Just a speculation, but I wonder how much underground parking increases Swedish multifamily construction costs. In my travels in Europe I am struck by the extent (almost universality) of underground parking, especially in colder climates. Obviously building underground parking is more expensive than just laying down some asphalt outside.
I would also lean into the 'Swedish housing is higher quality' argument. Not just the outside windows & doors, but solid-core interior doors, soundproofing, structural integrity - is it my imagination or does European modern construction just feel more solid, more durable, thicker, quieter, more substantial than American?
Also, it would be interesting to compare long-term (30+ years) energy, repair & maintenance costs. My hunch is that in Sweden you pay more up front but less over time.
What is included in your cost per square meter? Is it the same across countries? My family recently bought a prefab house in Sweden and the price included stuff like, bathroom, appliances, heat pump + floor heating, solar on the roof etc inte catolog price.
Also single family houses are somewhat smaller in Sweden re US - should push up square meter cost(?)
The US census home price is the sale price of a new single family home minus the value of the improved lot, so the home and everything in it. In the US this would include major appliances (HVAC, water heater, etc.) and probably some large kitchen appliances (my new build came with a dishwasher, oven, microwave, and a garbage disposal, but no refrigerator).
I'm not proposing that this explains the gap between site-built and factory-built houses, but I do identify a factor not mentioned in this article: the cost of punch-list items and other followup fixes and maintenance.
My intuition tells me that a factory that has built the same model house many times might deliver a product that has fewer flaws. By flaws I mean obvious things, such as a door that won't close due to a crooked jamb, and also things that only emerge months or years later, such as a drywall crack because of uneven settling or uncontrolled expansion/contraction during temperature changes. These flaws are often externalities to the price of a house - their costs are borne by homeowner at a later date. As such, according to this intuition, the more pricey Swedish home might have a lower total cost of ownership because it leaves behind fewer maintenance headaches for the owner.
The assessment of the cost or value of having a house with or without these types of flaws is complicated, both because of the technical nature of estimating repair costs and the uncertainty around when/if the flaws might emerge. As such, I would think that the average homeowner might be quite ill equipped at pricing this into the value of a home.
Yes, "higher quality" is often cited as a reason to favor prefab. It's hard to reason about this in a general case (its very easy to have low-quality prefab homes), but it wouldn't surprise me if there were fewer of these sorts of flaws in Swedish construction.
Curious about the cost of labor- could the fact that the US construction labor force is (especially in single family) is mostly non union, and heavily immigrant play a role here?
Equally relevant are the human labor hours associated with factory vs site built construction, and interest accrued on a construction loan prior to closing/CoA., all things being approximately equal in floor plan and envelope design.
Also, annual maintenance costs over time (say 20 yrs?) should be factored in. My experience is that factory built is less maintenance costly/intensive.
Disclosure: I have a panel factory home, assembled on site in 10 worked days by a crew of 4, custom designed, which uses far less heating energy per sf than the regional mean and requires almost no exterior maintenance after 20+ years.
I'm wary of using sale price to measure construction productivity because there are so many other factors that contribute. I'm also wary of comparing cost/sf because it seems like US houses are significantly larger.
That aside, assuming Sweden hasn't achieved any significant savings through pre-fabrication, I think the question is... why? And can it be fixed? It's hard to see construction ever becoming more efficient as long as every single piece is cut and joined by hand on site. Perhaps there are more burdensome regulations on Swedish houses, or maybe their strong unions are blocking automation in their factories.
I think there's pretty good evidence in the US that prefabricated construction of small units like ADUs is significantly cheaper than on-site, so it's worth thinking about what it would take to scale this. Maybe the issue is more about transporting volumetric assemblies instead of flat wall, floor, and roof assemblies?
Relative to European countries often timed higher efficiency in the US is due to market size/integration, Sweden has population of 10.5m and there several players at least in single family homes and basically no international market, I'd guess it plays a role.
Concerning transportation, floating homes should be able to do large homes but with transportation costs similar to AUDs/trailer homes.
