PreFab Housing

A four-story building built in four days with apartments that include closets, a kitchenette, a sofa that converts to a queen-size bed, and a flat-screen TV? We are used to seeing that kind of thing in China but this development was in, of all places, Berkeley.

Berkeleyside: This new 22-unit project from local developer Patrick Kennedy (Panoramic Interests) is the first in the nation to be constructed of prefabricated all-steel modular units made in China. Each module, which looks a little like sleekly designed shipping containers with picture windows on one end, is stacked on another like giant Legos.

Cost savings on the housing itself were significant but local assembly was still expensive. Organized labor isn’t very happy:

Organized labor also dislikes that these MicroPADs are manufactured abroad.

“We’d rather they be constructed here instead of China so they don’t undercut wages and conditions,” said Michael Theriault, secretary-treasurer of the San Francisco Building and Construction Trades Council, in 2016 to the San Francisco Chronicle. “And we want them built under local building code and inspected by local inspectors.”

Cost savings won’t be passed on to consumers if the quantity of housing supplied isn’t increased so this isn’t a solution to high-prices in quantity-constrained cities. Nevertheless, construction costs rather than land supply are an important constraint elsewhere in the country. Moreover, it’s good to see experiments in improving construction productivity, one of our most important but productivity lagging sectors.

Comments

"The project, initially approved by the city in 2010 as a hotel, then re-approved in 2015 as studio apartments..."

So, four days to build, but eight years to get started?

"Cost savings won’t be passed on to consumers"
The cost savings will go to the investors because rents are not set based on the cost of the unit but rather the comparative costs of the community. But I suspect that these are government housing/subsidized housing. So in this case the real consumer is the taxpayer and they are probably getting screwed regardless of the coat of the housing.

Or you could read the very brief article instead of commenting blind. The developer didn't include any low income housing, and the studios are going to rent at slightly above market rates to Cal grad students.

So I'm right! They are subsidized housing.

They're going to rent at above market rates? How are they holding guns to people's heads like that?

The single most corrupt segment of the market - local inspectors - speaks through it's mouthpiece, the Trade Union...

Housing fit for a Cuck

Prefrabricated homes and buildings are is something that keeps cropping up in some without really catching on, probably since Edison had his first concrete houses:

https://christineadamsbeckett.com/2012/04/03/thomas-edisons-beautiful-failure/

But the amount of material going into modern buildings that is designed to reduce labor costs has been increasing and maybe kit homes will finally have their day in the sun.

While the developed world generally has little need for new housing stock, there is plenty of potential for kit homes to house literally billions in Asia, Africa, and South America.

Sears sold kit homes during the 20s and 30s, contracting with a number of kit home makers to fill it's Sears Modern Home catalog. Typically 25 tons of precut lumber, fasteners, siding, shingles shipped by rail and then truck with instructions for assembly. Plumbing and electrical extra.

Maybe Amazon will contract to have excess containers converted to housing and then delivered by truck and offloaded on a customer concrete pad. Amazon Basic Homes.

Cargo containers do not make good housing, but you could fit a nice little kit home into one. Of course, foundations, plumbing, and wiring will complicate construction and one design certainly won't suit all regions.

It could be made independent from the electricity grid but at the moment that's going to cost $20,000+ even for a small home if people want close to the convenience of being on grid.

A rainwater tank, composting toilet, and a grey water system could make it independent from water and sewage systems in the right areas, but that also isn't going to be cheap.

The East Coast of the USA has a surplus of cargo containers, stranded by our international trade imbalance.

I am thinking that refurbished and residence -prepped cargo containers could be shipped to very under-developed areas like Haiti. Local labor could pour the concrete pads and each new container homes (complete with insulation, doors, windows, plumbing, etc.) could be dropped in place by heavy cranes provided by American NGO assistance.

The metal sides of the containers would be earthquake-resistent and relatively crime-proof. Containers could be set up side-by-side or stacked for larger families.

The simplicity of the assembly would be corruption and theft resistant.

What could go wrong?

$2180 a month for single occupancy, no.

You'll note the developer paid an additional fine to "Berkeley’s Affordable Housing Trust Fund," of $500K.

Which added $23K per unit and probably jacked up rent by $100-150 per month.

How corrupt can you get Berkeley CA?

