Planet Money - The quest for the factory-built house

Episode Date: April 21, 2023

Imagine if we built cars the same way we build houses. First, a typical buyer would meet with the car designer, and tell them what kind of car they want. Then the designer would draw up plans for the car.The buyer would call different car builders in their town and show them the blueprints. And the builders might say, "Yeah, I can build you that car based on this blueprint. It will cost $1 million and it will be ready in a year and a half."There are lots of reasons why homes are so expensive in the U.S., zoning and land prices among them. But also, the way we build houses is very slow and very inefficient. So, why don't we build homes the way we build so many other things, by mass producing them in a factory?In this episode, the century-old dream of the factory-built house, and the possibility of a prefab future.This episode was produced by Emma Peaslee. Molly Messick edited the show, and it was fact-checked by Sierra Juarez. Brian Jarboe mastered the episode. Jess Jiang is our acting Executive Producer.Help support Planet Money and get bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

What does it mean that Trump's mugshot recalls Paris Hilton's? What does the fake resume of George Santos tell us about American myths? What if I told you that the Kardashians are the new Kennedys? On It's Been a Minute, I give you fresh ways of thinking about what's going on. Listen every week to It's Been a Minute from NPR. This is Planet Money from NPR. Let's talk about houses in America. I'm going to go out on a limb and I'm going to say houses in America are too expensive.

Bold words from Jacob Goldstein coming in hot. And there are a lot of reasons for this, right? There's the zoning, there's land prices. But one reason we do not hear much about, one of the things driving the cost of housing, the process of building houses is just really slow and inefficient and expensive. that really made me realize just how inefficient it is to build a house. And it goes like this. Imagine we built cars the same way we build houses. You'd have a meeting with the car designer where you tell them what kind of car you want. They drop plans for your special car.

Then you'd go to the city council. You'd get a permit. Then you'd go around town. You'd call different car builders, show them your blueprints. And they'd be like, yeah, sure, I can build you your special car. It'll cost, I don't know, a million dollars. It'll be ready in, say, a year and a half. And sure, there are developers who build whatever, like a hundred homes at a time. But even building a hundred homes at a time is this wildly slow and expensive process. It seems like we should be able to do better. We know how to make things cheaper. We've been doing it for hundreds of years. We make things cheaper by

mass producing them in factories, just like we do with cars and just like we do with lots of other things. So why don't we do that with houses? Hello and welcome to Planet Money. I'm Jacob Goldstein. And I'm Nick Fountain. Jacob, so good to have you back. So good to see you. Thanks, man. I'm happy to be back at Planet Money. We should say you now have another job. You now host this great show called What's Your Problem? I'm a big fan. It's about people trying to solve problems out in the world, oftentimes with technology. Very good. Yes. Thank you for listening. And for What's Your Problem, I recently interviewed a home builder who is trying to do this thing we're talking about on the show today.

He's trying to figure out how to build houses in a factory. And as I was preparing for that interview, I realized that there was actually a much bigger story here, a story that would be great for Planet Money. It's this hundred-year story of people trying to do this thing, trying to figure out how to make houses cheaper by building them in factories. Today on the show, the story of something that should have taken off by now.

There'll be some flying saucer houses. There'll be some double wides. And Nick, you get to do one of your favorite things. You get to go to a construction site. Swinging some hammers. Just a quick heads up, there is a mention of suicide in today's show. This dream of using factories, using mass production to make houses cheaper and better goes back about 100 years now.

And in those 100 years, there have been some spectacular failures and at least one surprising boom along the way. So what we're going to do on today's show is talk about three key people. There is an impractical genius, a very practical small businessman, and someone who is trying again right now to mass produce houses and factories. The star of Chapter One, that impractical genius, is a man named Buckminster Fuller. Bucky to his friends. Bucky was this famous weirdo. He was a designer.

He was a futurist. He was beloved by Steve Jobs and other hippie-adjacent tech types. Fortunately for us, someone just published a book about him. My name is Alec Nebala Lee, and the book is Inventor of the Future, The Visionary Life of Buckminster Fuller. And do you by chance have any close connections to any of the current or former staff of Planet Money or The Indicator? Yes, yes. Well, we should make this very clear that this is not a Nepo situation, that you were not aware that I was married to Indicator reporter and co-host

Whelan Wong until after you began looking into Buckminster Fuller. It's true. Alex says Buckminster Fuller's dream of making houses and factories starts in 1927. He's not famous yet. He's in his early 30s, living with his wife and his baby daughter in Chicago. And he's working for this company that sells construction materials. But then he gets fired. He's in a really bad place. And in the middle of all this, he walks to the edge of Lake Michigan and considers suicide.