Even if costs remain constant, one possible benefit for the Swedish model could be a shift in the labor requirements. At least in my local market, construction crews are almost entirely immigrants. These are highly skilled and experienced workers who, in the case of the undocumented, are being paid well below market rate for those skills. If current US immigration policy continues many of those will need to be replaced with workers that are more expensive and, more importantly, less experienced. Mixed manufacturing might allow us to concentrate the skilled workforce requirements on the factory floors and make use of more junior on-site crews.
Anything that expands the market would help. The lack of available skilled labor is a significant impediment today - so the question is, can you get them to show up to the factory more reliably than you can get them to the jobsite?
Right now there are municipal restrictions against pre-fab. These need to be loosened. Building codes can impede them - this should be looked at as well. But the biggest question is will be people buy them at scale. My encounters with homebuyers tells me no - until attitudes change with the buyer (and their realtors as well), pre-fab won’t move the meter.
Lastly, this really just plays with the edges of home production. The biggest issue is the land, and entitling and developing it. This is where Gavin and Ezra and their friends stand firmly in the way of solving this problem. We do not need government wasting tax dollars subsidizing the new shiny prefab factory (Solyndra) - which I’m guessing is the type of action they’d propose. If government wants to help, they need to focus its efforts around enabling/developing the infrastructure necessary to support more housing units. More power, more roads (and not bike trails), sanitary/sewer, and most of all stopping all the NIMBYs from blocking the next pre-fab development that might reduce the home resale value of their constituents.
Thank you. Anything Newsom spews is for the WEF agenda, and nothing more. He probably envisions the Pacific Palisades burning as an answer to his dream 15 minute city agenda moving forward.
Furthermore, fix the entitlement process to stop reviews from taking years to gain approval, with a plethora of rent-seekers blocking the path to development. And then within the home production cycle itself, we should move ourselves past the place where it takes almost as long to get a building permit for a home as it does to build it. There is no reason it should take more than 30 minutes to get a building permit for a single-family home, and a lot of reasons to employ A/I to make the process almost instantaneous. That’s something politicians could change instantly. But they won’t - I’m betting Ezra and Gavin didn’t even touch on those issues.
This rocks my priors. I assumed that prefab could be a major unlock together with looser regulations towards driving prices down. What do you think are the most significant drivers of higher housing prices? Regulation? Lack of supply?
The operative word in Mr. Klein's comment is "unionized". US building industry uses a lot of illegal workers, which provide the cheapest labor available.
Secondly, when talking energy efficiency, European homes have heating, but hardly ever cooling. The latter is, in CA and many other parts of the US, what uses the most energy.
Lastly, what are you comparing? I lived in the Netherlands, where homes are usually townhomes. Bedrooms built adjacent, thin walls giving the impression of sharing your bed with the neighbor.
Some friends of mine recently bought a townhouse in Sweden in one of the smaller coastal cities. The big problem they encountered was the thin market. They had a bit of a wait before something suitable became available.
It was interesting to read this article about the Swedish housing industry in comparison with the market in the US. One advantage of factory produced housing is that it is easier to manage supplies. Contractors I've employed often find out they need a particular item or tool and have to stop work for a side quest. Only the most experienced and luckiest ones have everything they need on hand. A factory site can maintain an inventory and is less likely to be an hour long drive to the nearest hardware store.
In your recent book, there was some discussion about why productivity stalls "technical limitations, political limitations, and market limitations". You then suggest that the international building code itself might be part of the problem for housing due to its prescriptive nature.
This would be an interesting area to be explored further. One possible angle would be to compare costs of small RV trailers to Tiny Houses to see whether there has been productivity innovation.
Anything that expands the market would help. The lack of available skilled labor is a significant impediment today - so the question is, can you get them to show up to the factory more reliably than you can get them to the jobsite?
Right now there are municipal restrictions against pre-fab. These need to be loosened. Building codes can impede them - this should be looked at as well. But the biggest question is will people buy them at scale. My encounters with homebuyers tells me no - until attitudes change with the buyer (and their realtors as well), pre-fab won’t move the meter.