"We are used to seeing that kind of thing in China but this development was in, of all places, Berkeley."

And the difference between Berkeley and China is...what?

In China the communist party is controlled by neoliberals

😂🤣

From a previous MR post: (relative) Freedom of speech

https://marginalrevolution.com/marginalrevolution/2017/12/sam-altman-fear-political-correctness.html

As someone who regularly visits both, Berkeley has more homeless, less air pollution and of course Amoeba Music. And there's probably no Chinese equivalent to People's Park.

"high-prices in quantity-constrained cities"

______________

... so a curious professional economist would ask/answer: what exactly constrains housing quantity in such cities ?

The economic answer would absolutely NOT be the 'lack of economically-efficient construction technology' in our modern world era.

So therefore... let's post about the non-problem of efficient construction-technology availability -- and ignore the huge primary problem --> vast direct & indirect coercive government interventions in housing markets. This how the economics profession routinely flounders... with a trivia focus.

Please stop! You are embarrassing the professional economists!

There is a lack of housing that low income workers can afford in cities where regulations/zoning and approval processes are not the constraint preventing more affordable housing from being built, but construction costs are a constraint, as Cowen noted.

How does cutting wages of workers make housing more affordable to workers?

Construction workers typically make more than minimum wage. So reducing the labor (and total costs) of construction benefits the whole host of workers who make minimum wage or near to it. Home health care aides need housing too, and manufacturing housing as opposed to building it on site is a way to make it more affordable, in the same way that manufacturing anything tends to make it more affordable (which is why everyone in the US, even the poor, have fridges and microwave ovens).

“We’d rather they be constructed here ...": hats off. At least he can construct a sentence.

And then there's that! It is just so un-MAGA-like.

A half million dollar "affordable housing" tax on four stories of graduate student housing? I love California!

Oh, the irony! :) In my Central CA neighborhood an "affordable housing" bond is on the ballot. Home ownership rates are low in this least affordable area, so it will surely pass. For the newer, much more wealthy residents it is no big deal. For the middle class holding on to a home bought long ago at a much below current value price, it is death by a thousand little bonds.

The middle class will continue to bail out, losing a lifetime of social capital in the process. The wealthy and poor can - via section 8 and affordable housing lotteries - afford to stay. The wealthy signal compassion but mix with the poor they do not. The poor will stay, resent the rich, and will vote to tax them to death. Social capital will be low.

This is what we have done to ourselves.

California seems to be enacting policies that are hollowing out the middle class. It's a contributing factor for the state now having the highest poverty rate (PP) in the nation.

I guess Mississippi can now change it's motto to "Thank God for California!"

I can't even trust regular MR commenters anymore so I went to the internet and found this:

https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_poverty_rate

It turns out California is 35th out of 56 (which includes states and territories) and Mississippi is 51 out of 56 and the lowest of all the 50 states. My suspicions were verified and indeed the quality of comments here as evidenced by JWatts have hit a low.

Look more closely. Note that the comment specified “(PP)” - presumably meaning adjusted for purchasing power. The site you linked appears to show CA with the highest poverty rate after adjusting for geography.

"indeed the quality of comments here as evidenced by JWatts have hit a low."

Well somebodies comment quality is a little low.

http://lmgtfy.com/?q=california+poverty+rate+pp

"Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents is poor. "

http://www.latimes.com/opinion/op-ed/la-oe-jackson-california-poverty-20180114-story.html

https://www.politifact.com/california/statements/2017/jan/20/chad-mayes/true-california-has-nations-highest-poverty-rate-w/

Indeed, your very own link proves my point. Click on the Supplemental Poverty measure .

Californians will vote for any "affordable housing" measure. A couple years ago, LA County (where property taxes range as high as 10.25 percent) approved an extra quarter-cent increment to build housing for the homeless. Nobody seemed to notice that the initiative had been sponsored by the building trades unions and specified "prevailing rates" for all construction on said new housing.

Sales taxes. Sorry.

Portland's Rob Justus is a low cost housing developer who builds for under half the cost of government (union) built units.

https://pamplinmedia.com/pt/10-opinion/401650-296684-my-view-private-sector-can-make-housing-affordable

Another point: do ANY so-called progressive types use union labor (and work rules) when contracting work for their own homes?

