Where are the economies of scale in homebuilding?

https://www.construction-physics.com/p/where-are-the-economies-of-scale

by JumpCrisscross • 2 months ago

104 143 2 months ago

Avicebron2• 2 months ago

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 fundamentally the issue with homebuilding isn't that we haven't optimized how to build houses. It's that only certain small segments of the population have seen anything but crushing decreases in wages on top of rampant inflation. So of course, when the average income of a region is 35k and the average house is 650k, there are issues that optimizing can't solve.

socalgal23• 2 months ago

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.

Avicebron2• 2 months ago

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 rates and want returns, which then prices out the people who can't pay the builder themselves.

nfw2• 2 months ago

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

pianopatrick• 2 months ago

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.

NooneAtAll3• 2 months ago

I wonder, have vertical integration been tried yet? As in, do any builder companies own forestries, or maybe cement or steel mills?

shaewest• 2 months ago

I would assume the issue there would be transport. It'd be cheaper to use "local cement maker X" than to ship from "remote cheap cement maker Y"

narnarpapadaddy• 2 months ago

In the case of concrete there’s also a time component. Once you mix the cement and aggregate you have a few hours before it begins to set. The cement itself is already typically trucked in (a relatively small amount of dry, easily transportable powder).

tylershuster• 2 months ago

Sierra Pacific, for instance, has a window company.

dyauspitr2• 2 months ago

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 mention this is how everyone else in the world builds houses.

taneq• 2 months ago

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.

XenophileJKO• 2 months ago

I would also like it if the modular units could self drive so I can take my house on vacation.

dyauspitr2• 2 months ago

I think 3-D printing is still important. You can build the heaviest and most “untransportable” part using 3-D printing which is accurate enough to leave appropriate gaps for the fit out where it’s plug-and-play and those components are mass produced in a factory.

dlcarrier4• 2 months ago

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 color?

TurdF3rguson• 2 months ago

We also demonize McMansions at the other end.

dlcarrier4• 2 months ago

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.

JumpCrisscross9• 2 months ago

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?

nonethewiser3• 2 months ago

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?

bluGill7• 2 months ago

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

fragmede5• 2 months ago

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.

idiotsecant2• 2 months ago

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.

taurath• 2 months ago

I wonder how much it’s due to the fact that homes are such an incredibly expensive endeavor compared to other things. I could see significant economies of scale in most of the materials and parts, but perhaps there has been a steady increase in quantity in those materials?

JumpCrisscross9• 2 months ago

homes are such an incredibly expensive endeavor compared to other things

Jet engines are more complex and complex than homes. We still see productivity increases in their manufacture year after year. Same for turbines, rockets, et cetera.

akst6• 2 months ago

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 an entire house doesn't really make sense. Not to mention construction codes can change as well (I know in the US it can vary on a county level), they mentioned they saw more success with prefabricating components like windows or fireplaces or whatever.

Something like a factory requires an intensive upfront captial investment, if tastes change often enough the process would need to be amendable to adapt to changing tastes.

Combined with that, I think the fact there is no uniform standards for acceptable floor plans, compliant layouts and construction codes across the different jurisdictions really makes it hard for there to be economies of scale.

note I don’t think construction codes are strictly a problem within the US, there’s apparently a manufactured housing code. However planning controls are a seperate thing and possibly still an issue.

An example from Sydney (which likely relates to other jurisdictions) Outsides construction code, in Sydney there is a quasi instrument called the apartment design guide which issues requirements on floor plans, floorspace, how far a bedroom wall can be from a window in a bedroom, ceiling heights a lot of things that act as constraints on the possible layouts of a home, and I have no doubt some form of this exists in other jurisdictions as well. I imagine when there is so much variation in different legislative constraints in different jurisdictions there isn't really economies of scales as there are actually several different non homogenous market segments with incompatible set of constraints, and where there's overlap it may not be a high demand end product.

I don't think this as much of a problem but I imagine there are cases where some unionised construction industries may refuse to use work on site using prefab components. I haven't really heard of such cases so I'm not convinced this is a real blocker.

JumpCrisscross9• 2 months ago

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.”

akst6• 2 months ago

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 plenty of fragmentation of planning regimes.

Point being, you may be able to construct something and it to tick the construction code boxes, whether the building you can make with it is permitted under planning is a different matter. Which can implicit ban those buildings

For example the zoning code could limits the type of dwelling to something and that thing has a pedantic definition which unique to that jurisdiction, or there’s a combination of max floor space controls and height controls that makes off the shelf prefab components ineffective at making the most of the allowed building envelope. Or a jurisdictions could require design contests for buildings at certain sites or a certain area so it may not be a given you can even use available prefab.

