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Housing improves over time due to innovations in materials, design, and construction, as well as innovations in the numerous systems and networks that support housing. The pace of innovation in housing is often criticized as sluggish, and the housing industry is frequently criticized as resistant to change. Resistance to change, however, is not inherently bad. The importance of housing for personal and family health, well-being, and social status make it imperative that the risks of change be balanced against its possible rewards.

Unlike the transformative innovations in other sectors of the economy, innovation in housing occurs mainly in response to external shocks outside the housing sector, particularly in the energy, transportation, communications, and finance sectors. The automobile led to large-scale “Levittown” tract housing. More recently, information technology innovations have enabled the “smart” house. The innovation of the long-term, self-amortizing mortgage spurred the American Dream of a single-family detached house, while the recent innovations of collateralized debt obligations and derivatives led to the housing bubble and the foreclosure crisis.

Concepts, Definitions, and Theory

The topic of innovation has gained widespread popularity among policy makers, business leaders, scholars, and the general public. From a small body of seminal scholarship produced between 1930 and 1980, interest in innovation has exploded. The literature on innovation is now expansive and deep, and there is general agreement on basic concepts.

Innovation is related to invention. Invention is the initial creation of a new idea, product, or process, whereas innovation involves the delivery of the invention into practice (e.g., through product development and commercialization). There is seldom a clear separation between invention and innovation as the processes are interactive and repetitive, often over a long period of time. The chemical discovery of vinyl occurred decades before its use as an exterior siding material in housing. The mixture of sand, cement, and cellulose fibers to create fiber-cement materials dates back to the 1950s, but fiber-cement siding is still considered by many as an “innovative” product. Thus, innovation does not necessarily mean “new,” and “newness” (time from first creation or introduction) can change due to reinvention, modification, and time of commercialization.

There are three different (and sometimes overlapping) types of innovations. Cost-efficiency innovations result in building homes of like quality for less cost and expanding demand by making the product more affordable. Quality-functionality innovations improve on the performance of existing products and help sustain their use. Radical innovations introduce entirely new products or materials that create new markets.

Innovations in housing generally involve improvements in the cost and functionality of established products and processes. The nail and hammer combine an age-old construction material and process for attaching materials and creating structures, such as houses. Continuous improvements have been made in the nail over centuries, progressing from hand produced nails to “cut” (manufactured) nails, which have in turn progressed from square nails to wire nails. Similarly, the hammer has been continually improved to increase fastening durability and worker productivity. The nail gun integrated the nail with the tool to create an automatic process with greater uniformity, quality control, and speed. Robotics and computers further integrate the original worker-hammer-nail assembly process into a highly efficient and quality-controlled industrial assembly.

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