This is a subject we touch upon periodically. One of the reasons it is so interesting is that, for those who are unaccustomed to technological transformation, here is something that is happening right before our eyes.
Hopefully, through this process people will be able to alter how they look at things so as to understand the technological angle and the disruption is brings.
One of the biggest problems with construction is the fact that it has not advancement much in the last 100 years. When you think about it, the building of a home still mirrors what took place a century ago. In other words, this is a market that is prime for disruption.
HINT: Anytime an industry was bypassed by technological advancement, that is one which is primed to be obliterated in this era.
Hence, we are in the early stages of what I believe will big a major transformation in the construction industry. This is going to completely change the real estate market. When we couple this with remote work (another change soundly based in technological trends), we see how what we know now will not be the case in a decade or so.
From Trickle To Flooding
Technology rarely bursts onto the scene. Instead, it starts out as a slow drip, often lasting a very long time. Before getting into the topic of this article, let us look at one of the recent disruptions, retail sales. Most of us are aware of the transformation from physical stores to online.
Here is a chart that shows the growth of online:
Did you notice how your eyes were drawn to the upper, right-hand side of the chart. The reason for this is the rest of it is rather boring. There is very little of interest taking place.
The pace was slow but steady. In real dollar terms, it was a lot of money added in each interval. Yet, the pace was slow enough for it to go unnoticed for a long time. It was not until the middle of the decade when most people were aware of the term retail apocalypse. Unfortunately, this was not only the general public who missed what was taking place. Leadership at many of the largest retailers were asleep at the wheel also.
I bring this up to show how what starts out as non-threatening can suddenly become so.
When it comes to home building, one of the most promising areas is 3-D printing. So far, a few models were created along with some proof-of-concept units. This is a phase that is quickly coming to an end.
We are about to see exponential expansion in 2022. Before getting into the numbers, this does not mean millions of homes 3-D printed, yet. For now, the numbers are very small and will be that way for a while. However, keep in mind the online sales chart.
Austin, TX appeared on our radar before with this technology. Now, we see a much larger project being kicked off.
A major home builder is teaming with a Texas startup to create a community of 100 3-D printed homes near Austin, gearing up for what would be by far the biggest development of this type of housing in the U.S.
This is home to ICON which produced a 4 unit project in the area. Now they are partnering with Lennar, one of the nations larger home builders, to put up 100 homes.
“We’re sort of graduating from singles and dozens of homes to hundreds of homes,” said Jason Ballard, Icon’s chief executive.
In other words, we are moving from the trickle and heading towards the flooding.
Novelty Growing Into Big Business
To disrupt an industry, there has to be major benefits to what is being implemented. Without that, there is little reason to change. That is why disruption is always revolutionary. A minor change or nominal improvement is not worth the effort. For something to cause major upheaval within an industry, there has to be drastic change, usually resulting in large financial benefit.
We have repeatedly seen 3-D printing do that. To start, no matter what the sector, less materials are used since waste is reduced. This is an automatic cost savings.
In the construction industry, a simple way to break in is to reduce labor. This is one of the biggest expenses in the industry. As stated earlier, the core premise is has not really changed in 100 years. Therefore, anything that attacks the labor issue is going to be of interest to the homebuilders.
Icon requires only three workers on-site when printing a wall system, replacing as many as 6 to 12 framers and drywall installers needed for conventional construction, Lennar said.
This new system does just that. We can see the massive reduction in staff required to get the shell of the house built. This is a major step forward for the industry.
The fact that a national builder like Lennar is starting to partner with the technology is very telling. It is the old adage, if there is one, the others are also sniffing around. A major cost savings is not going to be passed by Lennar's competitors. The industry is to cut-throat for that.
Here is where we see things potentially happen very quickly. What would the industry look like, in a couple years, if most of the home builders adopted this technology in some form? Imagine the concept of tens of thousands of homes having their shells constructed in this manner.
My guess is that this is going to be fairly standard by mid-decade. It is also vital to understand that what we are discussing here is referring to 2021 technology. Over the next few years, this is going to see massive improvement (read cost reduction) which will only further the appeal.
For now, we are still in a proof-of-concept phase although quickly moving out of that. If Lennar and ICON complete this 100 unit subdivision, then it is off to the races.
This is worth keeping an eye on.
If you found this article informative, please give an upvote and rehive.
gif by @doze
logo by @st8z
Posted Using LeoFinance Beta