Markoff5• 2 months ago

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

akst6• 2 months ago

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.

piva00• 2 months ago

Not only communist countries, Sweden had Miljonprogrammet[0] between 1965-1975, Wikipedia's page about it is a good read for more details:

At the time, the intention to build one million new homes in a nation with a population of eight million made the Million Programme the most ambitious building programme in the world. In contrast to the social housing proposals of many other developed countries, which is targeted at those with low incomes, the Million Programme was a universal program intended to provide housing to Swedish people at a variety of income levels.

I currently live in a townhouse built during that period, the house is from 1974, around me in the same neighbourhood there are many houses of the exact same floorplan. Each row has 4-5 townhouses, 3-4 rows are built around a central playground where each row faces each other, this pattern repeats spreading across a 2km stretch between two lakes and a forest, there are around 200-300 of these townhouses in the neighbourhood. Closer to the metro station there are higher density buildings, the low-density ones (like mine) are built on the edges of the suburb, still a short 10-15 min walk to the station.

They are all based on pre-fabricated concrete structures, the finishing varying a bit (wooden panels, different colours). Also they were built in a way to make renovations and reconfigurations easy, accessing utilities is straightforward and it was easy to upgrade my house's electrical systems to have many more outlets in different rooms than it was originally planned for.

I wish similar programs would be discussed these days, it was an effective way to improve the housing stock in a short period of time.

[0] https://en.wikipedia.org/wiki/Million_Programme

inglor_cz2• 2 months ago

Paneláks work, in the sense that after the necessary fixes and improvements, plenty of people still live in them happily.

Some comments from the Commie era, though:

* quality of work used to be shoddy in a legal environment where firing a drunkard was illegal and there were no competing firms. In a competitive market, this can only work if the people doing the building are reliable and competent,

* some level of personalization, if only decorative, goes a long way. If all the buildings look identical, it wears down on people:

https://historie.ovajih.cz/wp-content/uploads/2019/02/G-OS-K...

* you really, really have to think about how people will use the resulting architecture. Some such buildings had a lot of various empty corners and dead ends where people would piss and worse, thus developing an extremely disgusting smell.

akst6• 2 months ago

This kind of capture the point tbh

For many sectors of construction, difficulty in achieving economies of scale could be attributed to the fact that only a small number of buildings of a particular type get built in the US each year. There were, for instance, only 10 skyscrapers taller than 200 meters built in the US in 2025

But so on production productivity generally, relating to that

In New Zealand Auckland they did a board upzoning in 2016, it was the largest metro governed under the same planning regieme, they allowed many dwelling types by right, and increased planning controls. Economist Matt Maltman did some research on construction productivity during this period

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5386023

His research (which showed productivity did increased) this is consistent with the idea the point above being productivity gains comes from the ability to repeat the same process over and over which was possible Auckland after they uniformly upzoned the city, after which most lots had higher zoned capacity than its existing built capacity (almost certainly with homogeneous allowed heights and floor space), allowing for this process of repeatedly building the same type of unit over and over. Matt has written more about construction productivity here in

https://inflectionpoints.work/articles/best-practice-for-sup...

Anyways if you'll note that the number of firms providing homes also increased, meaning the process of repeating construction over and over isn't isolated to a few firms. While the size of the industry almost certainly grew, the same number of builders likely were working more and more of similar buildings, and they are repeating similar processes over and over consuming similar inputs over and over.

- Those different housing projects due to some level of homogeneity will encounter similar hurdles where which creates a sufficiently large incentive and market for someone to sell solutions tailored to those problems which likely improves productivity (compliance is likely a big one).

- There was likely a greater rate of interaction of different people in these industries interacting with one another allowing for a greater distribution of construction related ideas, some more efficient than others. Think when you have a new coworker who introduces a new tool and suddenly every starts using, this process is able to happen more frequently.

- Likewise some of those inputs likely had an opportunity to efficient. Inputs from industries with fewer players would have been greater incentivised to sell as many units as possible and find ways to reduce their costs. If they performed price 2nd/3rd discrimination previously due to that market being insufficiently large relative others, they have an incentive to act otherwise.

inglor_cz2• 2 months ago

This Czech company produces pre-fabricated wooden houses and is locally fairly successful.

https://www.rdrymarov.cz/en/all-about-building

I witnessed this process with a friend, a freshly-happily-divorced doctor who moved away with her two kids and wanted a fast solution. Damn, they were quick. It took a few months to produce the components (they have a backlog), then something like 4 days to put together.