"... do ANY so-called progressive types use union labor (and work rules) when contracting work for their own homes?"

Heck no! They hire illegals to do the work - much cheaper!

Do you remember Slick Willie's search for an AG who had not employed illegal tax-avoiding nannies? That was fun. He ended up with the strange woman who had all those people murdered at Waco. That wasn't fun.

I'd guess the 4 day thing is a stunt, at least if 70% of the work still occurs on site, as the article says. You can't get that many people in and out with the coordination necessary. There was a show that would build a house in a week or so. Articles later would say a lot of things wouldn't work at all or they'd fall apart within a year or two.

The building here was a lot better looking than I thought it would be though.

To make a dent you would have to do this building 60 times. More. Then you could have your scale with the flagmen, crane operators, welders, etc. Skip the fancy mid-century interiors and maybe this kind of construction could be an alternative for people who are working in the area.

How does this compare with trucking in a mobile home and placing it on the same type of multi-story structure?

I lived in a very solid 4-storey 40-unit in Tokyo that was "pre fabricated," but in the sense that the reinforced concrete walls and floors and ceilings were made offsite and trucked in. You really couldn't tell unless you were in the building trades. It looked poured on site. The pieces fit together like a puzzle and was bolted together on site.

The US has a lot to learn from Japan about pre-fab housing: https://www.curbed.com/2017/10/25/16534122/prefab-homes-manufacturing-japan-vs-us

Wasn't this how they constructed that bridge in Florida that immediately collapsed onto the street, killing a few people?

A new way using Structural integrated panels is coming soon.
https://www.compositesworld.com/articles/thermoplastic-composite-panels-deliver-affordable-housing-solutions

The ground preparation is probably not included in the time of construction. As far as purchasing the building from China, if traffic on I80 is any indication, Guerdon Modular Buildings of Boise is delivering units to California on a daily basis.

Not sure construction productivity is really lagging, so much as it is simply incorporating unheralded improvements. For instance, consider the statistics on home fires.

And sure, in theory you could build a comparable brick shell for a lot less 100 years ago, but the guys making and laying the bricks probably tended to die of horrible lung diseases at a much higher rate. https://en.wikipedia.org/wiki/Silicosis

Re: “We’d rather they be constructed here instead of China so they don’t undercut wages and conditions,”

Another company, Blu Homes, builds their prefabs (single family) in Vallejo.

https://www.bluhomes.com/homes-landing

In the article it mentions they looked at domestic manufacturers, but they were deeply backlogged.

Amazing that two of the most communist places on Earth can get the big things done. Marxist China and Marxist Berkeley can build in days while Capitalist USA looks more and more like a house of cards.

It took the developer 8 years to be allowed to break ground. That once that was done it took 4 days - due to efficiencies pioneered by *capitalist* economies - is not a point in favor of Marxism.

Labor constraints are only going to get worse. The future of construction is moving offsite. This conference in Boston will explore the opportunities and challenges associated with this kind of building. www.iwbcc.com

Build container prefabs in China, put them on container ships, because they're containers, ship to NA. Bob's your uncle. Check out Alibaba.com for prefab housing. Mind-blowing array. Everything from hostels for your African workers to attractive Villas.

Well, its Berkely - once you get planning permission you have to move fast to get the project done before someone comes up with some reason to get the permission withdrawn or the city tries to staple *yet another* unrelated requirement on your project.

"And we want them built under local building code and inspected by local inspectors.” -- Translation: "They're OK as long as our local guys get schmeared off. Ugotaproblemwidthat?"

See also: https://www.nytimes.com/2016/10/06/nyregion/developer-that-cracked-the-code-on-modular-building-exits-the-business.html

I run a website that covers the prefab industry with a current focus on the mid to higher end single family residential builders. Most all of them build domestically, usually within a few hundred miles of the destination where the home will reside.

In this segment of the market, there is not much price advantage over site-built homes and the main advantage is speed of construction and the fact that it is not weather dependent

Also, here is a link on pricing for reference: https://www.prefabreview.com/blog/modular-and-prefab-home-prices-what-you-need-to-know

What are the differences in the highly regulated taxi cab business and the home building business? It seems Uber and Lyft enjoy some of their success in spite of and because of local municipal regulation. Is there a similar workaround for providing housing?

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