Many who look at the high and rising cost of housing see the problem as fundamentally one of production methods; more specifically, that homes could be built more cheaply if they were made using factories and industrialized processes, instead of assembling them on site using manual labor and hand-held tools.
It's been a good series exploring construction costs. It would be helpful for me if you addressed directly the somewhat mundane and worker oriented problem that concerns me: in my "world" the more or less hand and jobsite tools I use to do construction have vastly improved my efficiency: I have laser levels, cordless long lasting powerful tools, press-connect copper, flexible lines, pre-hung doors, etc. An enormous number of 'things' that make my work speedier. How have all these advances not resulted in much more sq. ft. production per worker hour? My 'feelings' tell me that in my area the bureaucracy captures all the possible savings: high fees, more inspections, more labor requirements, supervisions, etc. I have land I would happily build on but the simple act of connecting a home to the sewer system is over $20,000. Having the county bring the water line 50' down the street: $100,000. Having the electric company upgrade their side of the power grid: $50,000. In my area, there is no possible way to capture this investment through rent. I could build a home efficiently with my team of a few people cheaply and quickly, and yet it would take years and $100,000s of dollars in fees and increased property taxes to do so.
So: if you felt the interest in dividing construction costs between: materials, the on the ground labor, the supervision, the fees etc. - that would give me real direction. If the labor at the site has not become vastly improved from 1970 to 2025, then something is wildly wrong: our site tools are so much better, that portion of construction should have had costs lowered dramatically.
Worker productivity has doubled, so where are the savings? The real question is, what would construction costs be without that productivity increase? A HECK of a lot higher.
I know it seems like that should be the case, but if you read the post from a few weeks ago, https://www.construction-physics.com/p/trends-in-us-construction-productivity , it showed that worker productivity had NOT increased. And I actually believe that. I think that the advances in equipment and ease have all be absorbed into "something", I don't know what it is. And all the other savings like I said I think are captured by administration. Worker's comp costs? Profit and Overhead? I dunno.
A floor and bathroom tiling contractor probably earns four times what his predecessor did forty years ago. That's where the big truck with the tow hitch for a boat comes from.
If his data was all about costs I think that would be a solid point - but, he also charts the square footage per man hour built, and that has barely budged. There are a LOT of things in our world where automation and efficiency should have brought costs down and instead the costs have stayed approximately the same with the "savings" being absorbed by governance and profit taking. The square footage per man hour should be increasing noticeably and substantially, and instead it is not.
So why don't the stats show an increase in sq ft per man hour? It has to be all lost in supervision, oversight, safety monitoring, etc. That's exactly what my post has been driving at: if the individual worker is much more productive, why hasn't the cost of construction fallen? My unproven surmise is that the savings have been captured 100% by code, requirements, and bureaucracy.
It may be that we are searching for a breakthrough that just doesn’t exist. Given government constraints, maybe construction costs are already minimized. Rather than having government push for a breakthrough, maybe government should just get out of the way. Rational, simple and uniform building codes and zoning regulations might be a good place to start.
There are MANY companies in Sweden building pre-fab houses.
Myresjöhus I checked and they have built almost 100,000 houses to date.
These houses you can tailor almost any way you want.
Here you can't buy a piece of land in the same way. Whole neighborhoods are built by the same builder who bought a chunk of land and then the more or less identical houses are sold to individuals (but why no prefab houses??).
I always found Levittown in Long Island fascinating I recently bought a book about the history of Levittown called “perfect communities” which I plan on reading this weekend. Maybe this book will provide some answers.
I like this continuing deep dive into why construction costs haven't benefited from factory production like many other industries. One idle notion that I haven't seen discussed, is there some argument similar to a Geoffrey West style scaling argument going on here?
When our fabrication and transportation technologies are one scale, what is the impact of their ability to produce efficiency gains relative to the scale of the product they are generating? For example, chip fabs are giant, and what they produce is minuscule. The ratio there is huge. It seems that housing is one of the few manufacturing areas where the transportation and manufacturing infrastructure are almost necessarily smaller than what they are generating. Shipbuilding, and aircraft are other examples of places where the scale is often less than one, both of these aren't known to be especially 'lean' industries either, and they have the advantage that transportation is less of a bottleneck for them.
