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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?

#31

Post by hedora »

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, plumbing and HVAC into standardized modules that can be cut to length with a circular saw, and attached with tools that cost a total of $500 with no skilled labor. It doesn't matter if this increases material costs by 50% for those components because they are cheap vs. labor. I'd rather waste a $50 piece of conduit than pay three different tradespeople $100+/hour to hand-build junctions where the wasted piece would end up being.

2) The next big cost is probably drywall finishing + doors. I don't have a great solution. I can imagine just 3d printing the whole interior once the conduits are placed.

3) Roofs can be cheap if rooflines are simple, since that allows stuff like metal roof trim to be fabbed at a factory. I don't think asphalt shingles are going to make much sense in many places 30 years from now, so probably just bite the bullet, and pick something wind and fireproof, then make it cheap.

4) Put solar panels somewhere other than the roof, or replace the roof material with them entirely.

5) Framing and insulation are already embarrassingly cheap vs the rest of the house. Probably not worth optimizing unless it saves finishing labor in the next step (e.g., 3d print a beautiful interior wall so you don't have to pay for someone to apply joint compound + paint).

That leaves the foundation + architecture / engineering work as the hard part. Most of the design work for that stuff could be automated. Let the homeowner and builder boss an LLM around, and then run the LLM output through code compliance + simulation gates. The latter is really important because most local code is hazard or climate dependent, and having good deterministic vetting of designs would let the construction process apply to multiple climates.

Prefab could make sense, but, in practice, those people don't pick up the phone. One major issue is delivering the house to things like hills, or at the end of windy / suburban roads. (The prefab sections want to be 30-50ft long, but your residential road doesn't want to support trailers over 20-30' or so).

Re: Where are the economies of scale in homebuilding?

#32

Post by bluGill »

nonethewiser wrote: post #22
JumpCrisscross wrote: post #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 ?

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 scale.

Similar for drywall, it comes in standard sizes to fit standard size walls. It's made in large factories that take advantage of all the scale factors for you, but they don't care if the customer is big or small because they're making the same thing.

The factory sells the stuff by the railroad car and lumberyard is what buy them and so you can't even get scaled by producing separately because the lumberyard is essentially what you'd have to do and you're duplicating exactly what they're doing and Essentially you're just taking in their profit, but you're not actually gaining anything

Re: Where are the economies of scale in homebuilding?

#33

Post by pessimizer »

JumpCrisscross wrote: post #17
wanoir wrote: 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…

> One thing that can’t be scaled is “prime location” Literally density.

Density trashes a location.

Re: Where are the economies of scale in homebuilding?

#34

Post by onlyrealcuzzo »

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…

The problem is that most of the country wants housing to get more expensive...

You're going to have a hard time getting anything passed when a lot of people will do anything and everything to make sure housing can never get cheaper and only more expensive...

Re: Where are the economies of scale in homebuilding?

#35

Post by peab »

onlyrealcuzzo wrote: post #34
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…

The problem is that most of the country wants housing to get more expensive... You're going to have a hard time getting anything passed when a lot of people will do anything and everything to make sure housing can never get cheaper and only more expensive...

Exactly. The incentive isn't there.

Re: Where are the economies of scale in homebuilding?

#36

Post by bluGill »

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…

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 different possible sizes that you need. Thus two by fours come size multiple of two feet except for the 92 and 5/8's and 104 and 5/8's. Those later too are the extremely common sizes that are used in most commonly.

The truck has to pass through something like Home Depot anyway because all those boards come not on a truck they come on a railroad car and then they'd have to be transferred to trucks to get them to wherever. That Home Depot-like place is also a good place to stage things if you actually are building you'll discover that the dedicated lumber yards are very good at breaking apart all the different pallets of lumber and they figure out exactly what you need and they put those all into one group and bring it to you. Yes, you do sometimes have to cut a 10 foot 2 by 4 and 9 foot 2 inches. However, you are never in the situation where you have a 12 foot 2 by 4, you have to cut to that size because Lumberyard has already figured that out and gotten you the closest to the right size for you. Having been in construction, I can inform you that there are very few boards that actually return to the lumber yard at the end of the build. They are generally right on and getting you the exact amount of lumber you need from the blueprint

Re: Where are the economies of scale in homebuilding?

#37

Post by fragmede »

JumpCrisscross wrote: post #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 ?

The number of different trades that are involved with building a house is what complicates things and drives timelines and cost up. I wonder if you mass produced a (large) widget that was water and sewer and an AC/heating unit and an electrical panel all in one, so the widget would be a bathroom/kitchen/living room central core, with electrical, that homebuilders could just drop in, if that would reduce coordination issues.

Re: Where are the economies of scale in homebuilding?

#38

Post by JumpCrisscross »

pessimizer wrote: post #33
JumpCrisscross wrote: post #17

Earlier quoted context omitted.

> One thing that can’t be scaled is “prime location” Literally density.

Density trashes a location.

This attitude is anathema to affordable housing. One fundamentally cannot get it where people want it without density.

Re: Where are the economies of scale in homebuilding?

#39

Post by JumpCrisscross »

crabmusket wrote: post #23
wanoir wrote: 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…

> we are not good at making new places that people want to be

Isn’t this every boom town or place complaining about their quaint community blowing up?

Re: Where are the economies of scale in homebuilding?

#40

Post by fragmede »

peab wrote: post #35
onlyrealcuzzo wrote: post #34

Earlier quoted context omitted.

The problem is that most of the country wants housing to get more expensive... You're going to have a hard time getting anything passed when a lot of people will do anything and everything to make sure housing can never get cheaper and only more expensive...

Exactly. The incentive isn't there.

It will, once children start being unable to afford to move out and end up having to live with their parents forever.
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