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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?

#91

Earlier quoted context omitted.

Sounds like an absolute nightmare. All those components connect to other things and all you did was make a single enormous node that everything hooks to.

The homebuilder would drop in this all-in-one node that is the literal kitchen sink, electrical for the stove and refrigerator, the shower, toilet, bathroom sink, duct and wiring for the heater/AC, wiring for the living room, and the electrical panel. Yes it'd a total nightmare, but people pay to have their problems solved. By constructing this node in a factory, you'd be able to get economies of scale, not just on t…

>The homebuilder would drop in this all-in-one node that is the literal kitchen sink, electrical for the stove and refrigerator, the shower, toilet,

This is perfect for the future. Your pod will look like one of those supermax prison cells where the sink is built into the toilet because it is a supermax prison cell! There will be this central shoot where your bugmeal bread load will drop down into the hopper tray once a day and the treadmill for your exercise will charge your phone for entertainment and it will be legally mandated to have the Facebook app installed. Just wonderful.

We now live in a world with a shrinking population. There is no need to build new homes. Soon we'll be worried about how to tear down all the empty ones but we won't have the manpower.

Re: Where are the economies of scale in homebuilding?

#92
I believe all these engineering/technology/economic discussions are missing the human element, humans do human kinda things.

The #1 feature of housing in US is to keep the undesirables out. The best way to implement it is costly housing via zoning, deed restrictions and HOAs. And with costly housing, emerge good schools. Which creates a vicious/virtuous cycle. People who want to live in safe places (and/or good schools) create more demand in these specific locations even though they may not have the original motive (of keeping the undesirables out). This is the power of defaults.

Now, add to this that most of the wealth in US is housing, it creates a perverse incentive to stop any more supply, which they can accomplish at the city/county level.

Note: The above is US specific. There are other things at play in other countries. I'm not sure what drives costly housing in Canada and Australia.

Re: Where are the economies of scale in homebuilding?

#93
post #78
post #28

Earlier quoted context omitted.

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.

I think you're right, I wrote my comment after skimming for stuff on planning and before getting the mobile home part. I hadn't considered trailers

> The comment from here onwards is about Sydney specifically, so if you're not interested this is your chance to get off.

Unfortunately in Sydney Australia this is almost certainly also regulated https://www.planning.nsw.gov.au/policy-and-legislation/housi...

It seems if you want you're allowed to set it up on your own property, which is surprising reasonable for Sydney standards. Just no more than 6 months after which you need to make a permit, possibly make a development application or something as it may be viewed as a permanent increase in floor space which tends to be tied infrastructure levies and maybe rates (think property tax). You can't set it up in the middle of the outback without some kind of planning proposal to rezone it to permit it.

At least with NSW (the state Sydney is in) the criteria are likely consistent across the state)

In Sydney Trailers likely aren't subject to Development control plans (DCPs) but other kinds of prefab/manufactured homes definitely are. Here's an example of a DCP, here is an example one from Randwick (one of 20-30 councils sydney is compromised of): https://hdp-au-prod-app-rcc-yoursay-files.s3.ap-southeast-2....

It regulates room size relative to floor ceiling distance, solar and privacy impacts on adjacent sites, minimum privacy and solar inside the dwelling (such as the amount of sunlight during the least sunny hour of the least sunniest day of the year), setbacks, etc, etc. If its next a heritage item it can't mimic it, it also can't take attention from it, has to confirm with some abstraction notion of sympathy to the heritage item

Re: Where are the economies of scale in homebuilding?

#94
post #74
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_panela…

Yeah these are definitely some of the more well known examples, these early communist countries tended to have a lot of state capacity so if there were such things like local planning controls and they got in the way of state priorities they were simply rewritten or appealed.

The USA, and Australia actually use to have far greater state capacity.

Besides political will, the structure of institutions and distribution of authority in both Australia and USA act against the federal governments of either country enacting this.

Re: Where are the economies of scale in homebuilding?

#95
> This means that the ratio of the costs of the output to the costs of the physical inputs (drywall, lumber, concrete, etc.) is around 2.

> You could find a way to use fewer and/or cheaper raw materials.