Lastly, this really just plays with the edges of home production. The biggest issue is the land, and entitling and developing it. This is where Gavin and Ezra and their friends stand firmly in the way of solving this problem. We do not need government wasting tax dollars subsidizing the new shiny prefab factory (Solyndra) - which I’m guessing is the type of action they’d propose. If government wants to help, they need to focus its efforts around enabling/developing the infrastructure necessary to support more housing units. More power, more roads (and not bike trails), sanitary/sewer, and most of all stopping all the NIMBYs from blocking the next pre-fab development that might reduce the home resale value of their constituents.
Decent analysis. As the great economist Thomas Sowell says, “There are no solutions, only trade-offs.” And the main trade-off prefab construction has is losing flexibility to costs. You are locked in to the design that comes to site. As a rule of thumb, the less expensive your unit costs, the less flexibility you have to change or maintain your structure. This is even more apparent in areas with stricter codes, such as Florida and California.
Another often overlooked issue is transportation links. In locations like Hawaii, Alaska, and the Caribbean, the same issues with supply chains for traditional materials affect the prefab units too. In our location, where traditional construction costs are $10,000 per square meter, this is quite apparent. We are about to develop some lower costs housing using modular units from Stack Modular. While initial build costs are about half that, it remains to be seen what the finished costs are after thousands of kilometer transportation and site erection. It should represent a noticeable cost savings, but at the loss of future adaptation.
Please look into building efficiency/performance more! I do agree that it's probably more expensive to build up Swedish standards. I'm ignoring single family because that's not how we're going to solve the housing crisis. Matt risinger, passive house accelerator, the British columbian stretch goals building code are good resources
Just a speculation, but I wonder how much underground parking increases Swedish multifamily construction costs. In my travels in Europe I am struck by the extent (almost universality) of underground parking, especially in colder climates. Obviously building underground parking is more expensive than just laying down some asphalt outside.
I would also lean into the 'Swedish housing is higher quality' argument. Not just the outside windows & doors, but solid-core interior doors, soundproofing, structural integrity - is it my imagination or does European modern construction just feel more solid, more durable, thicker, quieter, more substantial than American?
Also, it would be interesting to compare long-term (30+ years) energy, repair & maintenance costs. My hunch is that in Sweden you pay more up front but less over time.
What is included in your cost per square meter? Is it the same across countries? My family recently bought a prefab house in Sweden and the price included stuff like, bathroom, appliances, heat pump + floor heating, solar on the roof etc inte catolog price.
Also single family houses are somewhat smaller in Sweden re US - should push up square meter cost(?)
The US census home price is the sale price of a new single family home minus the value of the improved lot, so the home and everything in it. In the US this would include major appliances (HVAC, water heater, etc.) and probably some large kitchen appliances (my new build came with a dishwasher, oven, microwave, and a garbage disposal, but no refrigerator).
I'm not proposing that this explains the gap between site-built and factory-built houses, but I do identify a factor not mentioned in this article: the cost of punch-list items and other followup fixes and maintenance.
My intuition tells me that a factory that has built the same model house many times might deliver a product that has fewer flaws. By flaws I mean obvious things, such as a door that won't close due to a crooked jamb, and also things that only emerge months or years later, such as a drywall crack because of uneven settling or uncontrolled expansion/contraction during temperature changes. These flaws are often externalities to the price of a house - their costs are borne by homeowner at a later date. As such, according to this intuition, the more pricey Swedish home might have a lower total cost of ownership because it leaves behind fewer maintenance headaches for the owner.
The assessment of the cost or value of having a house with or without these types of flaws is complicated, both because of the technical nature of estimating repair costs and the uncertainty around when/if the flaws might emerge. As such, I would think that the average homeowner might be quite ill equipped at pricing this into the value of a home.
Yes, "higher quality" is often cited as a reason to favor prefab. It's hard to reason about this in a general case (its very easy to have low-quality prefab homes), but it wouldn't surprise me if there were fewer of these sorts of flaws in Swedish construction.
Curious about the cost of labor- could the fact that the US construction labor force is (especially in single family) is mostly non union, and heavily immigrant play a role here?
