The quest for the factory-built house

0:00This message comes from Capital One. Capital One offers checking accounts with no fees or minimum. What's in your wallet? Terms apply. See CapitalOne.com slash bank for details. Capital One N.A. Member FDIC. 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.

0:49There's this thing I heard a while back, years ago, 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'd 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.

1:25And 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.

2:01I'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.

2:36It'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.

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3:49This 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.

4:29He 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 Nevala 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 Whalen Wong until after you began looking into Buckminster Fuller.

5:03It'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?

5:39You 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? kind, 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.

6:10You 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?

6:44This 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.

7:21So 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.

8:03And 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.

8:39And 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 evolving shelves, which are shelves that are built into the walls that rotate at the touch of a button.

9:18It'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.

9:49And 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 his 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 may be the most obvious, but it's worth pointing out. People do not want to live in a spaceship.

10:29These 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.

11:04Anyway, 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 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 gonna to build houses in a factory, don't make them too weird.

11:45Make 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. What? One, two, three. Stuck inside a mobile home field advantage. 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.

12:20Yeah, 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-Bucky, not a visionary, not touring the country giving lectures.

12:54He 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 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.

13:25And they just turned out to be incredibly popular. 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.

13:59They 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.

14:37In 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, you know, 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.

15:20After 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.

15:56And 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.

16:37So 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.

17:10On 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.

17:48It 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.

18:30you get proactive help across your workflow so you can outsmart the chaos. Experience AI that proactively helps you go from to-do to done faster. Unleash your superhuman potential today. Learn more at superhuman.com slash podcast. That's superhuman.com slash podcast. 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.

19:14I 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.

19:51Nice 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. Walking area. Nice open kitchen area. Open kitchen with a wide, you know, floor to ceiling window. a sliding... Alexis studied architecture in college, and he fell in love with this big idea of building houses in factories.

20:29And 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.

21:08So 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.

21:46To 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 as 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.

22:17So they solve a lot of that expensive-to-ship transportation problem that other factory-built houses have. Alexis' 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. You've got the, you know, 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.

22:53So 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 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, it's very unusual to do this kind of thing in construction. But in the automotive world, for example, it's called an electrical harness. You've got the, you know, there's hundreds of sensors in a car, right?

23:26And they have all these wires pre-made in a factory, shipped to the main line. And they have these connectors on the end, and then 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.

24:06And it's going to cost more than$400 ,000. A lot of money. They are not solving the housing affordability crisis with this house.