That's an important point. Highly automated factories (costing hundreds of millions) just aren't going to work, because the US is a big country and transportation to site will swallow the savings. It has to be a technology that can easily be set up, and easily moved when housing demand in that area has been saturated.
I'd suggest there is really no incentive for the building code to enable less expensive housing. However, there are lots of good ideas making homes more complex and expensive.
Especially in detached housing, allowing the market to deliver less safety, less energy efficiency, less climate resiliency, less inspections ... could reduce costs without compromising nearby homes.
I grew up in a home built in 1895 and recently sold another home built in 1925. Both were just fine and didn't have all the safety, energy efficiency, ... which make it difficult for homes to be delivered.
Houses today are luxury goods compared to homes 75 years ago. Ditto cars. This may explain the lack of productivity despite increases in tools and know-how.
Thanks for this history on a fascinating endeavor. The distinction between experimental and demonstration projects is very important. The Sisyphean persistence of trying to make houses like cars is really astonishing. I think with prefabrication it's very important to distinguish, per the architect Yositika Utida, in terms of open versus closed building systems. A house mod is a closed system, only able to made and utilized by it particular fabricator, while 2x4 framing, as an open system, can be used by anyone, sold anywhere, modified last minute, renovated later, etc. On this note, I think the Type B proposals for Breakthrough may have had more success, though less superficially impressive maybe than the Type A designs for entire buildings. For Breakthrough, HUD collaborated with the National Association of Homebuilders Research Foundation to develop "Optimized Value Engineered Framing," based on 2x6 construction spaced at 24" OC, leading to less use of wood with more wall depth for insulation. This system is still alive and thriving today as Advanced Wood Framing, as used in Joseph Lstiburek's "Perfect Wall" system. See https://buildingscience.com/documents/insights/bsi-030-advanced-framing and https://buildingscience.com/video/perfect-wall-finally. Which reminds me: why no sources or endnotes for your pieces? Would love a link to that RAND quote.
One consideration not mentioned is the nature of the object being constructed. Homes and autos might be expensive due to a few factors. To start the analogy, an example is the lowly cracker, which can frequently be a bit more expensive per pound than something like a loaf of bread. Before I get beat up on the water content of the bread, hear me out. Crackers have a high surface area per unit mass. They also have a low water content. This requires a more involved oven with higher effective volume to produce a cracker compared to a loaf of bread. Also there is the consideration of the number of pieces in a package.
Homes and autos have a large finished surface area, safety requirements and large numbers of assembled parts. All of these factors make the fit and finish of the product difficult to ensure and demanding to produce. Additionally, both products require significant design to survive weather and weathering.
These factors are independent of other parochial concerns such as the local market price factors,* producer profit margins, regulations, social concerns, and population density targets.
While these ideas have all been covered one way or the other, it still seems clear that entrenched interests will fight for their money, real or perceived, no matter how well we learn to build. And there is a huge psychological factor in a place to live. It is even more of a tangle when the majority of a family's wealth is tied up in it. Over time, the usual factors prevail, inflation, depreciation, and maintenance. I recall large houses in medium sized towns in the 1970's that sold for pittances. I wondered how that was possible.
Without serious effort, the solutions to our housing problems in livable areas will continue to be like fusion power, just a generation down the line. This is a perfect arena for government to secure the well being of the commons. I can already hear the bellowing.
* Simply increasing supply a small amount can have a large effect on the market price.
Reads like a synchronization tax story to me. The informational asymmetry between local regulations and labor standards and Operation Breakthrough was too expensive to build and maintain -- much more expensive than the physical buildings themselves!
I have a long standing thesis that one should think of the US housing industry as a fashion industry. I extemporize on this at length to the boredom of my acquaintances. Americans don’t want that form of cookie cutter. Americans want their own cookie cutter and what they imagine a house should look like, which is usually a mish mash of faux Euro details and center entry foyer boredom.
I can only compare to Sweden's manufactured homes and CA housing.
The houses built in suburban CA are all the same, with maybe 4 models per area.
