6 ms·

Where are the economies of scale in homebuilding?

104 points by JumpCrisscross 6mo ago

Avicebron 6mo 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.
- socalgal2 6mo 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.
  - Avicebron 6mo 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.
    - hombre_fatal 6mo ago
      That doesn't make sense. Developers don't wait around until you pool your money together with strangers to fund apartment construction. Density and supply explosion are what bring down prices.
      - idiotsecant 6mo ago
        This is not universally true. There are vast swathes of the country where you can explode all the supply you want, the people who live there will be simply unable to afford them. As in they can not afford the cost of material and labor, even assuming supply drops profit to zero. Supply is not magic. It can't reduce the cost of something below the cost of material and labor.
        bombcar 6mo ago
        > Supply is not magic. It can't reduce the cost of something below the cost of material and labor. I'll agree it's not magic, but supply can drop the cost of something below the cost of materials and labor, if you equivocate a bit. If new houses are going for $250k in your area, old, used, smaller houses should be going for less.
        Paradigm2020 5mo ago
        Except for the fact that in high desired locations the property cost is 2/3 to 4/5 land and the rest the building on the top. In the case of a really old crappy building it might be 6/7 is land and 1/7 the building but in those high demand places from your 250k, 140-180k would be going just to the land leaving you with a paltry amount for the actual structure. What we need is LVT or better public transport to either give money back to the people who create the value (average citizens) or to create an increase in desirable places to live (as in can get in <30min to work, do shopping etc etc) or more remote jobs for more people so they can move to lcol areas Unfortunately the nimby's on average are most home owners (60%) and close to be home owners... ~ "temporarily embarrassed millionaires" ~ "everyone starts of libertarians and ends up conservative" aka first you fight for more housing then when you have it you become like the average homeowner...
  - nfw2 6mo ago
    Regardless of the supply, the floor of a price of a new home will be the cost to build though?
    - socalgal2 5mo ago
      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...
  - pianopatrick 6mo 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.
    - Schiendelman 5mo ago
      I didn't see the word "fringe" in the post you responded to. Most people are NIMBYs.
NooneAtAll3 6mo ago
I wonder, have vertical integration been tried yet? As in, do any builder companies own forestries, or maybe cement or steel mills?
- shaewest 6mo 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 5mo 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 6mo ago
  Sierra Pacific, for instance, has a window company.
dyauspitr 6mo 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 6mo 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 6mo ago
    I would also like it if the modular units could self drive so I can take my house on vacation.
    - htrp 5mo ago
      https://insideevs.com/reviews/796924/pebble-flow-electric-rv-review/ https://insideevs.com/reviews/796924/pebble-flow-electric-rv... 200k
  - dyauspitr 6mo 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.
  - dlcarrier 5mo 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?
JumpCrisscross 6mo 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?
- nonethewiser 6mo 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?
  - bluGill 6mo 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
    - bombcar 6mo ago
      I've always dreamed of a house designed to minimize cuts; walls exactly the right length to use full sheets of drywall, etc. The reality: it wouldn't save hardly anything, tradesmen are good at what they do.
taurath 6mo 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?
- JumpCrisscross 6mo 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.
akst 6mo 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.
- JumpCrisscross 6mo 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.”
r-bryan 6mo 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?
- bluGill 6mo 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
  - nradov 6mo ago
    All but the cheapest new residential construction has moved to 9'+ walls. Buyers like higher ceilings.
wanoir 6mo 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
- JumpCrisscross 6mo ago
  > One thing that can’t be scaled is “prime location” Literally density.
  - pessimizer 6mo ago
    Density trashes a location.
    - JumpCrisscross 6mo ago
      This attitude is anathema to affordable housing. One fundamentally cannot get it where people want it without density.
      - nradov 6mo ago
        Really? Some of the least dense areas are also among the most affordable.
        JumpCrisscross 6mo ago
jmward01 6mo 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 6mo 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 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-rise-urbanism-contemporary-europe-0 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-europe-tallest-skyscraper.html https://www.domusweb.it/en/news/gallery/2025/09/26/benidorm-...
  - jmward01 6mo 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.
mcoliver 6mo 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 6mo 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).
- bombcar 6mo ago
  Have you ever been on a building site, let alone been involved with building?
jocelyner 6mo ago
[flagged]
Animats 6mo 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.
- pfdietz 6mo ago
  It suggests we need to find cheaper materials from which to build homes.
  - toomuchtodo 6mo 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.
    - why_only_15 6mo ago
      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"?
      - toomuchtodo 6mo ago
        https://www.reuters.com/world/china/key-features-chinas-affordable-housing-policy-2024-06-04/ https://www.reuters.com/world/china/key-features-chinas-affo... https://www.sciencedirect.com/science/article/pii/S2666165923001047 https://www.sciencedirect.com/science/article/pii/S266616592...
  - Animats 5mo 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.)
try-working 6mo ago
Take a look at Broad Sustainable Building.
josh_s 6mo 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.
- fragmede 6mo 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_s 5mo 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.
    - meetingthrower 5mo ago
      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.
  - trollbridge 5mo 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.
- bombcar 6mo ago
  > The differential for land to build is often 10:1. What does this mean? Land around here is cheap as free.
elzbardico 6mo 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.
bombcar 6mo 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-Pages-Ruiz/dp/1641552131/ 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 6mo 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 6mo 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.
aaron695 6mo ago
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thelastgallon 6mo 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 5mo 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 5mo 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.
AngryData 5mo 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.
486sx33 5mo ago
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silexia 5mo 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.

