Monday, December 24, 2007

Housing as a non-protected industry??

Our frequent correspondent Kat passed along an interesting article from Wired Magazine that is attempting to explain the increase demand for new housing versus old housing. Basically the proliferation of electronics and the increased power supply needs has made older houses a whole lot harder to retrofit.
wireless remotes that control lights and the thermostat, rooms wired with everything from coaxial to Cat-5, security setups worthy of Dr. No....That charming 1920s three-bedroom craftsman wasn't built to accommodate all these new devices, much less modernized subsystems like updated electrical, solar power, or flexible plastic plumbing. Which is one reason Americans have come to prefer new homes to pre-owned ones. Check out these numbers: In 1993, just 48 percent said they hoped their next house would be newly built. By 2004, that number had grown to 74 percent.
There is definitely some truth to that, newer houses are easier to renovate and retrofit a new wiring job. I have spent at least twelve hours fighting my home's layout to get a junction built off of old knob and tube wiring and then up threw some narrow wall jams to reinstall a broken outdoor light. A new build house the drops would have been straight down and I could have completed the job in two or three hours tops. However the most interesting segment of the article is on the nature of home building:
At MIT, architecture professor Kent Larson is working on designs in which the bones of a house — a skeleton of studs, beams, and trusses — are like the chassis of a car or a PC, and linked components like sensors and A/V equipment slot into integrated receptacles. The builder community is famously hidebound, but if it could be convinced to change its practices, Larson's scheme would mean faster, cheaper assembly (and disassembly and reassembly). "You'd move away from conventional construction, and builders would become assemblers," Larson says. [my emphasis]
Assembly is much lower skilled worker than construction. This means significantly lower wages for the home construction field as there will be less need for the highly skilled craftsmen such as plumbers, masons, carpenters and electricians. They will still be needed but for fewer hours per house. Furthermore assembly implies off-site fabrication which then leads to a much larger exposure of the middle of the construction chain to international competition. If significant modules of a residential unit can be built off site, then it matters far less whether off-site is twenty miles away, or seven thousand miles away.

The big winners of the Bush economy have been the people who have been able to work in either extraction fields such as the oil industry, or in protected segments of the American economy that are not exposed to significant international competition at this time. Real estate, until recently, construction, healthcare and security companies had done well under the Bush economy. The NASCAR decaled pick-up truck driver was and still is a core Bush voter because the Bush economy has treated this group of people reasonably well.

If residential construction faces more competition at the intermediate stage on the value chain versus the long standing raw material input stage, this element of the Bush base will very quickly become another Democratic leaning segment... interesting

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