If you look in a similar Swedish neighborhood you see lots of different manufacturers and variance. These houses are not same, you have endless options on how you want to tailor your home. Way more than in the US.
The main thing is they are built in a factory and shipped to site in sections.
One dimension I'm surprised doesn't come up more with manufactured housing is quality. Is the quality of a manufactured home any better? Quality improvements at the same cost are still valuable, and you'd think that the homes might have some tangible benefits. Maybe the finishing steps of any kind of home are similar enough that the quality gets washed out? I know tolerances are more difficult to hold over longer distances, so maybe it's fundamentally a tooling problem?
Admittedly, Origins of Efficiency is still in my backlog, so maybe you cover it there.
Anecdotal evidence given by the house I live in and have visited here is CA then yes manufactured homes in Sweden are better quality, and cheaper to build.
TBH US houses are pretty shoddy. Doors, windows and many materials are not very good in comparison, or wouldn't even meet code. It is built on the cheap but the final cost is higher.
The US is a big place, so I would be reluctant to draw many inferences from just one location. Especially if that location is California, where building is much more difficult and the temperature is much more moderate. The places I lived in the Mid-Atlantic and Midwest are much better insulated than my home in CA, which doesn't even have air conditioning.
Two initiatives that aim to improve construction by tackling regulatory issues (both in Europe though)
- IBAVI (Spain) Managed to generate amazing rent protected housing projects by changing the focus of public architecture competitions.
- HouseEurope (Germany) Aims to make renovation a priority over demolition. Unfortunately I think its future is uncertain at best in the current political climate.
Seems like the problem is not technological but bureaucratic :/
It's been a good series exploring construction costs. It would be helpful for me if you addressed directly the somewhat mundane and worker oriented problem that concerns me: in my "world" the more or less hand and jobsite tools I use to do construction have vastly improved my efficiency: I have laser levels, cordless long lasting powerful tools, press-connect copper, flexible lines, pre-hung doors, etc. An enormous number of 'things' that make my work speedier. How have all these advances not resulted in much more sq. ft. production per worker hour? My 'feelings' tell me that in my area the bureaucracy captures all the possible savings: high fees, more inspections, more labor requirements, supervisions, etc. I have land I would happily build on but the simple act of connecting a home to the sewer system is over $20,000. Having the county bring the water line 50' down the street: $100,000. Having the electric company upgrade their side of the power grid: $50,000. In my area, there is no possible way to capture this investment through rent. I could build a home efficiently with my team of a few people cheaply and quickly, and yet it would take years and $100,000s of dollars in fees and increased property taxes to do so.
So: if you felt the interest in dividing construction costs between: materials, the on the ground labor, the supervision, the fees etc. - that would give me real direction. If the labor at the site has not become vastly improved from 1970 to 2025, then something is wildly wrong: our site tools are so much better, that portion of construction should have had costs lowered dramatically.
Worker productivity has doubled, so where are the savings? The real question is, what would construction costs be without that productivity increase? A HECK of a lot higher.
I know it seems like that should be the case, but if you read the post from a few weeks ago, https://www.construction-physics.com/p/trends-in-us-construction-productivity , it showed that worker productivity had NOT increased. And I actually believe that. I think that the advances in equipment and ease have all be absorbed into "something", I don't know what it is. And all the other savings like I said I think are captured by administration. Worker's comp costs? Profit and Overhead? I dunno.
A floor and bathroom tiling contractor probably earns four times what his predecessor did forty years ago. That's where the big truck with the tow hitch for a boat comes from.
If his data was all about costs I think that would be a solid point - but, he also charts the square footage per man hour built, and that has barely budged. There are a LOT of things in our world where automation and efficiency should have brought costs down and instead the costs have stayed approximately the same with the "savings" being absorbed by governance and profit taking. The square footage per man hour should be increasing noticeably and substantially, and instead it is not.
If you actually go onto a building site and watch a contractor at work, you will be amazed at the speed compared to thirty years ago.
So why don't the stats show an increase in sq ft per man hour? It has to be all lost in supervision, oversight, safety monitoring, etc. That's exactly what my post has been driving at: if the individual worker is much more productive, why hasn't the cost of construction fallen? My unproven surmise is that the savings have been captured 100% by code, requirements, and bureaucracy.
