Podcast Episode 120 — Is Building Homes a Worthy Pursuit?
Home improvement retailers, the labor gap, modular homes, custom vs tract builders, making a living wage, job-site productivity, and the future of building trades.
Justin, Brian, and Rob begin the episode talking about the J.D. Power 2018 Home Improvement Retailer Satisfaction Study. It ranks retailers by customer satisfaction, and the top-ranked LBM / hardware stores are Menards, Ace Hardware, and Lowe’s. Brian visited a Menards once, in South Dakota, and he had a favorable report as well.
Of stores the guys personally visit, Rob likes his local Ace store, while Justin goes to Lowe’s or Home Depot based on what he needs.
The guys also talk about a recent New York Times article on factory-based modular housing, and Brian accidentally makes a provocative joke. Speaking of provocative, here’s a controversial quote from the article:
“The construction productivity rate — how much building workers do for each hour of labor they put in — has been flat since 1945, according to the McKinsey Global Institute. Over that period, sectors like agriculture, manufacturing and retail saw their productivity rates surge by as much as 1,500 percent. In other words, while the rest of the economy has been supercharged by machines, computers and robots, construction companies are about as efficient as they were in World War II.”
The guys talk about the evolution of home building, what it means to be a craftsman, custom builders vs tract builders, Larry Haun, robot builders, and keeping craft alive. Rob and Brian duke it out over the role of custom builders in making both more and less expensive houses. And is building homes a worthy pursuit? Even if it is, will the building trades look anything like they do now in ten or twenty years?
On to listener questions … well, look at that! No time left for listener questions in this episode. We’ll have some next week for sure. But you can still check out the links at the bottom of this post for more. Like Rob interviewed on Tim Faller’s podcast.
This episode of the podcast is brought to you by our sponsors, LP Shed and Marvin.
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We hope you will take advantage of a great offer for our podcast listeners: A special 20% off discounted rate to subscribe to the Fine Homebuilding print magazine. That link goes to finehomebuilding.com/podoffer.
The show is driven by our listeners, so please subscribe and rate us on iTunes or Google Play, and if you have any questions you would like us to dig into for a future show, shoot an email our way: fhbpodcast@taunton.com. Also, be sure to follow Justin Fink, Rob Yagid, and Fine Homebuilding on Instagram — and “like” the magazine on Facebook. Note that you can watch the show above, or on YouTube at the Fine Homebuilding YouTube Channel.
The Fine Homebuilding Podcast embodies Fine Homebuilding magazine’s commitment to the preservation of craftsmanship and the advancement of home performance in residential construction. The show is an informal but vigorous conversation about the techniques and principles that allow listeners to master their design and building challenges.
Links for this episode:
- J.D. Power 2018 Home Improvement Retailer Satisfaction Study.
- NY Times: Piece by Piece, a Factory-Made Answer for a Housing Squeeze.
- Larry Haun: One Carpenter’s Life (1931-2011).
- Video Vault: How to Raise a Wall, with Larry Haun.
- Larry’s 10 Rules for Framing.
- The Tim Faller Show.
- Rob is a guest on Episode 9 of the Tim Faller Show.
- Tom Cardillo and #KeepCraftAlive.
- The Many Faces of Prefab.
- Why Modular?
- All FHB podcast show notes: FineHomebuilding.com/podcast.
- #KeepCraftAlive tee-shirts support scholarships for building trades students. So go order some shirts at KeepCraftAlive.org.
- The direct link to the online store is here.
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Great discussion on the multiple angles you addressed. Skills gap, future production of residences, cost of housing, lack of affordable homes. A couple years ago I spoke with a group of builders from Japan and they described typical housing - both detached single family and multifamily. Sounds like buyers can go to a showroom and order modules - bedroom, kitchen, living, bathroom.... Customize and order the finishes they would like. The modules - not like our 'modular' homes but more like cargo containers or manufactured homes but in subsections - are delivered to the site, craned into place and connections made. Sounds like the manufacturing facilities are semi-automated and staffed production line style.
I think the US will move more into that direction especially with affordability being such a problem throughout the US - and it's not even the big cities that have an affordable housing shortage.
With stagnant wages and increasing home production costs (materials, labor) and land development limitations, the affordability gap will increase for the forseeable future. I don't believe that even if we had a tremendous influx of skilled tradecraft people that the affordability gap will be resolved.
Even if the building industry were overstaffed and wages for tradecraft workers started to drop from where they are now, workers would leave the building industry and wages would remain stable. In otherwords - filling the skilled worker gap won't have a big impact on housing costs. Only automation at some level, cheap land cost, and high density will bring the cost of new construction down.