And the house is genuinely nice to be in.

anthonypasq• 2 months ago

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.

anamax• 2 months ago

One problem with prefab is that it isn't less expensive.

https://www.construction-physics.com/p/the-elusive-cost-savi...

akst6• 2 months ago

Not disagreeing and the inability to obtain economies of scale like other manufacturing processes is part of the reason why.

r-bryan• 2 months ago

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 site without passing through Home Depot?

bluGill7• 2 months ago

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

nradov5• 2 months ago

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

bombcar6• 2 months ago

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").

trollbridge5• 2 months ago

Lumber is transported from sawmills via rail cars to some depot where it will then get trucked to places like Home Depot.

There are some large-scale lumberyards that still have a railroad siding and will get lumber by the carload.

A delivery of lumber for a typical house is a full load (or more than one) via truck, and obviously a train isn't going to come to a construction jobsite. So the llumber at the construction site is already hand picked...

It's no big deal at all to cut off ends to make it fit exactly, but when framing most of the 2x4s, etc. are already the exact size you need. You just trim off the top and bottom plates at the edges of the rooms.

wanoir2• 2 months ago

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 fixed, demand increases, and the price increases in turn.

This actually made me think then that an accelerator for scalability could be: public transit into population centers that ensure areas with abundant space (and cheaper housing supply) can still easily access the areas that would otherwise be hugely expensive to live near

I believe this was done near DC where the public transit buildout helped foster further housing development in those emerging areas. Not sure if other HCOL areas, e.g. CA Bay Area, have similar things going on for East Bay mobility / other cross-county transport

JumpCrisscross9• 2 months ago

One thing that can’t be scaled is “prime location”

Literally density.

pessimizer• 2 months ago

Density trashes a location.

nonethewiser3• 2 months ago

That's not exactly true. Its possible to bootstrap entire cities successfully. Look at China. In the US, redeveloping Gary Indiana would be a good option for this sort of thing.

And I guess some billionaires are trying to do something more greenfield in Solano County, California.

"Prime location" is not some static thing.

wanoir2• 2 months ago

Building from scratch is much easier / when you can demolish everything that pre-exists.

I don’t think this is realistic in already-developed areas where home values may already be very high.

Not aware of the Gary story! Would be curious to see how that’s going and if there’s local support / resistance.

crabmusket2• 2 months ago

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. But creating sprawls of dormitory suburbs and efficiently piping everybody into the few places that are actually nice sounds terrible.

* my perspective from Australia

fragmede5• 2 months ago

In the US, in California, some billionaires tried to create a new city, but it got shot down, because billionaires.

JumpCrisscross9• 2 months ago

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?

_carbyau_• 2 months ago

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

So much this. Australia has ridiculous space compared to population. In comparison to somewhere like Singapore, we have sooo much space.

And yet bureaucracy seems to be trying to kill off most places not a capital city...

rickydroll• 2 months ago

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.

physPop2• 2 months ago

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.

lesuorac• 2 months ago

It can though.

The USG kinda used to do this by changing the headquarters for an agency/organization to be in the western (less populated) states.

NoGravitas2• 2 months ago

Public transit is one thing that could help. Another is a land value tax, which would incentivize density in places with rising demand.

jmward013• 2 months ago

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 too often a make or break, and too often that just means break so you get nothing bus held up development, and even when it does happen it is too much and you likely overshot in many ways and undershot in many more. Then, years down the line all those houses age out at the same time and their infra ages out at the same time leading to a sudden problem for the city. Smaller projects lead to a diverse and healthy city. You want to make homes cheaper? Publish, and maintain, pre-approved plans for homes and ADUs, but make sure the plans meet city density needs. Give incentives to clear out brownfill. Encourage development in ways that improve the health of a city and you will get healthier cities.

Swizec• 2 months ago

'build a lot of homes at once'. That creates the suburbs which

What a silly American way of thinking. Build a lot of homes at once creates high rise neighborhoods. We've had these in Europe since the 60's, they are great. Asia has taken it to the extreme in recent decades.

A couple high rises give you a few hundred residential units in a completely walkable neighborhood.

Here's an example from Ljubljana, built between 1977 and 1987. Houses 18,000+ people on 150 acres. https://sl.wikipedia.org/wiki/Nove_Fu%C5%BEine

Here's a more sciency source. Over 3000 residential high rises were been built in Europe in the 2010's

https://www.alexandrinepress.co.uk/built-environment/high-ri...