Not sure. This website gives an average salary for a Swedish carpenter as the equivalent of $48,000 per year https://www.erieri.com/salary/job/carpenter/sweden#:~:text=The%20average%20pay%20for%20a,SEK%20321%2C788%20and%20SEK%20528%2C651.
The BLS lists the median salary for a US carpenter as $56,000 per year (https://www.bls.gov/oes/2023/may/oes472031.htm)
Though in Sweden there might be greater benefits that drive up the effective compensation, idk.
Equally relevant are the human labor hours associated with factory vs site built construction, and interest accrued on a construction loan prior to closing/CoA., all things being approximately equal in floor plan and envelope design.
Also, annual maintenance costs over time (say 20 yrs?) should be factored in. My experience is that factory built is less maintenance costly/intensive.
Disclosure: I have a panel factory home, assembled on site in 10 worked days by a crew of 4, custom designed, which uses far less heating energy per sf than the regional mean and requires almost no exterior maintenance after 20+ years.
I'm wary of using sale price to measure construction productivity because there are so many other factors that contribute. I'm also wary of comparing cost/sf because it seems like US houses are significantly larger.
That aside, assuming Sweden hasn't achieved any significant savings through pre-fabrication, I think the question is... why? And can it be fixed? It's hard to see construction ever becoming more efficient as long as every single piece is cut and joined by hand on site. Perhaps there are more burdensome regulations on Swedish houses, or maybe their strong unions are blocking automation in their factories.
I think there's pretty good evidence in the US that prefabricated construction of small units like ADUs is significantly cheaper than on-site, so it's worth thinking about what it would take to scale this. Maybe the issue is more about transporting volumetric assemblies instead of flat wall, floor, and roof assemblies?
Relative to European countries often timed higher efficiency in the US is due to market size/integration, Sweden has population of 10.5m and there several players at least in single family homes and basically no international market, I'd guess it plays a role.
Concerning transportation, floating homes should be able to do large homes but with transportation costs similar to AUDs/trailer homes.
Even if costs remain constant, one possible benefit for the Swedish model could be a shift in the labor requirements. At least in my local market, construction crews are almost entirely immigrants. These are highly skilled and experienced workers who, in the case of the undocumented, are being paid well below market rate for those skills. If current US immigration policy continues many of those will need to be replaced with workers that are more expensive and, more importantly, less experienced. Mixed manufacturing might allow us to concentrate the skilled workforce requirements on the factory floors and make use of more junior on-site crews.
I am really surprised this was ignored here.
If we want ‘good factory jobs’ here in the US, perhaps this is the perfect source??
Anything that expands the market would help. The lack of available skilled labor is a significant impediment today - so the question is, can you get them to show up to the factory more reliably than you can get them to the jobsite?
Right now there are municipal restrictions against pre-fab. These need to be loosened. Building codes can impede them - this should be looked at as well. But the biggest question is will be people buy them at scale. My encounters with homebuyers tells me no - until attitudes change with the buyer (and their realtors as well), pre-fab won’t move the meter.
Lastly, this really just plays with the edges of home production. The biggest issue is the land, and entitling and developing it. This is where Gavin and Ezra and their friends stand firmly in the way of solving this problem. We do not need government wasting tax dollars subsidizing the new shiny prefab factory (Solyndra) - which I’m guessing is the type of action they’d propose. If government wants to help, they need to focus its efforts around enabling/developing the infrastructure necessary to support more housing units. More power, more roads (and not bike trails), sanitary/sewer, and most of all stopping all the NIMBYs from blocking the next pre-fab development that might reduce the home resale value of their constituents.
Thank you. Anything Newsom spews is for the WEF agenda, and nothing more. He probably envisions the Pacific Palisades burning as an answer to his dream 15 minute city agenda moving forward.
Furthermore, fix the entitlement process to stop reviews from taking years to gain approval, with a plethora of rent-seekers blocking the path to development. And then within the home production cycle itself, we should move ourselves past the place where it takes almost as long to get a building permit for a home as it does to build it. There is no reason it should take more than 30 minutes to get a building permit for a single-family home, and a lot of reasons to employ A/I to make the process almost instantaneous. That’s something politicians could change instantly. But they won’t - I’m betting Ezra and Gavin didn’t even touch on those issues.