He is going through this crisis, and the story is that while he's looking out at the water, he starts to ask himself a series of questions, starting with, you know, is there a God? Does God have a plan for me? You know, do I know what this plan is? And then he has this kind of blinding rush of insight that says, you do not belong to yourself. You belong to the universe. And, you know, it is for you to figure out how you can be a benefit to all of mankind. And you know what Buckminster Fuller, vessel of the universe, decides to do to devote himself to the betterment of all mankind? He decides to mass produce houses in a factory.

So the next day, you know, he starts to focus very seriously on this housing idea, okay? Because that's his background. He's someone who has spent years in construction. You know, his father-in-law is a famous architect. And so, you know, for him to make an impact, the obvious place to start is housing. And it wasn't just his background.

Bucky thinks the time is right for this idea. It's after World War I. Construction costs are really high. And like today, it was really hard back then for a working class family to buy a house. And this was a time when people really believed that technological progress could make life better. Radio is new. It's the dawn of mass consumer goods. People are starting to get things like refrigerators and washing machines. And cars, right? This is about 20 years after Henry Ford had rolled out the Model T.

That was the first car that was affordable to the masses. And the reason it was affordable was because it was mass produced on the assembly line. The car was a really important inspiration for Bucky. That thing I did at the top of the show about, you know, imagine we built cars the way we build houses. I got that from him. I got that from Bucky. Shout out to Bucky. So Bucky decides, I'm going to build houses the way we build cars. And crucially, this means not just building regular style houses in a factory. It means rethinking from scratch what it means to build a house. So he has this big idea and he goes out and he starts pitching it.

He calls it the Dymaxion house. And he starts to get popular as this sort of visionary big idea guy. He's given lectures. If he were around today, he would definitely be big into TED Talks. But one thing he is not doing, building houses. Because to build these factory built houses, he needs a factory and he doesn't have one. And then finally, 15 years after he first comes up with the idea, he gets his big chance. It's 1944. U.S. factories have been churning out planes and ships and jeeps to fight World War II. But now the war is starting to wind down.

And one of the questions as the war starts to wind down is, what are we going to do with all of this industrial capacity that we've built up? And Fuller, who's kind of in the right place at the right time, says, well, you know, I have this idea for industrialized housing. And it makes a lot of sense for us just to convert these aircraft plants to building houses because it will keep the plants operational. People will keep their jobs. And in theory, we're going to have a huge demand for post-war housing after all these veterans come home. So Bucky convinces this airplane company in Kansas to let him use their factory to build a prototype of the house he's been dreaming of for years. And an airplane factory was actually a pretty good place to do it because his factory optimized house was nothing like a regular house. So it looks like a flying saucer.

All right. It's kind of the best way to describe it. It's, you know, bare aluminum. So it's this shiny metal house. And there's a ring of plastic glass windows. Just to be clear, this is a round house. And you go inside and the floor is very springy because of the way the house is engineered. All these rooms are kind of like wedge shaped. And, you know, he has these, what he calls, ovalving shelves, which are shelves that are built into the walls that rotate at the touch of a button. It's basically the Jetsons' house.

Yeah, yeah. I mean, it's funny because, like, it was always seen as like the house of the future, right? Like, even from early on, people were saying, oh, you know,

Fuller is designing the house of the future, which I think kind of annoyed him at first because he was trying to do it for real in the present. Bucky finally has a factory.

He makes these prototypes. World War II is over. The GIs are coming home. So what happens next? So nothing ever happens, right? The company does not go into mass production. Yeah, Bucky's dream, the dream of the mass-produced factory house, does not come true. And Alex says there are a few reasons for this.

For one, Bucky was just kind of a pain to work with. Not a great guy to run a big company. Another reason? Bucky came up with this idea back in the 1920s. But now it's the mid-1940s. And unusually in American history, this is a time when a lot of working class people actually could afford houses. Congress subsidized mortgages for returning troops. And developers were starting to build

these cheap housing developments. And the last reason Bucky's factory-built homes went nowhere, maybe the most obvious, but it's worth pointing out, people do not want to live in a spaceship. These were weird-ass round metal houses. This is kind of the takeaway here. It's like Fuller really said, you know, people will like what I tell them to like.

