Where are the economies of scale in homebuilding?
construction-physics.com
Where are the economies of scale in homebuilding?
1–10 of 149 posts
Re: Where are the economies of scale in homebuilding?
#2Interesting essay.
There is this factory for lack of a better word near me that makes houses, packages them on a truck in pieces, and will ship them around the US to a foundation. All is said and done it's _maybe_ 100k cheaper to go with them than to buy the land and find your own contractors (and when the cost is between 300k-750k either way it doesn't really matter).
The essay touches on why this is the case, but fundamentally the issue with homebuilding isn't that we haven't optimized how to build houses. It's that only certain small segments of the population have seen anything but crushing decreases in wages on top of rampant inflation. So of course, when the average income of a region is 35k and the average house is 650k, there are issues that optimizing can't solve.
Re: Where are the economies of scale in homebuilding?
#3I wonder, have vertical integration been tried yet? As in, do any builder companies own forestries, or maybe cement or steel mills?
Re: Where are the economies of scale in homebuilding?
#4Interesting essay. There is this factory for lack of a better word near me that makes houses, packages them on a truck in pieces, and will ship them around the US to a foundation. All is said and done it's _maybe_ 100k cheaper to go with them than to buy the land and find your own contractors (and when the cost is between 300k-750k either way it doesn't really matter). The essay touches on why this is the case, but f…
The reason prices are high is lack of supply. Lowering costs of construction is one way to get slightly more supply but it's mostly governments and NIMBYs preventing construction. The high prices would bring in lots of people willing to build but they're blocked constantly.
Re: Where are the economies of scale in homebuilding?
#5I wonder, have vertical integration been tried yet? As in, do any builder companies own forestries, or maybe cement or steel mills?
I would assume the issue there would be transport. It'd be cheaper to use "local cement maker X" than to ship from "remote cheap cement maker Y"
Re: Where are the economies of scale in homebuilding?
#6We have effectively managed to demonize factory made houses by referring to the people that live in them as trailer trash. I honestly think 3-D printed concrete houses at some point will be how most things are built you’ll get tons of Americans talking about how do you can’t access the wires/plumbing and stuff and it basically just comes down to having enough windows or access points into the inner wall. Not to mention this is how everyone else in the world builds houses.
Re: Where are the economies of scale in homebuilding?
#7> You could vertically integrate backwards into the production of raw materials and components, in the hopes of driving down those costs
This is my takeaway: to reduce home-construction costs, we need to apply economies of scale further to the inputs.
What is the idiot index for lumber, drywall, et cetera?
Re: Where are the economies of scale in homebuilding?
#8Interesting essay. There is this factory for lack of a better word near me that makes houses, packages them on a truck in pieces, and will ship them around the US to a foundation. All is said and done it's _maybe_ 100k cheaper to go with them than to buy the land and find your own contractors (and when the cost is between 300k-750k either way it doesn't really matter). The essay touches on why this is the case, but f…
The reason prices are high is lack of supply. Lowering costs of construction is one way to get slightly more supply but it's mostly governments and NIMBYs preventing construction. The high prices would bring in lots of people willing to build but they're blocked constantly.
> Lowering costs of construction is one way to get slightly more supply but it's mostly governments and NIMBYs preventing construction.
In some places this is true. But in others it's just as true that builders would be happy to build but the people who need the houses can only leverage their 35k/year income in making that happen. And if you brought in some equity firm to then build the houses, they do so at market rates and want returns, which then prices out the people who can't pay the builder themselves.
Re: Where are the economies of scale in homebuilding?
#9I wonder, have vertical integration been tried yet? As in, do any builder companies own forestries, or maybe cement or steel mills?
Sierra Pacific, for instance, has a window company.
Re: Where are the economies of scale in homebuilding?
#10I wonder how much it’s due to the fact that homes are such an incredibly expensive endeavor compared to other things. I could see significant economies of scale in most of the materials and parts, but perhaps there has been a steady increase in quantity in those materials?