Another fun example: The tallest skyscraper in Europe will have 260 apartments and 107,000+ sqft of communal space https://www.domusweb.it/en/news/gallery/2025/09/26/benidorm-...

jmward013• 2 months ago

What a silly dismissal. Of course you can build apartment buildings and increased density options in some cities and not take too big of a step. I'm a fan of that in the right sized cities. Go for it, if the city can handle it as a small step. Some cities however that one project would take up the next couple years of anticipated growth and would therefor likely be too big of a step. The point is the step size relative to the city, not an arbitrary count. I am advocating for cities encouraging many smaller steps, compared to their size, instead of trying to build all the housing in one big development all at once. But to get to your point about high-rises, those can also be city killers and emphasize my point. Many cities have 'redeveloped' poor neighborhoods into high-rises to 'make enough low income housing available' all at once. This type of development was bad because it often achieved its goal, all low income housing needed was created at once in one place leading to massive problems. So, yeah, high-rises can be great, or terrible. It depends on the city and the way they are implemented.

opsnooperfax• 2 months ago

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.

jmward013• 2 months ago

I am all for people being able to pay a premium to get the burbs. The problem is they don't actually pay the premium. Their service costs are often not covered by the taxes and direct fees assessed. Consider water and sewer. I pay the same amount for water and sewer as the sprawl house built out in R1 on the edge of town but my house is on major city services that cost a fraction to maintain, per house, as that house on the edge. I am subsidizing them. And I do it for their roads. And their parks. And every service they use because them and 5 other people suck 20x the resources but pay the same as me. And it makes me mad. So, yeah, pay your fair share to live in sprawl and I will be happy, force me to pay your taxes and imply I'm a communist and I get a little less polite.

mcoliver• 2 months ago

Homes last for 50+ years and are fixed objects that establish the visual look of our communities and outdoor space. They aren't disposable products. The way you get economies of scale is by repetitive builds and a highly optimized supply chain. You could get efficiencies if every home was built and looked the same but most people don't want to make that tradeoff

There are some things that could improve the situation. Post frame construction, Pre built trusses, macerating toilets that are more forgiving for sewer tie ins, localized instant hot so you don't have to run separate hot water lines, radiant heating so you don't have to run the duct work. It's all tradeoffs though and you aren't going to get a $500k house for $30k.

The other thing holding back progress are building codes and city laws. To be fair a lot of those codes exist for good reason but the inspection and permit system is suboptimal in most cases. You can buy a $30k small studio on Amazon right now that shows up on the back of a truck but good luck with your city allowing you to use it as a dwelling.

hedora• 2 months ago

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).

onlyrealcuzzo• 2 months ago

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...

peab2• 2 months ago

Exactly. The incentive isn't there.

landryraccoon• 2 months ago

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.

toast0• 2 months ago

1) I don't think this is really a problem? When the walls are open, running stuff is fast. But when the walls are done, the trades come back to make the connections, which is slow amd expensive. Or if you messed up and have to fix it when the walls are up.

2) prehung doors help. Drywall is already the cheaper, faster option... but yeah, finish takes a lot of time. Innovations such as giant oversized outlet trims help a little bit.

3) simple rooflines help even when not using prefab, but people seem to prefer complex roofs. Again, asphalt shingles are the cheap option. If you have a single or two surface roof, a roof goes very fast. Where planes intersect is where all the time is. Material costs on a metal roof are still way more than asphalt.

4) most people don't have a somewhere else for the solar to go. Solar tiles are too expensive (materials and labor)... Panels as roof sounds good until you want to have roof penetrations as is normal for plumbing vents, combustion flues, and bathroom ventilation. Gotta make that all mostly waterproof too.

5) framing seems to be getting some labor saving. Prefab sections can save on-site labor. Things like roof trusses fit on a truck nicely. I think I've seen wall segments too, maybe? Stair sections?

bombcar6• 2 months ago

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

trollbridge5• 2 months ago

Most homes built don't use conduit for electric anymore. A few jurisdictions like Chicago require it. In any case, doing it new construction is quite easy and usually the job given to the newest apprentice electrician.

Plumbing (including HVAC lines and gas lines) already come in standard sizes and can be cut with a saw; connecting them is trivially easy. (HVAC lines might be slightly harder but everything else is easy.)

Hanging drywall and mudding it is not particularly expensive and is necessary for good fire resistance. There are cheaper techniques like pre-printing wallpaper on drywall, but most people would rather pay more to have a conventionally painted wall.