104 points by JumpCrisscross 6mo 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.

socalgal2 6mo 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.
- Avicebron 6mo 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.
  - hombre_fatal 6mo ago
    That doesn't make sense. Developers don't wait around until you pool your money together with strangers to fund apartment construction. Density and supply explosion are what bring down prices.
    - idiotsecant 6mo ago
      This is not universally true. There are vast swathes of the country where you can explode all the supply you want, the people who live there will be simply unable to afford them. As in they can not afford the cost of material and labor, even assuming supply drops profit to zero. Supply is not magic. It can't reduce the cost of something below the cost of material and labor.
      - bombcar 6mo ago
        > Supply is not magic. It can't reduce the cost of something below the cost of material and labor. I'll agree it's not magic, but supply can drop the cost of something below the cost of materials and labor, if you equivocate a bit. If new houses are going for $250k in your area, old, used, smaller houses should be going for less.
        Paradigm2020 5mo ago
        Except for the fact that in high desired locations the property cost is 2/3 to 4/5 land and the rest the building on the top. In the case of a really old crappy building it might be 6/7 is land and 1/7 the building but in those high demand places from your 250k, 140-180k would be going just to the land leaving you with a paltry amount for the actual structure. What we need is LVT or better public transport to either give money back to the people who create the value (average citizens) or to create an increase in desirable places to live (as in can get in <30min to work, do shopping etc etc) or more remote jobs for more people so they can move to lcol areas Unfortunately the nimby's on average are most home owners (60%) and close to be home owners... ~ "temporarily embarrassed millionaires" ~ "everyone starts of libertarians and ends up conservative" aka first you fight for more housing then when you have it you become like the average homeowner...
- nfw2 6mo ago
  Regardless of the supply, the floor of a price of a new home will be the cost to build though?
  - socalgal2 5mo ago
    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...
- pianopatrick 6mo 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.
  - Schiendelman 5mo ago
    I didn't see the word "fringe" in the post you responded to. Most people are NIMBYs.

NooneAtAll3 6mo ago

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

shaewest 6mo 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 5mo 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 6mo ago
Sierra Pacific, for instance, has a window company.

dyauspitr 6mo 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 6mo 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 6mo ago
  I would also like it if the modular units could self drive so I can take my house on vacation.
  - htrp 5mo ago
    https://insideevs.com/reviews/796924/pebble-flow-electric-rv-review/ https://insideevs.com/reviews/796924/pebble-flow-electric-rv... 200k
- dyauspitr 6mo 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.
- dlcarrier 5mo 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?

JumpCrisscross 6mo 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?

nonethewiser 6mo 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?
- bluGill 6mo 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
  - bombcar 6mo ago
    I've always dreamed of a house designed to minimize cuts; walls exactly the right length to use full sheets of drywall, etc. The reality: it wouldn't save hardly anything, tradesmen are good at what they do.

taurath 6mo 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?

JumpCrisscross 6mo 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.

akst 6mo 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.

JumpCrisscross 6mo 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.”

r-bryan 6mo 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?

bluGill 6mo 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
- nradov 6mo ago
  All but the cheapest new residential construction has moved to 9'+ walls. Buyers like higher ceilings.

wanoir 6mo 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

JumpCrisscross 6mo ago
> One thing that can’t be scaled is “prime location” Literally density.
- pessimizer 6mo ago
  Density trashes a location.
  - JumpCrisscross 6mo ago
    This attitude is anathema to affordable housing. One fundamentally cannot get it where people want it without density.
    - nradov 6mo ago
      Really? Some of the least dense areas are also among the most affordable.
      - JumpCrisscross 6mo ago

jmward01 6mo 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 6mo 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 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-rise-urbanism-contemporary-europe-0 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-europe-tallest-skyscraper.html https://www.domusweb.it/en/news/gallery/2025/09/26/benidorm-...
- jmward01 6mo 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.

mcoliver 6mo 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 6mo 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).

bombcar 6mo ago
Have you ever been on a building site, let alone been involved with building?

jocelyner 6mo ago

[flagged]

Animats 6mo 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.

pfdietz 6mo ago
It suggests we need to find cheaper materials from which to build homes.
- toomuchtodo 6mo 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.
  - why_only_15 6mo ago
    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"?
    - toomuchtodo 6mo ago
      https://www.reuters.com/world/china/key-features-chinas-affordable-housing-policy-2024-06-04/ https://www.reuters.com/world/china/key-features-chinas-affo... https://www.sciencedirect.com/science/article/pii/S2666165923001047 https://www.sciencedirect.com/science/article/pii/S266616592...
- Animats 5mo 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.)

try-working 6mo ago

Take a look at Broad Sustainable Building.

josh_s 6mo 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.

fragmede 6mo 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_s 5mo 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.
  - meetingthrower 5mo ago
    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.
- trollbridge 5mo 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.
bombcar 6mo ago
> The differential for land to build is often 10:1. What does this mean? Land around here is cheap as free.

elzbardico 6mo 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.

bombcar 6mo 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-Pages-Ruiz/dp/1641552131/ 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 6mo 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 6mo 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.

aaron695 6mo ago

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thelastgallon 6mo 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 5mo 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 5mo 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.

AngryData 5mo 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.

486sx33 5mo ago

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silexia 5mo 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.