Loyal readers may recall that one of my pet obsessions is why the manufacturing techniques that have made cars and widgets cheaper can’t be applied to housing. Why can’t, at least, the house have plug-in bathrooms, kitchens, and utility rooms so that all of these items can be refreshed cheaply with factory-built rooms after 20 years?
A side effect of our failure to come up with a way to build houses at a lower cost is the “affordable housing crisis” that advocates for population growth via low-skill immigration like to decry (see Immigration and rent are both at all-time highs).
“Why Do We Build Houses in the Same Way That We Did 125 Years Ago?” (New York Times; non-paywalled version) digs into this question:
In 1969, the federal government announced that it would hand out millions of dollars in subsidies to companies willing to try something new: build houses in factories.
It didn’t work. Big companies, including Alcoa and General Electric, designed new kinds of houses, and roughly 25,000 rolled out of factories over the following decade. But none of the new home builders long survived the end of federal subsidies in the mid-1970s.
Last year, only 2 percent of new single-family homes in the United States were built in factories. Two decades into the 21st century, nearly all U.S. homes are still built the old-fashioned way: one at a time, by hand. Completing a house took an average of 8.3 months in 2022, a month longer than it took to build a house of the same size back in 1971.
As with most innovations, the central planners believe that central planning (“government help”) is necessary:
The tantalizing potential of factory-built housing, also known as modular housing, continues to attract investors and entrepreneurs, including a start-up called Fading West that opened a factory in 2021 in the Colorado mountain town of Buena Vista. But Fading West, and similar start-ups in other parts of the country, need government help to drive a significant shift from handmade housing to factories. This time, there is reason to think it could work.
How much can be saved?
Fading West says houses from its factory can be completed in as little as half the time and at as little as 80 percent of the cost of equivalent handmade homes, in part because the site can be prepared while the structure is built in the factory. A 2017 analysis by the Terner Center for Housing Innovation at the University of California, Berkeley, found similar savings for the construction of three- to five-story apartment buildings using modular components.
If we adjust for the inevitable startup hype factor… the 80 percent is probably 115 percent of what a tract house developer spends when building 25-100 houses at a time and 95 percent of what it would cost to build one house via the traditional method.
What do people who don’t get government money for their factory-built house startup say?
Factory home builders have struggled to streamline construction. [Brian Potter, a senior infrastructure fellow at the Institute for Progress, a nonpartisan think tank focused on technological innovation] spent several years looking for ways to make housing construction more efficient, an effort he narrated on a fascinating blog, before concluding that significant progress wasn’t likely. “Almost any idea that you can think of for a way to build a single-family home cheaper has basically been tried, and there was probably a company that went bankrupt trying to do it,” Mr. Potter told me.
The depressing conclusion: If you believe in fairy tales, single-family houses could potentially come down in price by 15 percent (the land underneath won’t be reduced in cost by 20%!) as an absolute outer limit. If the American population is to grow, therefore, people are going to live in smaller and crummier houses unless they develop valuable work skills.
Homes are not build the way they were 125 years ago and the cost of building a home is not relevant to the lack of “affordable” housing.
It might superficially look like houses are built the same way they always have, but a quiet revolutions in power tools, especially the Skilsaw introduced in 1926, and materials, especially engineered wood composites, e.g. plywood, have made the modern stick built home incredibly cheap.
Modern homes in the US are built with a fraction of the labor and materials once required, controlled for inflation.
But that is all irrelevant, the cost of housing in all the places experiencing a housing “crises” is driven by popular government policies that make building new housing incredibly expensive.
San Francisco, as an example, has a housing crisis because housing has been built on all the available land and building a new multistory residential building will take 5~20 years between acquiring the land and being permitted to begin construction. The actual cost of building the structure is almost irrelevant in this situation.
New technology making construction cheaper will not change the politics that make new homes so expensive in all the places people want to live.
There is a very simple solution to building cheap housing fast, the Panelak (aka panel buildings), first encouraged in 1954 by comrade Nikita Khrushchev and widely adopted by the Warsaw Pact.
The goal was to provide large quantities of fast and affordable housing to solve the housing shortage after World War II.
In the Czech Republic, they were built in groups in areas known as “sídliště”.
By 2005 they housed 3.5 million people (1/3 of the population). Panelaks were built very simple but strong, today considered better structurally than some of the apartments built in the 1990s after the revolution.