This rocks my priors. I assumed that prefab could be a major unlock together with looser regulations towards driving prices down. What do you think are the most significant drivers of higher housing prices? Regulation? Lack of supply?
The operative word in Mr. Klein's comment is "unionized". US building industry uses a lot of illegal workers, which provide the cheapest labor available.
Secondly, when talking energy efficiency, European homes have heating, but hardly ever cooling. The latter is, in CA and many other parts of the US, what uses the most energy.
Lastly, what are you comparing? I lived in the Netherlands, where homes are usually townhomes. Bedrooms built adjacent, thin walls giving the impression of sharing your bed with the neighbor.
Some friends of mine recently bought a townhouse in Sweden in one of the smaller coastal cities. The big problem they encountered was the thin market. They had a bit of a wait before something suitable became available.
It was interesting to read this article about the Swedish housing industry in comparison with the market in the US. One advantage of factory produced housing is that it is easier to manage supplies. Contractors I've employed often find out they need a particular item or tool and have to stop work for a side quest. Only the most experienced and luckiest ones have everything they need on hand. A factory site can maintain an inventory and is less likely to be an hour long drive to the nearest hardware store.
In your recent book, there was some discussion about why productivity stalls "technical limitations, political limitations, and market limitations". You then suggest that the international building code itself might be part of the problem for housing due to its prescriptive nature.
This would be an interesting area to be explored further. One possible angle would be to compare costs of small RV trailers to Tiny Houses to see whether there has been productivity innovation.
The cost of housing is primarily driven by the cost of the land underneath the house, not the cost of construction.
Cheap land leads to cheap housing, and expensive land leads to expensive housing, regardless of the construction technique used.
This isn't true for single family home construction in the US, land is typically on the order of 20% of the cost of a new home.
Anything that expands the market would help. The lack of available skilled labor is a significant impediment today - so the question is, can you get them to show up to the factory more reliably than you can get them to the jobsite?
Right now there are municipal restrictions against pre-fab. These need to be loosened. Building codes can impede them - this should be looked at as well. But the biggest question is will people buy them at scale. My encounters with homebuyers tells me no - until attitudes change with the buyer (and their realtors as well), pre-fab won’t move the meter.
Lastly, this really just plays with the edges of home production. The biggest issue is the land, and entitling and developing it. This is where Gavin and Ezra and their friends stand firmly in the way of solving this problem. We do not need government wasting tax dollars subsidizing the new shiny prefab factory (Solyndra) - which I’m guessing is the type of action they’d propose. If government wants to help, they need to focus its efforts around enabling/developing the infrastructure necessary to support more housing units. More power, more roads (and not bike trails), sanitary/sewer, and most of all stopping all the NIMBYs from blocking the next pre-fab development that might reduce the home resale value of their constituents.
Decent analysis. As the great economist Thomas Sowell says, “There are no solutions, only trade-offs.” And the main trade-off prefab construction has is losing flexibility to costs. You are locked in to the design that comes to site. As a rule of thumb, the less expensive your unit costs, the less flexibility you have to change or maintain your structure. This is even more apparent in areas with stricter codes, such as Florida and California.
Another often overlooked issue is transportation links. In locations like Hawaii, Alaska, and the Caribbean, the same issues with supply chains for traditional materials affect the prefab units too. In our location, where traditional construction costs are $10,000 per square meter, this is quite apparent. We are about to develop some lower costs housing using modular units from Stack Modular. While initial build costs are about half that, it remains to be seen what the finished costs are after thousands of kilometer transportation and site erection. It should represent a noticeable cost savings, but at the loss of future adaptation.
Please look into building efficiency/performance more! I do agree that it's probably more expensive to build up Swedish standards. I'm ignoring single family because that's not how we're going to solve the housing crisis. Matt risinger, passive house accelerator, the British columbian stretch goals building code are good resources
Spoiler alert... no they should not!
YW