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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?

#61
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.

Re: Where are the economies of scale in homebuilding?

#62

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...

That’s already backfiring because high housing costs drive down the birth rate. If the next generation is smaller than the previous generation, housing prices will collapse.

It's what we're seeing in Japan I think. I never realised this second order effect, but it makes sense.

Re: Where are the economies of scale in homebuilding?

#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.

Re: Where are the economies of scale in homebuilding?

#64
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.

I’m unsure if this solves the problem. Like childcare, we may need to collectively subsidize housing construction to make it affordable. Example: China.

The problem is that the costs of labor and materials from the past are behind us, and there are potentially no material cost and productivity improvements to be had. The costs are the costs and potentially unavoidable.

Re: Where are the economies of scale in homebuilding?

#65
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

I think it's more appropriate to say that we don't have enough diversity of places to meet the population's wide-ranging desires and needs. There are city mice that love the density, crowds, and noise of urban environments, and there are country mice who take refuge in quieter country spaces. It's a disaster when housing misallocation forces one to live in another's space.

Case in point. A friend lived in a suburban rural community because it had dark skies and he loved astronomy. It was great until some neighbors moved into an adjacent house, and they immediately put up floodlights all around the house and left them on all the time. They resisted turning them off when he asked.

These people should have been living in a city condo tower where they would feel "safe." The question then becomes, why didn't they buy in the city? They clearly had the money given the size of the property and the city it was located in. I suspect the answer was an insufficient number of urban condos.

I love having gardens, fruit trees, and birds at the feeder. That is an existence I chose. I want people to be able to choose a different living option if they want it.

I don't have an answer for how to solve the housing problem. I hope that whatever plans people use, they keep urban-scale density inside the city limits and not export it to the countryside. And while they're at it, turn down the fucking lights. Your light bubble damages crepuscular and nocturnal life cycles in animals and plants within a 20-plus-mile radius.

Re: Where are the economies of scale in homebuilding?

#66
post #45

Earlier quoted context omitted.

Really? Some of the least dense areas are also among the most affordable.

> Some of the least dense areas are also among the most affordable Taking into account job opportunities and cost of goods, it’s often a wash or worse, particularly if you consider standard of living.

And the RTO fad means those Low Cost areas continue to decline.

Re: Where are the economies of scale in homebuilding?

#67
post #63

Earlier quoted context omitted.

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

I’m unsure if this solves the problem. Like childcare, we may need to collectively subsidize housing construction to make it affordable. Example: China. The problem is that the costs of labor and materials from the past are behind us, and there are potentially no material cost and productivity improvements to be had. The costs are the costs and potentially unavoidable.

Does China subsidize housing construction? Is your claim something like "China encourages/forces consumers to save at high rates which lowers interest rates and makes there be more construction"?

Re: Where are the economies of scale in homebuilding?

#68

One problem in development is we keep trying to think big 'build a lot of homes at once'. That creates the suburbs which, long term, is very unhealthy for a city and its residents (and unfair to the core which ends up paying for their services). We need to push for smaller development, but more of it. It is a lr for cities. When you hear 'redevelopment' it generally means too big of a step is being attempted. It is t…

The US is not completely centrally planned by a politburo, and suburban sprawl is not a conspiracy of diabolical powers that be. Given the choice, many people with the means will pay a premium and spend hours every day commuting to not have to live in The city they work. Why? There are uncomfortable answers. You can’t make maximizing harm to a segment of the population a policy goal and expect them to stay.

Re: Where are the economies of scale in homebuilding?

#69

Earlier quoted context omitted.

I’m unsure if this solves the problem. Like childcare, we may need to collectively subsidize housing construction to make it affordable. Example: China. The problem is that the costs of labor and materials from the past are behind us, and there are potentially no material cost and productivity improvements to be had. The costs are the costs and potentially unavoidable.

Does China subsidize housing construction? Is your claim something like "China encourages/forces consumers to save at high rates which lowers interest rates and makes there be more construction"?

https://www.reuters.com/world/china/key-features-chinas-affo...

https://www.sciencedirect.com/science/article/pii/S266616592...

Re: Where are the economies of scale in homebuilding?

#70
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…

> The differential for land to build is often 10:1.

What does this mean?

Land around here is cheap as free.

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