Metal roofs are already fabbed at the factory. You simply order what you want and install it. Obviously a simpler roofline is less work to install.

Solar panels can't be the roof because few want to engineer a solar panel which also is capable of being a watertight, weather-resistant roof tile that can hhandle things like snow load, driving rainstorms, and has the ability to do simple repairs. There have been attempts at this, but then it costs more than just a conventional roof plus conventional solar panels.

"3D print" a wall doesn't make sense - where is the 3D printer going to come from and where it will be set up? 3D printing stuff requires having a base, rigidity, and so on; it's just not well suited for putting up walls which is a pretty trivial task to do.

Hope this didn't sound dismissive, but the problems in homebuilding that could be solved by manufacturing techniques and automation already have been solved by the people who are in the business of making singlewides, doublewides, and modular homes; it saves a little money but doesn't save that much, and the resulting product is often quite a bit less desirable and less durable than a conventionally built house.

quickthrowman2• 2 months ago

I work in the construction industry, you did not ask the LLM the right questions.

1) is already the way residential construction works. Conduit isn’t used in homes aside from Chicago and a handful of other jurisdictions but all conduit can be cut with a sub $500 tool called a portaband. Plumbing pipe can be cut with a portaband. There are multiple power tools that can be used to cut sheet metal. Fittings for the electrical, plumbing, and HVAC trades are commoditized and standardized.

2) Drywall and drywall finishing is the cheapest labor on a building site aside from the cleaners and maybe the insulators. The framers, finish carpenters, equipment operators, flooring workers, and MEP trades all make more than the drywallers, mudders/tapers, and painters.

3) Raised seam metal roofs are great and last longer than asphalt shingles, but it’s more expensive up front.

4) Solar roofs have far too many terminations/connections to be reliable, the upfront cost may possibly never be paid back. That could change, but it’s a tricky problem.

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.

The architect and engineer design the construction documents to adhere to the codes in the jurisdiction the structure is being built in, no LLM needed. Most jurisdictions just adopt one of the standardized codes for general code like the IBC and then various trade codes like the NEC.

Things like roof load calculations for areas with snow make designing a house that works in both California and Minnesota not worth it unless you want to overengineer your roof for California.

There’s an entire massive industry focused on shaving costs to increase margins that have been working on these problems for a long time.

Animats2• 2 months ago

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.

pfdietz3• 2 months ago

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

toomuchtodo2• 2 months ago

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.

Animats2• 2 months ago

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.)

dlcarrier4• 2 months ago

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.

bob1029• 2 months ago

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.

In practice, the single stage condensing units tend to be significantly more reliable. Inverter units require specialized control boards and semiconductors. The most advanced piece of logic in my condensing unit is a macro-scale electromagnet that keeps a circuit closed. I have several replacements sitting around my garage somewhere in a box. These components are brand agnostic so I could probably help my neighbors out too (or vice versa).

A single stage condenser can often survive things like a direct lightning strike. Also, if you live in a place like Texas gulf coast region, there isn't really a point to having a speed lower than 100%. You'd have 2-3 weeks out of the year where that would actually be useful.

AngryData2• 2 months ago

For a large part of residential construction if everything is new it only takes a few days to assemble for each step, the rest is just the logistics of choosing and buying the materials and getting delivery. Like even a large house can be entirely framed in a few days, a week at most, with two or three if all the materials are available and the frame design is finalized. With dimensional lumber construction there is a pretty simple way to stack and nail the floors then walls then ceilings then next floor if there is, then rafters. Work goes as fast as you can toss lumber and shoot nails. Everything so with simple blueprints of where the walls are, the height of the walls, and window and door placements. For a framer its like constructing with legos. Then a roof can be put on in half a day, siding 2-3 days, electrical and plumbing a day or two, drywall a day or two to hang and a day or two to mud and sand, painting can be done in a day or two. Getting decent trim might take longer, but it is also a more skilled and detail orientated work. With framing you can ignore 1/16th gaps and everything will settle and flex into a solid foundation. With pieces of trim a 1/16th gap could be a visible problem.

You could potentially go from nothing to an entire nearly finished house in 2 weeks worth of labor, however because the framers, electrocutions, plumbers, siding, flooring, drywall guys are often all separate contractors and the shipping for all those materials are all on different schedules it takes longer. Or if a few guys are doing it all, they will lose a bit of speed by not being specialists for each task, but can make up that time having a more centrally coordinated plan of attack.

