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Real estate is a very old business, and has a bit of a reputation for not being very innovative (compared to, say, computer tech or bio tech).  That comparison is a bit unfair, since the real estate business would be truly scary if the success rate for innovation is as low as it is in tech.  And, the long life span of buildings makes the attitude of “fail fast and move on to Plan B” (common in tech) very expensive.

What should be praised is the attempt to innovate. For example: Net Zero (which supersedes Energy Star) or learning how to exploit information technologies.  You do not need to challenge common sense all of the time, and not all attempts will discover something dramatic or useful. Curiosity generates at least the possibility of new opportunities. 

Once identified, the better answer needs to pass the usual tests to prove that it is better, not different.  My experience as an researcher shows how hard it is to identify truly innovative and correct ideas.

Time is usually the best test.  At this time of year, many prestigious awards are being presented for success in the past.  They show that new ideas exist even after many smart people have spent many years trying and failing to solve a problem.

At the top of the list are the Nobel Prizes.  A little lower down the list are the awards to the MacArthur “Genius” Fellows.  More locally, the winners of NAIOP’s annual Development Challenge in Toronto [1]  [2] deserve congratulations for their mixed use proposal which would preserve the history of the area and energize the community.

My personal favourite awards are the Ig Nobel Awards for “achievements that first make people LAUGH then make them THINK”: my personal favourite this year is the prize for Psychology (although I think that it should have been for Literature) on BS.

These prizes demonstrate is that lots of good ideas remain undiscovered.  Maybe you can win an award now:

The affordable housing competition is important.  While the media may focus on the problems faced by people who are forced to live in a $1m home because they were outbid for a $2m home, that is a “first world problem”.  The study of real estate is interesting because not having four walls and a roof changes so many aspects of a person’s life.

Finding solutions to hard problems requires a different way of thinking.  The easy ways to reduce the price are known: reduce the wages of workers, reduce the profit margin, reduce the price of land, use cheaper inputs, ….  These are not real solutions since the maturity of the industry makes the opportunity costs widely known.

An obvious partial solution is to return to the past: the average new house is about twice as big as 60 years ago.  So, one solution might be to find a way to make 1000 sq. ft. feel bigger.

Finding a better solution will require somebody to understand the industry and to understand how the players interact.  When the better solution is found, the flaws in the current arguments will be made obvious, and textbooks will need to be re-written.

I do not know the next great innovation or how to find it, but there is value in the attempt.

PA

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