From Crisis To Comfort: Affordable Smart Homes Startup Hoping To Ease Rising Housing Costs

The U.S. housing landscape has been reeling from rising mortgage rates and supply shortage for some time, pushing median home prices to near-record highs. 

The S&P CoreLogic Case-Shiller national home price index exhibited a 0.7% month-on-month growth in June after being adjusted for seasonal factors. This follows a 0.8% increase in May.

Home sales declined 16.6% year over year in July, registering the slowest pace since 2010. Meanwhile, median home prices crossed the $400,000 mark in July, indicating a 1.9% rise since the same period last year. 

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Mobile Homes Disrupting The Housing Market 

The global real estate crisis has sparked concerns worldwide, particularly among younger people. With home affordability nearing record lows, the millennial and Gen Z generations are concerned about whether they will ever be able to own homes. Skyrocketing rental rates have exacerbated the situation. 

But several startups have found a solution to address the shortage, creating affordable mobile homes catering to nuclear families. ZenniHome, a disruptive robotics and technology company, designs and builds fully furnished smart homes in factories, which streamlines the manufacturing process. 

In addition, ZenniHome's factory-made homes are designed for easy transportation and assembly and can be parked as stand-alone units or stacked into multifamily apartment units. The impressive stacking feature could make ZenniHome a leading player in the factory-built housing space because it reduces the cost of home ownership. 

Avalanche Of Orders

ZenniHome's mission to address the housing crisis is taking effect, with investors placing bets on the company's success. The company's soft orders have exceeded 40,000, with developers of multifamily low- and mid-rise developments accounting for 75% of the orders. 

ZenniHome's housing units have garnered significant support from the government as well, with 22% of the soft orders arising from governments with the aim of providing affordable housing for marginalized communities and shelter in the event of disasters and catastrophes. 

ZenniHome has an addressable market of $600 billion, focusing on homes less than 1,200 square feet. Operating with from a factory in Page, Arizona, the company estimates an obtainable market of $150 billion, covering housing demand within a day's trucking distance. 

Revenue Forecast 

ZenniHome launched the prototypes of its Denizen and Citizen housing models, which are open for tours to the public in Arizona. The customizable homes allow buyers to select interior finishes and colors and are expected to appeal to the masses, significantly driving demand. 

The affordable housing developer aims to open a second factory in Arizona and is in discussions with the Native American-governed town of Navajo Nation to manufacture and install homes in the region. Apart from this, ZenniHome aims to expand its services across the high-visibility regions of California, Utah, Idaho and Colorado as well as across Canada. 

According to projections, ZennHome is on track to install a 90-unit multifamily project to develop ZenCity in Arizona this year. The project is expected to generate $23 million in revenue this year. The company expects revenue to triple by next year, crossing $70 million. 

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Housing Market: Future Prospects And Challenges 

Between 2019 and 2021, the shortage of affordable rental homes for low-income people worsened, with the deficit expanding by over 500,000 units. This escalation brought the shortage from 6.8 million to 7.3 million, perpetuating the ongoing trend of diminishing housing supply. As the Federal Reserve remains committed to raising interest rates to combat inflation woes, the housing shortage is expected to continue.

"Though the backward-looking annual growth rate dipped to 0.1%, May's exceptionally strong 0.7% month-over-month gain would equate to an annualized growth rate of 8.9%, suggesting the annual home price growth rate would remain at or near 0% for only a short time before inflecting and trending sharply higher in coming months," Black Knight Vice President of Enterprise Research Andy Walden said.

As a result, companies like ZenniHome can become the next big thing in the housing sector while addressing supply shortage issues. The company's crowdfunding option allows retail investors to gain an equity stake with $250. 

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