You can delete almost all of those components, almost all of that assembly work, much of the mass of the structure, much of the supply chain for the raw materials, almost all of the inventory costs, and you can make the financial carrying cost negative. You build it in a factory at room temperature mostly out of nearby rocks, and ship it flat-packed to the destination, where it mostly self-assembles over the course of a few minutes. The result is beautiful, requires little energy to heat or cool, and is impervious to insects, salt, caustics, weather, fire, and resistant to bombs.

Uh, the demonstration is forthcoming, bear with me.

Re: Where are the economies of scale in homebuilding?

#96
post #84
post #76

Earlier quoted context omitted.

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

People like to live in nice homes and the cost difference is tiny over the life of the structure.

construction cost maybe, heating/cool expenses difference won't be so tiny, quite the opposite and it's not only about expenses, lower ceiling is also faster to cool/heat, so you have to wait shorter time

I can really understand high ceiling (in new residential buildings) only for people who use fake built-in second floor (dunno the word in English, maybe mezzanine by my quick research) for like bed or something, but what's the point then and why not build proper separated 2nd floor if you are building new house

Re: Where are the economies of scale in homebuilding?

#97
post #54

Lots of interest comments on the efficiency of building homes. The bigger issue is the cost of land. The differential for land to build is often 10:1. So even if the prefab shave 10-20% the price for a custom build, it's still not making much of a difference for the normal buyer. unless a develop or government was opening up mutiple parcels of land well below the costs to build a house, prefab is not really going to…

If the land cost is 10:1 then chances are that is a lot ripe for townhomes/apartments. Desirable single home plots in the suburbs of my mid sized city are like 1:3 with the cheapest new builds from a local builder.

Re: Where are the economies of scale in homebuilding?

#98
post #63
post #50

Key statement: "The fact that the ratio between costs of constructing a home and the costs of the various materials is already so low is fundamentally what makes achieving substantial economies of scale difficult." That's striking. Building houses looks labor-intensive, but, if that's correct, labor cost isn't that large a fraction of the final cost.

It suggests we need to find cheaper materials from which to build homes.

Most of the world builds low-end homes from reinforced concrete. Most US buyers don't like that.

(I live in a house built from cinder blocks filled with concrete and rebar, like a commercial building. It was built by a commercial builder as his own house. It looks industrial from the outside, and nice inside. I'm fine with that, but most people are not.)

Re: Where are the economies of scale in homebuilding?

#99
post #50

Key statement: "The fact that the ratio between costs of constructing a home and the costs of the various materials is already so low is fundamentally what makes achieving substantial economies of scale difficult." That's striking. Building houses looks labor-intensive, but, if that's correct, labor cost isn't that large a fraction of the final cost.

It's a strange way to analyze the situation. By that logic, building from premium materials makes economies of scale more difficult, and building from cheap materials makes it easy.

Also, labor inefficiencies clearly exist, as protectionism by definition creates artificial inefficiencies, and it is rampant in all aspects of construction. It's easy to buy an off-the-shelf and cheap window air conditioner that uses a far more efficient variable-speed heat pump than the fixed-speed heat pump most central HVAC's use, but that same technology is rare in installed central HVACs, because the licensing and certification requirements impede the adaptation of newer more-efficient technology, despite the requirements ostensibly existing to increase its use, but in practice providing protectionism at the expense of modern efficient technology. There's similar effects with protectionism slowing the adaptation of longer lasting, safer, or less error prone infrastructure in other fields of construction like plumbing, electrical, framing, etc.…

Licensing and certification is also easily hijacked by NIMBYists, and because it's not based on actual safety requirements it can vary significantly from region to region, as is demonstrated by nationwide home builders having an efficiency disadvantage over those operating in only one region.

Granted, repealing NIMBYism and protectionism is nearly impossible, so it's not an effective means to reduce the costs of building housing, but it does demonstrate that there is a lot of inefficiency in the process. It also means that the field is ripe for disruption, because a concerted enough effort to sidestep NIMBYism and protectionism could break through and create a significant and immediate impact on the field, as for example, Trader Joe's did with wine importation, Southwest did with scheduled airlines, and Uber and Lyft did with town car services.

Re: Where are the economies of scale in homebuilding?

#100

We 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 menti…

We also demonize McMansions at the other end.

They're not disparaged because they're expensive, but because they're a cheap way of producing a high-square-footage house. A smaller house on a larger property built from higher-quality materials wouldn't be mocked, despite being a similar price.
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