Is Residential Home Building Disruption on the way?

Mark Finlay designed beauty in Connecticut

Tradition. Traditional homes and traditional building techniques. We’ve been quite reluctant in any way to disrupt what is beautiful in terms of style (like this gorgeous Mark Finlay designed home in Connecticut) and comfortable in terms of process. Yet, in today’s world, building this home is much more expensive than in years past, if you could even find someone to build it! The cost of materials and the shortage of skilled trades has changed residential construction, driving up prices. This challenge creates opportunity for disruptors to break into the establishment. Could we be at a construction crossroads?

The trades involved in residential home building are resistant to change. “My daddy and granddaddy did it this way,” has been the mantra. New technologies are created, yet our building process hasn’t changed significantly over time.

However, in today’s economy, there are several major bottlenecks in residential building. Could this be the impetus for some of those construction alternatives to gain some traction?

The biggest issues currently in residential building relate to the cost of materials and the lack of skilled labor. Both of these issues have existed at different points in time, but having both issues simultaneously could create opportunity for disruption.

If you follow construction or residential real estate, you’ve seen the memes and cartoons. The cost of lumber is out of control.

At construction sites in the past you might have seen little scraps of wood burning in a barrel – keeping the workers warm. Burning that precious bit of wood today – no chance!

Burning timberlands have contributed to supply chain issues with lumber, but it’s not just 2×4’s. Check out OSB. Last August a sheet of OSB was $12-13/sheet. Our walls, floors and roofs are all sheathed in OSB. Current charts show OSB costs 500% greater than April 2020.

Recently the headlines have shown that after record increases in cost began mid 2020, lumber prices are coming down. That is great news for residential home builders, right? It should be, but as the National Association of Homebuilders explains, prices are “sticky.” Retailers who purchased inventory while the prices were high are reluctant to slash prices. They need to unload inventory at the higher prices. There can be a significant lag as costs are falling. Of course when prices are rising, they are quick to adjust upward.

Did you ever play the game Oregon Trail? It’s the one where you play a pioneer trying to pack your wagon to cross the Oregon Trail. You had to balance packing enough food for you and your family (and horses) for the long ride. But not so much that it weighed the wagon down. It was really a tricky balance. There is actually a game called the Wood Supply Game which simulates the balance of the Forest Products Supply chain… it is not easy to win!

In 2020, 91% of homebuilders used traditional wood framing, so they are forced to absorb the cost increases and pass them on to the consumer. A new home in 2021 is significantly more expensive than the same home just a year ago.

What are the alternatives though? Two major alternatives are concrete and steel framing. Both have previously been cost prohibitive. However, with lumber prices sky high, it is possible we could trend toward these framing techniques.

Concrete framing:

Concrete Framed Home

Steel Framing:

Steel Framed Home
Superior Walls

Superior walls can be used in many applications – commercial and residential. There are a lot of hurdles to make the switch to these alternative building techniques. Probably the biggest of these hurdles though is habit. Builders have always done it a certain way, and so have the skilled trades. Moving toward these building styles would mean architects and engineers, building inspectors and the trades would all have to adopt these styles. Simple things like insulation become more tricky. Large builders like KB Home and Lennar tinkered with the idea of changing. While there were many great parts about using these new construction styles, they simply couldn’t get the trades on board. Cabinet makers and roofers balked.

However, according to the NAHB, “the lack of workers in the skilled trades has reached a crisis level.” On July 13th, the NAHB, Homebuilders Institute and a panel of experts will host a panel to “answer questions and address winning strategies to tackle this issue.” One of the ways I think they will consider is training more young workers in alternative and newer technologies.

Disruption typically happens in 4 stages (Steven Sinofsky). This most frequently relates to technology, but I think it could apply here. In typical disruptions the new technologies develop, but they aren’t adopted because the incumbent (traditional building practices) is seen as satisfactory. Eventually, the disruptors begin to expand their capabilities and address their shortcomings. The incumbent doesn’t adapt. Every day we are seeing innovation in building techniques and materials. As traditional building is hampered by high costs, it seems logical that some of the other stuff might have a chance. But beyond concrete/steel framing and Superior walls, a myriad of other new technologies are finding their way into the residential building space.

What else could breakthrough soon?

Drones, Augmented Reality, Constructions Exosuits, Collaborative Robots? These futuristic sounding ideas make automated roof truss production seem old school! (https://www.bigrentz.com/blog/construction-technology). Even digital printing and Building Information Modeling is being utilized for residential construction. Imagine begin able to see a digital representation of a custom home plan before building! Change orders get pricey and if you could “see” what your home would look like during the design phase, many of those fees could be avoided.

Construction Drone – Fortune
Male worker using powered exoskeleton. – Riskandinsurance.com

Some of the technologies like automated roof truss systems, exosuits to provide support while lifting or to reduce repetitive motion injuries, or drones utilizing mapping technology to analyze the topography and grade change of a construction site just use existing technology in a new application. It is really amazing to consider. Streamlining processes with tech can improve safety and efficiency. Those are huge improvements with existing technology. There are other difficult to imagine implementations. Consider 3-D printing building materials like cinder blocks, or even an entire bridge! Designs are completed and tested on paper and are created with perfect accuracy. While those technologies seem far fetched, just think, those aren’t even “new” technologies. There are some that we haven’t even seen yet!

Framers and roofers who learned from their dads and granddads are increasingly rare these days. With this shortage of skilled labor, combined with sky high lumber prices, some of these technologies can be used to in place of laborers, to improve materials estimates or to supplement capacity. But also, as new folks join the workforce, perhaps they’ll be open to learning about and adopting the innovations? We all know millennials like tech. Could we see a big shift in the near future?

My very favorite book is called Traditional Construction Patterns. It covers all of the elements of proper construction, referencing perfect proportions like the Golden Ratio to make architecture aesthetically pleasing.

I wonder with all of the new tech and efficiencies if we might lose some of the beauty of traditional architecture?

I sure hope not.

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