Another excellent podcast. You three work together in an excellent manner with just enough northeastern pushback for interest. In the case of affordable housing, I think Brian had the best arguments and as he pointed out, it's not about the "worthy pursuit" question. Clearly craftsmen and those willing to pay for exceptional quality will always exist. Some trades will be protected by local and state regulation for a period. I believe the housing and tradesmen shortages have been clearly defined for decades, eg baby boomers will be (are now) retiring in all professions resulting in skilled labor issues from yardmen to medical to nuclear scientists. Meanwhile, our immigrant labor force that drives the industry down south is under full attack and retreating. Automation and factory standardization is only a venture capitalist away. It won't be Sears this time, but it could be the time for Home Depot homes.
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Great podcast and a hot topic. As someone in the building trades in Colorado, I see a lot of similarity to CA, the two states I have spent most of my life. I also have several years on my city's affordable housing board. I think the the one thing missing from the conversation of what is driving housing prices is the land costs. I think the car analogy is a good one, because cars depreciate over time, so people that could not afford them when they were new, eventually can. I would argue that houses however are sitting on a finite resource and that's the lot they occupy, and many cities are like mine have low density requirements which exacerbates scarcity, driving up prices. With minimum lot sizes, the property is valued at what you can do with it, regardless of your building intentions. If it is zoned for multi family, a single family house is priced off the table.
When you have to pay $130K to $250K for a buildable lot, and another $50K for permits, impact fees and water, a more affordable product just doesn't pencil out without subsidy. I know a city planner, who was forced into doing a bigger addition/remodel than originally planned, in order for the bank to get their loan to value.
In Colorado, some people from both coasts still see it as a bargain, but this is quickly displacing locals, and as Rob said in the podcast, with technology you can virtually live wherever and still do many jobs. Several cities in CO are on the short list of most expensive cities in the world, and these aren't even quaint mountain towns. In less than 30 years from when I moved here, I will see the state and my city's population double. In many areas this is not a bubble but unfortunately the new normal and kids that grew up in Colorado will have to leave in order to afford housing, or give up on home ownership all together, or as some New Yorkers are doing, buy a house elsewhere to rent out, but turn around and rent in their own town.
Is building homes a worthy pursuit? The "labor gap" and a "living wage" tells you everything you need to know. I have been working in the trades for the better part of 20 years and jobs are getting worse, at least on the big commercial jobs that I frequent. The labor gap exsists because when I was coming up in the late 1990's starting pay was $50 a day plus a sandwich for the NY metro area. No retirement and no medical. No wonder the trades attracted so few people.
So if the industry is not willing to dignify your lifes work in the form of medical, retirement, and a living wage I would recomend people steer clear of it and leave it to those who are forced into it or it is their best option in life.
Mike touched on stagnant wages being a driver of unaffordable houses in the comments and Brian mentioned the virtous circle of workers being able afford to buy homes. I think this delves in closer to the reality of the situation.
Brian also floated the solution all three podcasters chose: to live in smaller more affordable houses. It would be interesting to see what people would live in if the government did not subsidise mortgages (latin root: life debt) or if the government did not bail out the housing finance industry in 2008 (TARP), or the central bank did not print trillions in Quantative Easing and bought up most of the 2008 era toxic mortgages, or if the Fed Chair Greenspand had not introduced unheard of low interest rates (culminating in ZIRP) to supercharge the finance markets to cover up the devistating effects of de-industrialisation, which goes back to what Mike said about the buyers not being there. I think big solutions have been tried and failed, and swindling the workers out of their pay by increasing the workforce won't fix the problem either.
Trade unions and the lack there of was noticably absent from this whole discussion. Last time our local took on apprentices there was line around the block over night like some Black Friday sale just to apply. The lack of labor when a living wage, retirement, and medical are present is non exsistant.
Thanks for presenting both sides of the story in your podcast (Brian vs Justin) and keep up the good work.
Great podcast, interesting article from the 'failing' NY Times. You're pulling on a thread that leads to unravelling the whole sweater we call capitalism; so what the hell, I'll pull on it a little more. The housing market is merely reflecting the larger phenomenon of wealth funneling into fewer hands. It runs against our social paradigm that a larger and larger percentage of Americans should be packed into less and less expensive housing, but that is exactly what is dictated by the larger shifts in the economic plates. Supply adapts to demand, never the reverse, and we are witnessing the adaptation of housing supply to a demand curve shifted downward due to less relative income and wealth among the 99%. Not passing judgment, just making an economist's observations. I live outside Minneapolis where, on posh Lake Minnetonka, several mansions in excess of 25,000 square feet have been built in the last 3 years. That is the economic counterbalance to the affordable housing squeeze. Last thing... economics is more my thing than construction, but even I know the McKinsey study claiming flat productivity in construction since WW2 is utter nonsense. I have no idea what data their numbers are based on, but I have little doubt that, were it peer reviewed, the peers would suffer greatly from laughter-induced stomach cramps. From plaster and lath to gyp board? Plywood? Pex? Joist hangers? Air nailers? Romex? Power tools? Cranes and hoists? Seriously? This "study" sounds like McKinsey pulling their usual stunt of backing up the bus full of college grads on whose diplomas the ink has not yet puddled, let alone dried. Seen it many times.