He expects people to kind of change their lifestyle to fit this idealized house design that he has come up with. And people didn't want to do that. Side note, we actually haven't mentioned the thing that Bucky is best known for today. The geodesic dome. Like Spaceship Earth at Epcot at Disney World, and also the dome house that my hippie friends in the Santa Cruz Mountains used to live in. I think everybody has hippie friends

who live in a dome house in the Santa Cruz Mountains. Anyway, you didn't need a factory to make one of these domes. It was a really simple design, very DIY-friendly, but it didn't work that well. So Fuller actually lived in a dome house, and it was so leaky that apparently, you know,

people would see him at home, like reading the newspaper with an umbrella over his head and like a flashlight clutch between his teeth. You know, there's a reason why we don't mostly live in domes today. Final recap from Bucky, timing is everything. Don't launch your factory-built house at the one moment when working-class people

can afford traditional houses. And if you're going to build houses in a factory, don't make them too weird. Make them like normal houses that people want to live in. Which brings us to chapter two. Okay, Nick, for the title

of this chapter, I'm going to count to three, and we're both going to say our favorite name for the chapter. One, two, three. Stuck inside a mobile home with the zoning blues again. Is that a Dylan reference? Yes. This section is about mobile homes. And the mobile home story, which is the next big moment for factory-built homes, it doesn't happen through some grandiose weirdo vision like

the one Bucky had. It builds gradually, and it comes sort of from the bottom up. Yeah, our guide to this chapter is Brian Potter. He actually worked for a factory-built construction company that had its own boom and bust. They raised several billion dollars in venture capital and then went bankrupt. Now he writes a newsletter that we love. It's called Construction Physics, and it's all about this thing that we're talking about in the show today. It's about productivity and construction. Brian has spent a long time looking back at the history

of factory-built homes. And he told us about this guy, Elmer Fry, kind of the anti-Buckey, not a visionary, not touring the country giving lectures. He had a company that made camping trailers. There were a bunch of companies that made these, and some people did live in them, but mostly they were for towing around. And then one day in the early 1950s, Elmer heard from one of his customers. One day he got a request from somebody who wanted a 10-foot-wide trailer, and Fry said, well, that's too wide to legally go on the roads. And the guy said, oh, that's okay. I'm just, I'm not going to move it once I have it. I'll just call it a construction trailer and permit it like that. And Fry said, okay, and then built it for him. And then he

started building more of them and they just turned out to be incredibly popular. And then the rest was history. The rest was history. The increase in width in mobile homes went on from there. People loved it. Pretty soon, everybody was ordering these extra-wide trailers. A few feet at a time, those trailers people towed behind their car were becoming the mobile homes that we know today. Pretty soon after the 10-wide, you have the 12-wide and then the 14-wide. And then, yeah, the double-wide, which is two modules that get stuck together. Yeah, so right in the 50s, that's pretty much when that shift started. They were not building weird, round spaceship houses of the future with push-button shelves. They were building rectangular cheap houses. Also, the timing was better. That post-World

War II moment when so many ordinary people could afford traditional houses, that moment passed. So lots of people started buying these new, cheaper mobile homes. There was a mobile home boom. And companies also started building bigger, full-sized houses and factories. By 1970, mobile homes and those other factory-built homes made up roughly half of newly built single-family homes in America. Fountain, I'm going to say that again, because it was so surprising to me when I learned it. It was why I wanted to do this whole chapter. In 1970, one in two newly built single-family homes in America was built in a factory. The industry is so large and expanding so rapidly that at one point in the late 60s or early 70s, I think three of the top 10 most profitable companies in the U.S. were mobile home companies. The largest home builder in the U.S. is a mobile home company. Yeah, it becomes just an enormous industry relatively quickly.

This was it. This was the moment when lots of affordable homes were made in factories. But it didn't last. There was a recession that started in 1973, and a bunch of the mobile home manufacturers went out of business. After that, the industry never really got back to where it had been in the early 70s. Today, only around 10% of new single-family homes are made in factories. So the question is, why? What happened? Brian points to a few things.

For one, middle-class homeowners, the classic villains of affordable housing stories, didn't want mobile homes in their neighborhoods. Mobile homes were targeted at low-income people. There was a stigma attached to the way mobile homes looked. And so, as a result, there was this wave of zoning rules that forced mobile homes out of town and into mobile home parks. But it wasn't just zoning. And, in fact, Brian thinks there was a deeper problem, a problem that goes to the big long-term question, why don't we build more houses and factories?