Most single family housing in North America are built from wood, so it would be easy to replace them with Panelaks and solve all housing problems in North America. The increase in density would also allow the construction of mass public transit such as subways.
The blocks could be easily produced in factories and delivered to the building location and assembled like a Lego set, the people would have a democratic choice in the final finishing colors, everything else would be standard across the US and Canada.
A single family house is for the elite, not for the commoners.
https://en.wikipedia.org/wiki/Panel%C3%A1k
Pavel: I agree with you that as the U.S. population is boosted via low-skill immigration to Chinese/Indian levels that living in basic apartments will inevitably be the fate for median Americans. But even basic new-construction apartments are well beyond the means of median workers. Building new subway systems in the U.S. is completely unaffordable (5-6X the European price and perhaps 10X what it costs to build in China). See
https://www.newyorker.com/magazine/2017/01/23/where-the-second-avenue-subway-went-wrong
and
https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html
Are you sure that panelák makes housing affordable? This 2022 article from CNN says that Czechs can’t afford panelák anymore:
https://www.cnn.com/style/article/what-is-it-like-living-in-soviet-era-housing-today/index.html
philg: The most likely reason that housing is not affordable in the Czech Republic, is due to government regulation, it is worse than in the US or Canada. Stories from relatives in the republic would make local governments in North America look reasonable. Currently it is something like 2 years to get a permit to build a simple single family house outside a major city, like Prague. First you have to get approval from all the neighbors to make sure that your new house will not disturb them and then the plans have to sit in the local office for comment. The new house has to also meet all the new EU building regulations. For something like a panelák it is even more complicated, as a developer you would have to guarantee that the local city will provide enough public transport to service the new development along with the utilities.
This is why an old two bedroom suite in a panelák is $166k USD in a country where the median income is about 1/3 of the US. Also, no new panelák have been built since the 1980s, everything new is designer apartments, modeled after New York fashion, for the elite.
Get rid of the government regulations and industry should be able to meet market demand with pre-fabricated homes and paneláks. Zoning regulations are a big part of the problem.
As for the subways, easy solution, if local labor is too expensive, lots of hard working building trades from all over Asia should be available. I am sure they would much rather build in the US than in the middle east. Most median Americans can afford consumer electronics and clothes, we just need to apply the same principles to housing. Remove zoning regulations and allow companies to manufacture the panels for the paneláks overseas to get the best price and quality.
I used to live in Soviet version of panels building, it was not great. Apartments were small, mine 3 room/1 separate bathroom 600 square ft apartment was considered large. You could hear neighbors’ not extremely loud conversations and static electricity was terrible, due to steel wire in the panels that acted as a solenoid. And there were not enough of them, there was 20 years or so wait for such an apartment, entire families lived in dormitories with shared utilities for a generation.
I also lived in a Soviet brick building apartment, it was smaller but better
What is a plug-in bathroom? We already have standardized: toilets, sinks, cabinets, tubs, etc., that ship separately. Aren’t we pretty much already there?
https://www.ikea.com/us/en/cat/bathroom-vanities-20719/
A literal plug-in prefab room! It would have a tile floor, finished walls and ceiling, all of the plumbing and electric in a standard location to connect to the house, etc. The plug-in kitchen would have all of the counters and cabinets already installed and the appliances too!
(Of course, the kitchen and all bathrooms would have to be on the exterior walls for this to work. Replace every 20 years!)
If homes could be built more efficiently in factories, where would those factories be located? Lots of people depend on construction jobs that, because the nature of home building, are mostly local.
The lion kingdom’s deed restriction doesn’t allow modular homes & the latest attempts from Boxable still look horrendous. Barndominiums are still promising. The amount of regulations on construction seems to have made it impossible to build anything in the last 100 years. It’s disappointing for a lion to already own land but be faced with millions of dollars in construction cost to build anything.
The Japanese employ plug-in bathrooms in their construction. They call them “Unit Bath”s.
Win one for the Buckster
https://blogs.uoregon.edu/dymaxionhouse/the-dymaxion-bathroom/
Buckminster Fuller tried to save us all, but no one apparently wanted to live in the future.
At least in California, homes are built with a concrete slab (usually on fill which settles and cracks the slab), some wood (mostly glue) and cardboard. I hardly see how they could be made much cheaper.
I am continually amazed/alarmed whenever I replace anything inside the house, like the frame for a folding door, at how cheaply made the stuff is.