A two-bedroom, two-bath single-family home built in one month?
It’s possible, says Amit Haller.
In a career pivot he now describes as “life-changing,” Haller, who developed a Bluetooth communications chip that was sold to Texas Instruments for $50 million in 1999, decided to go into real estate just as the housing bubble burst in 2008, triggering the Great Recession.
“It was not planned this way, but the timing worked perfectly well to start buying investment properties for redevelopment and to buy land to build from the ground up,” says Haller, 52.
But a decade into the traditional construction business in northern California found him returning to his tech roots.
In 2019, Haller’s company, San Mateo-based Veev, eliminated lumber from the homes it built, replacing it with steel and slabs made of a mix of acrylic and minerals that bind together. The company says it can build homes at least four times faster than traditional construction at a cheaper price.
U.S. housing, which is facing a shortage of 5.5 million to 6.8 million housing units, according to the National Association of Realtors, is badly in need of innovation, say experts.
California, where Veev operates, ranks 49th among states for the amount of housing available for each resident, and it needs to build 3.5 million homes by 2025 to satisfy the needs of a growing population, according to a 2016 McKinsey & Company report.
Last October, the company partnered with Habitat for Humanity and the City of San Jose to construct 78-unit shelter for homeless residents who needed a safe place to stay during the pandemic. The project was completed in under 90 days.
Veev, which has a factory in Union City, California, designs, manufactures, and assembles every component of its homes. It manufactures steel walls with mechanical, electrical, and plumbing hook-ups already in place that can be transported and assembled onsite faster than traditional construction. The company hopes to cut down on the many layers and stages of construction and the number of parties involved in production and installation.
Using these methods to build single-family homes, townhomes and condominiums can help shorten the construction timeline, cut project costs and could be more environmentally sustainable with less waste and more efficient production, according to Henry D’Esposito, construction research lead at JLL, the real estate services and investment company.
At a time when the industry faces a severe labor shortage, Veev and other modular construction companies such as Prescient and Bechtel, offer the possibility of building more homes with fewer workers.
‘Tesla of homes’
Modular construction has the potential to speed construction by as much as 50% and to cut construction costs by 20%, according to a 2019 McKinsey & Company report.
Is that the answer to the national housing crunch?
“I don’t know if that’s something that modular construction will solve this year or next year,” says D’Espositio. “But looking out a few more years, once you get into higher production rates for a lot of these facilities, I think that could be a key piece of the puzzle,” to fixing the shortage or at least meeting some of the high demand.
Indeed, Veev’s system allows it to “plug-and-play” the walls on the sites with minimal labor, says Haller.
“The amount of labor we need to build a house is about 10 times lesser than we need to build a traditional home because we prefabricate all of the components,” he says. “At the same time, we’ve managed to take the quality of our buildings to new levels. We are building the Tesla of homes.”
Haller says using steel framing instead of lumber during the pandemic helped them avoid issues related to lumber shortages, and to lower overall costs and the time needed to complete their projects.
Lumber prices rose by more than 340% in the last year, reaching as high as $1,711.2 per thousand board feet. Those increases added more than $36,000 to the price of the average single-family home, according to the National Association of Home Builders.
But did higher lumber prices in 2020 result in non-wood framed single-family homes getting a bigger slice of the home-building market?
“I can confirm that builders were investigating alternative building methods, including framing substitutes, particularly when lumber prices were above $1,000 per thousand board feet,” says Robert Dietz, the chief economist of the National Association of Home Builders. “It is my understanding that prices would have to remain above $1,200 or $1,300 per thousand broad feet for a sustained period of time to real see significant substitution.”
After peaking in May last year, lumber prices are at $633.90 per thousand square feet today.
For homes built in 2020, 91% were wood-framed, another 8% were concrete-framed homes, and 1% were steel-framed, according to NAHB analysis of Census Bureau data.
In 2016, 93% of new homes were wood-framed, 7% were concrete homes, and less than half a percent were steel-framed.
Veev has completed 138 residential units since 2019 and is currently developing 231 residential units, of which 86 are single-family homes.
Patrick Yang, a founder of a venture capital fund in San Francisco, who recently bought a Veev townhome in San Carlos, says he has been impressed with the quality of construction and the high-tech design.
“There are smart home panels everywhere. The high-performance surfaces are like the material they use in the walls for surgery rooms. So it’s antibacterial, mold-free and very heat resistant,” he says. “And unlike drywall, you can hang very heavy things.”
One of his favorite features?
No grout lines around the kitchen sink.
“It’s completely smooth and cleaning is super easy,” he says.
Swapna Venugopal Ramaswamy is the housing and economy reporter for USA TODAY. Follow her on Twitter @SwapnaVenugopal
This article originally appeared on USA TODAY: Housing shortage 2021: Can construction tech help build homes faster?