Brian says building houses and factories is just a fundamentally hard business. For one thing, home construction is very cyclical. And traditional contractors can deal with cyclical downturns by laying off workers, riding things out, and then hiring people back and starting to build again when the economy comes back. But companies building homes and factories, they have this big fixed cost. They have the factory where they build the homes. And they have to pay for those factories, whether the housing market is booming or crashing. So factory-built housing tends to have a tough time in downturns. You see a lot of these operations just go out of business.

This makes sense as far as it goes. But when Brian told us this, I asked him, what about all the other industries that have to keep factories open in downturns? It's not like, say, car companies go bankrupt every time there's a recession. Yeah, Brian said in the car business, doing mass production in a factory is just so much more efficient than the alternative. Think of Henry Ford's assembly line. It was so much better than building bespoke cars

one by one in some workshop. On the other hand, building mobile homes in factories, yeah, it was more efficient than building houses on site. But it wasn't that much more efficient. It wasn't enough more efficient to ride out the inevitable downturns in housing. Brian says once you paid to attach a mobile home to the back of a truck and haul it down the highway to wherever it was going and got it all set up, you lost a lot of the gains you got from building it in the factory in the first place. This is a really hard problem that in the end, mobile homes couldn't entirely solve. And for that matter, no one in this whole history of

factory-built housing has been able to crack. It is very, very hard to be the Henry Ford of housing, to be able to produce things in a factory that's so much cheaper that it just completely changes the way we build it and the way you can't go back to the previous way. That is very hard to do, and nobody has managed to do it yet. Nobody has managed to do it yet. Yet! Yet.

They're still trying, and we'll hear about that after the break. I grew up spending a lot of time on construction sites. My dad was a contractor, mostly remodeling kitchens and bathrooms. I used to work at a cabinet factory. I helped with a lot of kitchen installs. I am the reigning world champion of belt sander racing, modified division.

Don't try this at home. It's pretty dangerous. And so it was a great delight that for this story, I got to do something that's very familiar to me that I love. I got to go visit a job site and put my microphone very close to power tools. Final chapter, chapter three, working title. The work goes on, the cause endures, the hope still lives, and the dream shall never die.

So there are a few companies out there right now trying new ways to solve the factory-built house problem. One of them is called Cover. I interviewed the founder, Alexis Rivas, for this podcast I host, What's Your Problem? And Nick, you got to go meet him at a job site in L.A. where they were putting together one of these houses. Hey, Nick. Hey, guys. How's it going? Alexis.

Nick, good to meet you. Nice to meet you. Alexis is trying to figure out how to have the kind of success that the mobile home companies had back in the early 70s, but without running into the same problems. And there are some big differences between what he's doing and what the mobile home companies were doing. For one, he is not building cheap homes. Not at all. They're really expensive, at least for now. All right. So what are we looking at here? So this is the living

area. Sure. Yep. Kitchen area. A nice open kitchen area. With a wide, you know, floor to ceiling window sliding. Alexis studied architecture in college, and he fell in love with this big idea of building houses in factories. And he discovered that there is this relatively small industry that is building homes in factories. Not mobile homes, full-size houses. So Alexis went to intern for one of those companies. And what he saw there was that they're basically

just building traditional homes in the factory, then moving them on these giant flatbed trucks and lifting them into place with giant cranes and then doing lots of work to finish them on site. And he realized the same thing Brian Potter realized. When you do all that, the house doesn't wind up being that much cheaper than a traditional house. You don't get those sweet, sweet productivity gains from factory-based mass production. So Alexis starts this new company and their whole thing is sort of trying to do what Buckminster Fuller tried to do 100 years ago. They want to rethink factory construction from the ground up. And I could see this at the job site. It was very different from the many that I'd been on in my life. One difference, there's no wood framing. It's all steel studs. And also, the ceiling is steel. I've never seen that on a job site before, a steel ceiling.

Yeah, people who are familiar with conventional construction, they kind of walk into here and they're like, this is some alien system. Yeah, it's very unusual. To be clear, this is going to look like a nice house. It's going to look like something you'd see in an architectural magazine. But it isn't built like most houses. It's built mostly in the factory, one panel at a time. Homes has wall panels, floor panels, ceiling panels. So you can think of it like life-size Lego blocks. And then we take those panels,

we deliver them to site on a regular truck, no big crane, no big equipment, and then we assemble them into the homes. Those panels are flat. It's not like shipping, you know, half a house that you have to put on the back of a truck and install with the crane. So they solve a lot of that expensive-to-ship

transportation problem that other factory-built houses have. Alexis's company isn't the first to build houses with prefab panels, but they're trying to build a lot into those panels before they leave the factory. Alexis gets down on his knee and shows me an interior panel that already has wiring built into it. What I'm doing here is I'm pulling out one of the electrical connections. But you can see here there's an electrical connection. This comes pre-wired from the factory. And then there's this quick connect that you just plug in.