It would be great to see an analysis costs by type as you suggest.
I don’t believe this is really the main issue. The issue is that there is nowhere to PUT the homes because of regulations.
I agree, this seems to be one of the main reasons.
And also people seem to think prefab means trailer trash while in reality the houses are often nicer than McMansions.
It may be that we are searching for a breakthrough that just doesn’t exist. Given government constraints, maybe construction costs are already minimized. Rather than having government push for a breakthrough, maybe government should just get out of the way. Rational, simple and uniform building codes and zoning regulations might be a good place to start.
There is an interesting article about operation breakthrough in an issue of the New York Times from last year
https://www.nytimes.com/2024/06/08/headway/how-an-american-dream-of-housing-became-a-reality-in-sweden.html
There are MANY companies in Sweden building pre-fab houses.
Myresjöhus I checked and they have built almost 100,000 houses to date.
These houses you can tailor almost any way you want.
Here you can't buy a piece of land in the same way. Whole neighborhoods are built by the same builder who bought a chunk of land and then the more or less identical houses are sold to individuals (but why no prefab houses??).
I always found Levittown in Long Island fascinating I recently bought a book about the history of Levittown called “perfect communities” which I plan on reading this weekend. Maybe this book will provide some answers.
One way houses could be bought more cheaply is if they were out in the country and the people who lived in them built them themselves. Don't laugh.
I like this continuing deep dive into why construction costs haven't benefited from factory production like many other industries. One idle notion that I haven't seen discussed, is there some argument similar to a Geoffrey West style scaling argument going on here?
When our fabrication and transportation technologies are one scale, what is the impact of their ability to produce efficiency gains relative to the scale of the product they are generating? For example, chip fabs are giant, and what they produce is minuscule. The ratio there is huge. It seems that housing is one of the few manufacturing areas where the transportation and manufacturing infrastructure are almost necessarily smaller than what they are generating. Shipbuilding, and aircraft are other examples of places where the scale is often less than one, both of these aren't known to be especially 'lean' industries either, and they have the advantage that transportation is less of a bottleneck for them.
That's an important point. Highly automated factories (costing hundreds of millions) just aren't going to work, because the US is a big country and transportation to site will swallow the savings. It has to be a technology that can easily be set up, and easily moved when housing demand in that area has been saturated.
Sweden is the size of California with a third of the population.
This just doesn't fly.
Google "Beginner's guide to logistics."
I'd suggest there is really no incentive for the building code to enable less expensive housing. However, there are lots of good ideas making homes more complex and expensive.
Especially in detached housing, allowing the market to deliver less safety, less energy efficiency, less climate resiliency, less inspections ... could reduce costs without compromising nearby homes.
I grew up in a home built in 1895 and recently sold another home built in 1925. Both were just fine and didn't have all the safety, energy efficiency, ... which make it difficult for homes to be delivered.
Absolutely.
Thank you Brian Potter for destroying so many of my illusions on how to build quality cheaper, faster and more efficiently!
A national building code might be the answer and would take only fifty years to implement...
Mitt Romney was george Romney’s son.
Houses today are luxury goods compared to homes 75 years ago. Ditto cars. This may explain the lack of productivity despite increases in tools and know-how.
Thanks for this history on a fascinating endeavor. The distinction between experimental and demonstration projects is very important. The Sisyphean persistence of trying to make houses like cars is really astonishing. I think with prefabrication it's very important to distinguish, per the architect Yositika Utida, in terms of open versus closed building systems. A house mod is a closed system, only able to made and utilized by it particular fabricator, while 2x4 framing, as an open system, can be used by anyone, sold anywhere, modified last minute, renovated later, etc. On this note, I think the Type B proposals for Breakthrough may have had more success, though less superficially impressive maybe than the Type A designs for entire buildings. For Breakthrough, HUD collaborated with the National Association of Homebuilders Research Foundation to develop "Optimized Value Engineered Framing," based on 2x6 construction spaced at 24" OC, leading to less use of wood with more wall depth for insulation. This system is still alive and thriving today as Advanced Wood Framing, as used in Joseph Lstiburek's "Perfect Wall" system. See https://buildingscience.com/documents/insights/bsi-030-advanced-framing and https://buildingscience.com/video/perfect-wall-finally. Which reminds me: why no sources or endnotes for your pieces? Would love a link to that RAND quote.
