Why It's Still So Expensive to Build Homes in America | Odd Lots

Everyone has an opinion on why housing is so expensive in America -- and to be fair, there are probably a lot of reasons for it. But one simple factor is that homes are expensive to build. Unlike many other physical objects, they haven't gotten cheaper over time. So why is this? And why haven't we found a way to bring down the cost curve by building modular housing in factories or on assembly lines? On this episode, we speak with Brian Potter the author of the new book The Origins of Efficiency. Potter also worked at a modular homes startup that failed, and is also the author of the excellent Construction Physics newsletter. So we talk about what he's learned about housing, as well as broader questions about how operational efficiency is achieved over time across a range of industries.

[00:00:00] - Cold Open

[00:30:17] - Intro

[00:04:32] - Guest Introduction: Brian Potter

[00:04:54] - Housing inefficiency and Potter’s background

[00:07:38] - Why Houses Are Customized, Not Standardized

[00:08:43] - History of Prefab Housing Failures

[00:12:35] - Hidden Costs of Factory Construction

[00:14:40] - Liability and Contract Construction

[00:18:56] - Finding Efficiency in Manufacturing Processes

[00:20:51] - Economies of Scale

[00:22:54] - Balancing Efficiency with Resilience and Safety

[00:25:54] - Boeing and Aircraft Manufacturing Challenges

[00:28:21] - Talent Drain from Manufacturing

[00:30:42] - Historic Conditions for Rapid Production Scaling

[00:31:59] - Network Effects and Global Manufacturing Concentration

[00:34:05] - Tension Between Financiers and Manufacturers

[00:37:24] - Why Housing Construction Hasn't Improved

[00:40:55] - Future of Prefab Housing

[00:43:09] - Closing Thoughts

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Bloomberg's Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Monday and Thursday for interviews with the most interesting minds in finance, economics and markets.

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