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Where are the economies of scale in homebuilding?

construction-physics.com

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Re: Where are the economies of scale in homebuilding?

#71

Post by bombcar »

bluGill wrote: post #32
nonethewiser wrote: post #22

Earlier quoted context omitted.

Inputs are definitely a big cost but thats where economies of scale are already able to work their magic I would assume. What would the barriers be for a big builder to leverage economies of scale in procuring lumber, drywall, etc?

They really can't because all the things where scale would apply is already standardized. You buy 2x4's in the 92 and 5/8's length. And you put it up and that makes your 8 foot wall after adding the top and bottom plates. We laugh about how a 2x4 isn't really a 2x4 but that doesn't matter because the important part is it's a standard dimension you can get from anyone and so the people who make them already have the s…

I've always dreamed of a house designed to minimize cuts; walls exactly the right length to use full sheets of drywall, etc.

The reality: it wouldn't save hardly anything, tradesmen are good at what they do.

Re: Where are the economies of scale in homebuilding?

#72

Post by pianopatrick »

socalgal2 wrote: post #4
Avicebron wrote: post #2

Interesting 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.

On housing, I no longer think that a fringe group of NIMBYs override the will of the majority. There have been attempts to use direct democracy ballot measures to go around the NIMBYs and elected representatives and allow building. Most of the time, these ballot measures fail. If NIMBYs were truly a fringe group, these ballot measures would succeed.

Personally I would be in favor of a constitutional right to build to override these local restrictions. I think that would cause a lot of economic activity and growth due to all the construction which would happen. But I accept I am in the minority on the housing issue and I don't think it will ever happen.

Re: Where are the economies of scale in homebuilding?

#73

Post by bombcar »

idiotsecant wrote: post #60
hombre_fatal wrote: post #51

Earlier quoted context omitted.

That doesn't make sense. Developers don't wait around until you pool your money together with strangers to fund apartment construction. Density and supply explosion are what bring down prices.

This is not universally true. There are vast swathes of the country where you can explode all the supply you want, the people who live there will be simply unable to afford them. As in they can not afford the cost of material and labor, even assuming supply drops profit to zero. Supply is not magic. It can't reduce the cost of something below the cost of material and labor.

> Supply is not magic. It can't reduce the cost of something below the cost of material and labor.

I'll agree it's not magic, but supply can drop the cost of something below the cost of materials and labor, if you equivocate a bit.

If new houses are going for $250k in your area, old, used, smaller houses should be going for less.

Re: Where are the economies of scale in homebuilding?

#74

Post by Markoff »

akst wrote: post #11

A question about prefab construction came up at a talk this year in Sydney with Lucy Turnbull (Former Sydney Mayor) and Alain Bertaud (planner and author order without design), Lucy mentioned someone tried this in Sydney and went under and they never heard from them again despite promising the world. Alain mentioned that tastes (think in terms of from finishes to floor plans) change often enough where prefabricating…

communist countries before 1989 did this en masse producing large concrete panels with each wall being basically one, they could erect apartment blocks very fast and build thousands of apartments, they also used unified prefab "core" for bathroom/toilet

but it's difficult to say how economical it would be in market economy since they did it in centrally planned economy

use translate https://panelaky.info/vyvoj_panelaku/

https://en.wikipedia.org/wiki/Large-panel-system_building

https://en.wikipedia.org/wiki/Panel%C3%A1k

Re: Where are the economies of scale in homebuilding?

#75

Post by bombcar »

hedora wrote: post #31

I think standardized codes would help a lot. Another major issue is labor mobility: Here in California, there's a big labor shortage for all blue collar trades, and even if they do live in the area, they have to spend a lot of time going to/from the job site. I think this can be largely solved by technology, but with a change of regulations, code, and division of labor in the trades. 1) Put all the power conduit, plu…

Have you ever been on a building site, let alone been involved with building?

Re: Where are the economies of scale in homebuilding?

#76

Post by Markoff »

nradov wrote: post #53
bluGill wrote: post #36

Earlier quoted context omitted.

The vast majority of the boards and carpenters gets come pre-cut to 92 and 5'8". That is exactly the size you need for an 8' wall. It is only a tiny minority of borders that the carpenter is actually cutting on site. The majority are already pre-cut to the exact size needed. It would be possible to cut boards to the exact site in a factory. However, you would lose more in the logistics cost of managing all the differ…

All but the cheapest new residential construction has moved to 9'+ walls. Buyers like higher ceilings.

I wonder if someone explained to them difference in heating/cooling expenses + how much the extra 30-50 cm adds also to construction materials

Re: Where are the economies of scale in homebuilding?

#77

Post by bombcar »

r-bryan wrote: post #13

Why does a carpenter cut the end off a 10-foot board to get a required 9ft-2in, thereby wasting 8% of the input and incurring dumpster charges? Suppose the architect's design specified the cutlist, to be transmitted to the board "factory", which would cut boards to the required lengths, tagging them with RFID serial numbers indexed to the design, stacking them so the first ones to be used are on the top, and truck to…

You can buy kit houses that basically do what you're describing, up to and including entire log cabins that go together like Lincoln logs of yore (which end up being MORE expensive because they literally build the house at the "factory" and then disassemble it, put it on a truck and reassemble it onsite).

The big problem with kit homes ends up being what happens when (not if) you @#$@ something up.

And the big builders are already bypassing Home Depot, they buy from suppliers that you've never even heard of (the smaller ones buy from suppliers you've heard of, but when you went in everything was 5x the price of Home Depot, because they don't want you as a customer - they want the builders who buy on account and get 80-90% discounts on "list price").

Re: Where are the economies of scale in homebuilding?

#78

Post by TylerE »

akst wrote: post #28
JumpCrisscross wrote: post #16

Earlier quoted context omitted.

> think the fact there is no uniform standards for acceptable floor plans, compliant layouts and construction codes across the different jurisdictions FTA: “Conventional homebuilding is subject to different building code requirements in different jurisdictions, depending on what version of the code has been adopted. But manufactured homes are built to one set of national requirements, the federal HUD code.”

Cheers I missed that… Updated my comment Even with that still leaves planning controls, which dictates a lot constraint’s on development. In some jurisdictions you can effectively have planning controls that ban some floor plans. Admittedly I’ve just heard of federal HUD maybe this is some unprecedented case where it overalls local government planning and state laws, though I think that’s unlikely, I do know there’s…

"Manufactured home" probably isn't what you're thinking of.

It's what we used to call a mobile home or trailer. They get around a lot of zoning restrictions because they aren't permanent construction.

Re: Where are the economies of scale in homebuilding?

#79

Post by bombcar »

Building an Affordable House goes into some real, actionable things that could be done - and often aren't.

A big part of the problem is the same with cars; nobody makes used cars, and nobody builds used houses. The buyers are the ones with money and they drive the demand.

https://www.amazon.com/Building-Affordable-House-Fernando-Pa...

(Some of the obvious wins have taken over quite quickly; almost no builders frame roof trusses anymore and instead bring them in from a factory on trucks and crane them into position - three men can do in a day what would have taken an entire team a week.)

Re: Where are the economies of scale in homebuilding?

#80

Post by softgrow »

Maybe we are solving the wrong problem? Should it be, where at the economies of scale in "building places for people to live in". I'd be interested to hear from others about relative costs for high rise, multi-family dwellings, double storey dwellings and so on relative to single-storey single-family dwellings.
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