One consideration not mentioned is the nature of the object being constructed. Homes and autos might be expensive due to a few factors. To start the analogy, an example is the lowly cracker, which can frequently be a bit more expensive per pound than something like a loaf of bread. Before I get beat up on the water content of the bread, hear me out. Crackers have a high surface area per unit mass. They also have a low water content. This requires a more involved oven with higher effective volume to produce a cracker compared to a loaf of bread. Also there is the consideration of the number of pieces in a package.
Homes and autos have a large finished surface area, safety requirements and large numbers of assembled parts. All of these factors make the fit and finish of the product difficult to ensure and demanding to produce. Additionally, both products require significant design to survive weather and weathering.
These factors are independent of other parochial concerns such as the local market price factors,* producer profit margins, regulations, social concerns, and population density targets.
While these ideas have all been covered one way or the other, it still seems clear that entrenched interests will fight for their money, real or perceived, no matter how well we learn to build. And there is a huge psychological factor in a place to live. It is even more of a tangle when the majority of a family's wealth is tied up in it. Over time, the usual factors prevail, inflation, depreciation, and maintenance. I recall large houses in medium sized towns in the 1970's that sold for pittances. I wondered how that was possible.
Without serious effort, the solutions to our housing problems in livable areas will continue to be like fusion power, just a generation down the line. This is a perfect arena for government to secure the well being of the commons. I can already hear the bellowing.
* Simply increasing supply a small amount can have a large effect on the market price.
Linked this at post & discussion about the 'housing affordability"' bill now before the Senate:
https://chicagoboyz.net/archives/76256.html
Reads like a synchronization tax story to me. The informational asymmetry between local regulations and labor standards and Operation Breakthrough was too expensive to build and maintain -- much more expensive than the physical buildings themselves!
I have a long standing thesis that one should think of the US housing industry as a fashion industry. I extemporize on this at length to the boredom of my acquaintances. Americans don’t want that form of cookie cutter. Americans want their own cookie cutter and what they imagine a house should look like, which is usually a mish mash of faux Euro details and center entry foyer boredom.
I can only compare to Sweden's manufactured homes and CA housing.
The houses built in suburban CA are all the same, with maybe 4 models per area.
If you look in a similar Swedish neighborhood you see lots of different manufacturers and variance. These houses are not same, you have endless options on how you want to tailor your home. Way more than in the US.
The main thing is they are built in a factory and shipped to site in sections.
One dimension I'm surprised doesn't come up more with manufactured housing is quality. Is the quality of a manufactured home any better? Quality improvements at the same cost are still valuable, and you'd think that the homes might have some tangible benefits. Maybe the finishing steps of any kind of home are similar enough that the quality gets washed out? I know tolerances are more difficult to hold over longer distances, so maybe it's fundamentally a tooling problem?
Admittedly, Origins of Efficiency is still in my backlog, so maybe you cover it there.
Anecdotal evidence given by the house I live in and have visited here is CA then yes manufactured homes in Sweden are better quality, and cheaper to build.
TBH US houses are pretty shoddy. Doors, windows and many materials are not very good in comparison, or wouldn't even meet code. It is built on the cheap but the final cost is higher.
The US is a big place, so I would be reluctant to draw many inferences from just one location. Especially if that location is California, where building is much more difficult and the temperature is much more moderate. The places I lived in the Mid-Atlantic and Midwest are much better insulated than my home in CA, which doesn't even have air conditioning.
It's not just about insulation.
Two initiatives that aim to improve construction by tackling regulatory issues (both in Europe though)
- IBAVI (Spain) Managed to generate amazing rent protected housing projects by changing the focus of public architecture competitions.
- HouseEurope (Germany) Aims to make renovation a priority over demolition. Unfortunately I think its future is uncertain at best in the current political climate.
Seems like the problem is not technological but bureaucratic :/