And then that makes the electrical connection. So this is one way they're trying to make home building more efficient. Rather than spend a few days wiring up the house on site, they pre-cut the wires at the factory to the right lengths. They put connectors on them and they install-cut the wires at the factory to the right lengths. They put connectors on them and they install them in some of the panels. And then when they get to the site, they just click the connectors together. Yep. I've never heard of that before. Yeah. I mean, the idea is, and this is, so it's very unusual to do this kind of thing in construction. But in the automotive world, for example, right, it's called an electrical harness. You've got,

you've got the, you know, there's, there's hundreds of sensors in a car, right? And they have all these wires pre-made in a factory shipped to, you know, the main line. And they have these connectors on the end and then, you know, you just plug it all together. So it's taking kind of an automotive approach to electrical and bringing that to home building. Again, with the automotive industry. But this time, it's not just a metaphor. Alexa's company hired people from Tesla and other car companies to help them figure out mass production. But they have not really figured it out yet. They're still making houses one by one, which is part of the reason the houses they're selling cost a lot. Yeah, the house I saw being built is a two-bed, two-bath,

fancy house with high-end appliances, and it's going to cost more than $400,000, a lot of money. They are not solving the housing affordability crisis with this house. The classic Home Depot bucket. You haven't innovated on that yet? No. We've got to prioritize. What's your name?

My name is Gus. When I was on the job site, I got to spend a little time with Gus Contreras. What's your title? Um, what is my title now? Are you like the... Everything is my title. Magician. Gus was installing the bathroom,

and talking with him helped me understand how this company might possibly be able to bring down the still very high costs of their houses. Four minutes and you guys already have the shower installed? Yeah. Four minutes was fast, but it still takes Gus and five other experienced construction workers about a month to put the house together on site. And that month of skilled work makes the house cost more.

So maybe the most important part of Gus's job is figuring out how to make it faster and easier to put together these houses. Gus says plumbing the bathroom used to take like a whole day. Now it's just 30 minutes. And that's because Gus and his co-workers were constantly sending feedback to engineers at HQ saying, hey, try tweaking this one little thing at the factory before you ship it to us. Are you taking meetings from inside these buildings? Hi, baby, Zoom.

Zoom, Google Meet, whatever I can log into to get out of the meet, we'll do it. That's pretty rare for the construction industry, being on a Zoom at a job site. Yeah, I mean, I used to get yelled at for being on my phone. Now I'm praised for it. So, I mean, that's what it's like. This is it. One Zoom call from Gus at a time.

This is the thing happening. They're trying to reduce the need for expensive, time-consuming skill labor of people like Gus. Trying to mass-produce the panels in the factory so that when those panels get to the job site, it doesn't take a team of skilled workers a month to put it all together. The goal is to make it so easy that almost anybody can put together a house in a few weeks. Think of it like a really big piece of IKEA furniture. Not quite that easy and somewhat fancier, but IKEA-esque.

That is the dream, anyway. This is the way we make things cheaper in the world. We figure out how to mass produce them in factories. We've done it over and over again, for a long time now. And yet, after a hundred years of trying, we still can't do it with houses. Jacob, I have listened to the whole Alexis interview. There's a lot more about his backstory

and the nitty gritty of like what he needs to figure out to make home instruction really cheap. His goal. It's a great interview. It's a great show. It's called What's Your Problem with Jacob Goulton. You can find it where you can find it wherever. Thanks for the shout out. We'd like to thank James Schmitz of the Minneapolis Fed who talked to us about mobile homes. Also, the late Ted Kennedy. I poached a line from one of his speeches for the title of chapter three. Thanks also to Emma Peasley for producing today's show, Molly Messick for editing the show, Sierra Juarez for fact-checking it, and Brian Jarboe for engineering. If you or someone you know might be considering suicide or is in a crisis, you can call or text 988 to reach the Suicide and Crisis Lifeline.

That's 988. I'm Nick Fountain. I'm Jacob Goldstein. This is NPR. Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation, for helping to support this podcast.