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Where are the economies of scale in homebuilding?

construction-physics.com

121–130 of 149 posts

Re: Where are the economies of scale in homebuilding?

#121

Earlier quoted context omitted.

In a modern house insulation is very good (in general) and so your heating cooling expenses are not that high over a lifetime.

So you are telling me cooling down or heating bigger volume of air takes same amount of energy/money than smaller volume?

The larger use of energy in HVAC is recovery from losses from convection, conduction, radiation, and air leaks. The one time heating or cooling is small.

Re: Where are the economies of scale in homebuilding?

#122

Earlier quoted context omitted.

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 r…

That's not how supply and demand work. The builders make new, usually expensive housing, the people making enough to afford them move out of their older cheaper houses into the new ones, those older houses are now on the market, people who can afford those move in, freeing up cheaper ones, repeat, bottom of the market has new openings.

Re: Where are the economies of scale in homebuilding?

#123
post #12

Earlier quoted context omitted.

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.

Regardless of the supply, the floor of a price of a new home will be the cost to build though?

The new homes are not the source of cheap housing, they are the source of expensive housing, but people buy those free up cheaper houses, people buying those free up even cheaper houses, etc...

Re: Where are the economies of scale in homebuilding?

#125

Earlier quoted context omitted.

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…

I didn't see the word "fringe" in the post you responded to. Most people are NIMBYs.

Re: Where are the economies of scale in homebuilding?

#126
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…

Idk, but it seems like you could attempt to use this argument for absolutely anything that is manufactured.

Why do people buy manufactured cars instead of custom ones? Is it because they dont care or is it because a custom car would be 10x more expensive?

If they could actually manufacture a house that is 1/10th or less the cost but the tradeoff is its a little outdated or the layout isnt exactly what they want, i have a hard time beliving people wouldnt take that trade.

Re: Where are the economies of scale in homebuilding?

#127
post #104

Earlier quoted context omitted.

With what size housing unit though? If we're trying to make livable dense housing, the developer is going vertical and getting much better than 10:1.

yep, and that's what we see a lot of round here. this is still not driving pre-fab adoption. ie, a single family dwelling selling for $3m, knocked down and replaced with 8x apartments sold for $750k. no interest doing a prefab single family dwelling at any price.

Right but that margin is tight!? Total rev of $6m, entry cost before anything built of $3m. $3m to play with. 8 units selling for $750k and you want to build them for under $300k a piece? Tight.

Re: Where are the economies of scale in homebuilding?

#128
post #14

One thing that can’t be scaled is “prime location” There will be locations that are more desirable than others, and even if you keep building houses where there’s space, the need to congregate in particular areas (such as for work) will result in particular locations being more desirable. And, it’s hard to increase the density of an area once the housing supply is already built out. So instead, that supply stays fixe…

I've been thinking about this a lot. It feels to me like we* are not good at making new places that people want to be, so we spend a lot of energy working out how to maximally utilise the existing good places. There will of course be some places that are uniquely popular e.g. due to their geography or natural beauty. Humans tend to congregate around centres of economic activity, which means some places become popular…

China does it and it works well. We just need governments with executive planning capabilities. In my country (Canada) we only have myopic politicians who only care for re-election.

Re: Where are the economies of scale in homebuilding?

#129
post #15

Earlier quoted context omitted.

3D printing isn’t going to make houses hugely much cheaper. The lion’s share of the cost of a house is fit-out. Doors, windows, lighting, plumbing, cabinets, tiling, painting. What needs to happen is modular designs where the house is made out of standardised ready-made components that are mass produced in a factory and plug together to form a finished house.

I've never understood why we go through so much work, to coat the interior of our houses with easily damaged and difficult to repair materials. Who thought it was a good idea to compress dust between sheets of paper, nail it to the framing, then spray a texture onto it with more dust, and color that with a film of plastic that's cured in place, so it needs multiple coats to be thick enough to provide a consistent col…

Its also cheap, and fire retardant compared to other finishing. It used to be lathe+plaster. And before that plain wood.

Re: Where are the economies of scale in homebuilding?

#130
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…

With what size housing unit though? If we're trying to make livable dense housing, the developer is going vertical and getting much better than 10:1.

Trailer parks are a thing that does exist; you can even often find an available slot in one. It turns out that most people don't want to live in a highly-dense area with mass-manufactured housing.
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