DefinitelyTeed
The industry is teeming with ways builders can cut costs. All the puzzle pieces are there. It’s time to bring them together and make them work.
The new technology allows builders to analyze land, obtain permits and solve problems that previously took a huge amount of time, about half the time it used to take.
New materials and products allow builders to complete installation in half the time. Dealers and manufacturers offer component-based solutions to save job sites a lot of pain and reduce or eliminate waste.
Embrace what consumers want
The wishes of the consumer are changeas Karen Barnes from research firm The Farnsworth Group shares. As the majority of our population ages, they are looking for ways to cut back. The rest of the population is looking for ways to become homeowners affordably, without harming the environment.
These factors are pushing homebuilders and developers to rethink what they bring to market, and even rethink it as a more holistic experience.
Although the homebuyer may have settled for a single transaction with his builder, this is only the first step on a long journey, explains Ron Jones, co-founder and president of Green construction media.
“We need to talk more about homeownership as a sense of pride and intergenerational opportunities to grow wealth,” he said. “The first cost is the same, as the full cost is the furthest from the truth. We need to find a way to move past the suggestion that housing means nothing more than the value of square footage.”
Todd Usher, founder and president of Addison Houses points to the business side of the issue.
“In our industry we have no choice, we must emulate the rest of the modern industry which has focused on continuous improvement and maximizing value rather than the cost per square meter mentality that drives us to the race to the bottom,” he said. “We may need to build a slightly smaller house. We need to continue educating customers, appraisers and lenders so we can deliver maximum value to the market. It’s not easy, but we can do better. We can show customers they have a choice.”
Building smaller helps, but the secondary costs of home ownership also weigh on this.
“Tax and insurance costs are rising and housing budgets are now being eaten up by some of the secondary costs,” said Don Worthington, division manager at Primary home mortgage. “If the average real estate agent has a potential sale, they do nothing to disrupt that sale, even if affordability is under pressure. Now you can look at people’s housing budgets being eaten up by utility bills.”
The mortgage industry is responding in a way to help prevent some foreclosures resulting from these secondary cost increases. This year the assessment forms have been changed to include on the first five pages the option to evaluate the energy efficiency of the house, giving the insurer the opportunity to understand the impact of energy efficiency.
Additionally, this gives all electric homes, net-zero designed homes, and manufactured products a strong starting point.
Differentiation of builders
Sara Gutterman is hosting an event to discuss the increasing need for more affordable housing and the dire consequences if not addressed now.
Jennifer Castenson
This process will help builders differentiate more than ever before as home values will change. Homeowners won’t talk about the brand of air conditioner as much as they will talk about their builder’s thoughtful design. It will be more than just one transaction; homeowners will talk about the “brand” of their home as they live in it and experience its value.
Energy data will become a permanent part of the MLS and will therefore be within reach of the appraiser. That information will help the appraiser quantify the value as part of the cost of homeownership, which can then become part of the home’s equity. That visibility into the data will also position homeowners to begin to understand the value of the net-zero homes that builder X can build versus a neighbor with high energy bills built by builder Y.
“Our hope is that value and values can finally align,” said Sara Gutterman, co-founder and CEO of Green Builder Media. “While it provides real value to buyers, it’s not just a marketing opportunity. It’s a responsibility.”
To get there with both the initial cost of the house and to combat the secondary costs, there are many new products and technologies.
Disentangling complex urban challenges
Cities are known to be short on funding, departments understaffed, and unable to provide the resources and speed needed to deliver the right housing developments; however, technology is starting to change that.
AI-powered platform Prophetic reports a 32x improvement in land acquisition speed, reducing a three-to-four week process to just minutes.
“Every site is a function of the land you build it on, and that is the most fragmented,” says Oliver Alexander, founder and CEO of the tech startup. “Prophetic helps you find it, analyze it, organize it, and do it in a way that wasn’t possible because AI wasn’t advanced enough. We can extract zoning plans from any zoning document, create them in minutes instead of weeks. The market is responding beautifully.”
Previously, land acquisition was extremely fragmented, but this platform summarizes the process of several platforms into one.
After land, the plans must be approved. But once submitted, they are often rejected due to conflicts, such as an HVAC duct routed through a structural beam, or an energy specification that does not match the building kit. These clashes often lead to review cycles that add months to approvals and thousands to project costs, says Maor Greenberg, CEO and co-founder of AI-powered Spatial.
The company is proving that it can help architectural and design firms reduce the usual ten weeks to less than a week, ultimately delivering a complete set of permit-ready documents. Once the PDF file has been created, the constructor can check it to make sure there are no errors and make adjustments in Spacial if necessary. Validation can then be performed against city code to identify what works and what doesn’t to streamline the process.
Robbie Leer, founder and CEO of Turbo permitsaves up to 50% of the average time it takes to get a permit, allowing builders to do more work with the same amount of staff.
These technologies are being rapidly adopted as builders try to save costs and time. They are also switching to new products.
Changing construction methods
Charles Smith, general manager at Owens Corning, notes the ease of installation of the new EZSheath product.
Jennifer Castenson
Owens Corning is one of many manufacturers, dealers and distributors turning to component-based solutions to make on-site installation easier, reducing the number of on-the-job operations and time required to do so. The company recently introduced the EZSheath Structural Insulated Enclosures, a 4-in-1 system that combines structural enclosures, continuous insulation and air and weather protection in one easy-to-install system.
It’s designed for faster installation and fewer trips around the house, plus it’s up to 50% lighter than OSB, so it’s easier to handle.
It is aimed at labor simplification, not cost savings. The total installation cost, including labor, is comparable to other mantels, says Brian Caulkins, sales manager at Owens Corning.
“Additionally, it can save two inches of space over conventional construction methods,” he added, an important factor as floor plans shrink to reduce costs. “It also reduces design changes and the number of SKUs for builders. Finally, there is weight savings in completing the job and managing it on the job site. A 4’x8′ OSB costs 40 pounds, compared to just 20 pounds for an EZSheath of the same size.”
These four examples show that there can be several modular and component-based approaches to achieving low house prices. Furthermore, these solutions include complex design, automation and resilience at the right price.
With modular homes accounting for only 3% of homes built today, this city is primed for growth.
Speed for productivity
With labor being one of the biggest construction challenges, many products aim to make installation faster and easier, so builders can save time and costs with fewer people on site.
For example, Rheem’s residential HVAC line, Adventurehas digital tools and integrated connectivity to speed installation and configuration. Installers report that they can speed up installation by 54% compared to other HVAC brands. They also report up to 62% faster overall diagnostics, reducing installation and troubleshooting time.
Construction project management platform Constructionxact helps custom home builders create 97% accurate estimates in less than 90 seconds, completing 7 times faster than manual.
Schneider Electric has launched an EV charger with built-in charging management technology, allowing builders to install EV charging on the existing system without increasing the size of the panel, reducing installation time and costs.
This future-proof electrical infrastructure has panels and circuit breakers designed for modular upgrades that can support solar, battery storage and additional loads without much cost. Builders don’t have to pay for upgrades and panel replacements, which not only benefits their bottom line but also builds a reputation as a brand that delivers homes for homeowners’ changing needs and rising secondary costs.
Putting the puzzle together
With changing policies and regulations, there are more and more ways to put the pieces together to create affordable prices.
All the momentum and energy in the industry is shifting in that direction, supported by a boundless sea of ideas, some of which were shared here. As investments make their way into these innovations based on consumer desires, we will see some positive, inspiring shifts in housing.
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