The company is particularly interested in helping developers target what it defines as the “missing middle”. Traditionally, the construction sector has either built single-family homes or luxury high-rise apartment buildings. Today, however, the preference in many US cities is shifting towards developing livable and walkable neighborhoods, with larger, multi-family buildings in more central locations. Identifying the best sites for such projects, which will increase the population density of the area, is therefore crucial.

In that sense, argues Peters, Cedar hopes to help shift the mindset on US housing development. “By connecting local zoning and land development regulations with a national standard for infill housing and urban density, Cedar is the first technology startup to offer a fresh vision for housing development and design for the future,” he says.

It’s a bold position that not everyone will agree with – many in the US do not accept that increasing population density in urban locations is the right way to tackle housing shortages. Others are pushing for fundamental reform. A report published earlier this year by the World Economic Forum, for example, called for the launch of a national commission on the housing crisis, as well as greater support for first-time buyers and tighter regulation of property investment.

However, Cedar’s investors are excited about what the company can bring to this debate. Today’s round, which will provide Cedar with capital to develop its software with even more automation, is led by Caffeinated Capital, with participation from Tishman Speyer Ventures and a number of prominent individual investors.

“Characterising the economic value of any parcel of land through its current and future development opportunities will drive massive value to developers, brokers, states and municipalities, and other stakeholders,” says Varun Gupta, a partner at Caffeinated Capital. “With it, Cedar could help usher in a new golden era of municipal development and help solve America’s housing shortage.”

Certainly, the opportunity is a large one. Research suggests the infill multi-family construction market – building larger developments on sites traditionally focused at single-family residences – is worth $300 billion a year, and that it will nearly double by 2030. There is also a sustainability angle – a recent University of California Berkeley study suggested this type of property development could be a highly effective tool for reducing carbon emissions.

For Cedar, the challenge is to scale its business accordingly. “We need innovation in architecture,” adds Vansice. In time, he imagines that Cedar’s service will be so automated that developers will simply license the software and deploy it for themselves as a routine part of their site development process. If that can speed up the construction process, many American families will have reason to be grateful.

More articles

Latest article