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Comment by helsinkiandrew | Hacker News Reader

Reminded me of "The Rise and Fall of the Manufactured Home" discussion on HN awhile ago: https://news.ycombinator.com/item?id=32119828

In Finland 50% of homes are built offsite - assembled from parts constructed offsite - walls/floors/ceiling units etc - both wooden and concrete buildings. Which presumably has a massive reduction in cost. Often I see houses in a unit being built staggered 2 or 3 at a time with a week or so between a new one being started - presumably so as the construction crew/roofers/plumbers/electricians finish on one there's another waiting for them - this must reduce labour costs.

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Interesting that I haven't seen any discussion of the housing monopolies that were castigated in that study, given how vigorous discussion was on that topic when that study was posted here.

The study largely blames HUD and builders unions for squeezing manufactured home builders out of the market with zoning laws, government programs which favored stick-built housing, and further regulations which make buying and owning a manufactured home undesirable. This discussion of course only applies to the US.

I am curious about your presumption that pre-fab construction “has a massive reduction in cost”. Anecdotal evidence suggests this allows for faster construction on site (as you say) but hardly any costs reduction. From what I gather, the pre-fab units are still constructed uniquely with manual labour, only in a factory hall instead of on site. Extra transportation efforts seem to destroy most of any cost savings. The actual massive line production of standardized units ready for construction does not seem to exist anywhere for house construction, as it exists for other manufacturing. Happy to be proven wrong and learn more though!

IIUC, prefab construction is a labor arbitrage.

If laborers cost 2-3x more in a major city, and you can get laborers to work in a small town 5 hours away for 1/2 - 1/3 the price - then it makes sense.

Otherwise, you're mostly paying for the same amount of labor and a lot of money on shipping - for a small gain in labor efficiency.

> IIUC, prefab construction is a labor arbitrage.

Industrial construction utilizes pre-fab all the time. Jackets, topsides, pipe racks and modules made in one country then shipped to the installation country (or territorial waters).

That sometimes is about quality. For example the quality assurance one can put into welding at a factory is much higher than what can be realistically guaranteed on site.

I wonder how much (in the US) sales tax impacts this? Most US states have significant sales taxes on manufactured goods, including prefab housing.

If I pay for someone to build onsite, I pay the labor cost. If that same labor builds offsite and the finished product is delivered, I must also pay sales tax on that labor.

The problem in the UK is that land is the big cost, as there isn't enough allowed in the right areas for building. It doesn't matter if you drop your standard construction of a 3 bed house by £50k, £100k, or even eliminate it completely, the cost of the land would simply increase to compete, because demand is higher than supply, and the cost of a house is set by how much someone is allowed to borrow.

Only when supply does (or even can) exceed demand does competition push prices down to the point where the build cost factors into the end cost

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