Even then the permits and design planning and choosing the windows and siding and flooring and all that is often still the biggest speed bottleneck.

try-working• 2 months ago

Take a look at Broad Sustainable Building.

josh_s2• 2 months ago

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 be worth it.

fragmede5• 2 months ago

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.

josh_s2• 2 months ago

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.

trollbridge5• 2 months ago

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.

bombcar6• 2 months ago

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

What does this mean?

Land around here is cheap as free.

stouset2• 2 months ago

That is almost assuredly because nobody wants to live there. Now try this for locations that people actually want to live in.

davkan• 2 months ago

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.

elzbardico• 2 months ago

There's also the other path of making homes more durable, less maitainance intensive. This would also increase the housing stock and probably reduce total costs over the utilization time by a household.

More durable materials and construction techniques would also reduce the insurance costs which are basically overhead in the economy.

bombcar6• 2 months ago

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.)

softgrow• 2 months ago

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.

jillesvangurp• 2 months ago

There's no good technical reason why you shouldn't be able to pick up flat pack housing at your local Ikea and fix something very serviceable with just an Allen key in an afternoon or so. But it would burst the bubble that housing is expensive and devalue the property of people that indebted themselves to own a house. That's why Ikea is not in the housing business.

Housing is not a technical problem. Our medieval ancestors build housing using just twigs and mud. It's not that complicated to build something vastly better with modern materials. Modern conveniences like heating, electricity, sewers, water, etc. add a bit of complexity of course. But there's no logical reason why you should spend north of half a million on that. If you have a few spare thousands, you can own a pretty nice recreational vehicle that come with most of what you'd need. But good luck finding a spot in most densely populated areas where you would be allowed to live in one.

We keep finding extremely petty reasons not to do pragmatic things to fix housing and the cost of living crisis. Simply stopping the process of policing this sector would in short order lead to most cities gaining uncontrolled slums, camp sites, and what not. The irony of policy failure is that this is in fact happening in lots of places.

thelastgallon• 2 months ago

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.

DustinGadal• 2 months ago

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.

yobbo• 2 months ago

Housebuilding is motivated as much by need for housing as the prospect of increasing market value, "building equity" and so on. This prospect depends most strongly on location, which means the land price dominates the cost of construction.

AngryData2• 2 months ago

There isn't a lot of room for scaled improvements because labor speed is almost never the bottleneck in residential construction. It is the logistics of all the supplies, of all the subcontractors, the permitting, which all take considerable time and wait. And if people are building their own custom home, getting them to actually choose what windows, floors, doors, siding, roofing materials, or even just finalize the layout for framing can take a lot of time. The windows could all be installed in a few hours, but getting somebody to choose what windows they want could take days or longer, days for delivery, days for the contractors schedule to align while they are juggling a bunch of different jobs because rarely do they get to just sit on one jobsite for multiple days having everything they need ready to go.

I think people overestimate the labor requirement/cost for building new construction because so much of their experience is dealing with repairs and maintenance and adapting old construction. While it might take a day or two to fix one already existent bathroom because of tearing old stuff out, not making a massive mess, fishing tools and materials through little access holes, you can plumb an entire new framed house with multiple bathrooms that doesn't have drywall in the way or people living in it in the same time or less. In the time it takes to fix your old existent leaking tub, in new construction a plumber could install 3 tubs, 5 toilets, 7 sinks, and hot water heater with all new pipe. And it will be a much easier task with far less struggle and both physical and mental anguish. Construction guys absolutely love new construction because it is literally 10x easier and without having to hack together old standards into new standards.

Material costs are at minimum atleast 50% of the cost of new construction, some contractors will just automatically bid everything at double the base material cost and make decent money off that. And potentially even higher total cost will be just material if everything is decided beforehand and all the materials are ready to go on site, because half of your labor cost is paying for all these contractors and subcontractors to travel around to different sites at different times. If they can put in a solid 20-30 hours on a single project without leaving the job site, they are going to be happy and be making bank and able to put in low bids. If they gotta return to a single job site 20 separate times from repeatably going to stores, waiting for supply deliveries, waiting for decisions, they are going to want some compensation for it and it gets rolled into the labor cost.

silexia• 2 months ago

Actual developer / builder here.

The primary cost in homebuilding is not building itself. It is the gigantic amount of regulatory compliance and associated costs. Just splitting a parcel costs tens of thousands and takes years unless you know whose palms to grease. This is in the US in Washington state.

Where are the economies of scale in homebuilding?

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