The secret of the ooze

A former Texas A&M cross country and track athlete and Episcopalian minister, Ballard in 2011 co-founded TreeHouse, a retailer to sell environmentally friendly home construction materials. TreeHouse worked with Tesla on an ecofriendly home battery and opened a 25,000-square-foot retail store in Dallas. But the company was out of business by 2018.

By then, Ballard had bolted TreeHouse for Icon, an Austin, Texas company that debuted in 2018 at South by Southwest, the erstwhile Austin music festival where lurking A&R’s were long ago replaced by lurking venture capital investors.

With a small group of homes in Mexico and plans for a 100-home community in Austin, in conjunction with top national homebuilder Lennar, Icon is the furthest along of the U.S. 3-D home printing companies.

Another such company is Alquist, an Iowa City, Iowa business founded by Zachary Mannheimer. Mannheimer is former CEO of the Des Moines Social Club, an arts nonprofit. Alquist partnered with Habitat for Humanity to complete a now occupied 3-D printed home in Williamsburg, Virginia.

Also in the 3D home printing business is Mighty Buildings, which is based out of Oakland, and described by its founder Slava Solonitsyn as a “startup to disrupt the trillion-dollar residential construction industry.” The company drew attention last year when it said it would complete a 15-home 3-D printed community in Rancho Mirage, California by this spring.

A prolific investor, Solonitsyn also has money in PreNav, which hopes to “capture data about the world’s infrastructure using small aerial robots.”

A 20^th century vision of the future, 3-D printers have existed since the 1980s. A 3-D printing synonym is additive manufacturing, a way of putting together three-dimensional material layer-by-layer. Ideally, an engineer designs a model of what they want on software, from an air duct to a prosthetic limb, and it is precisely printed out.

One can produce the frame of the home like that, said McCoy of Virginia Tech. They just need a 1,200-square-feet or so printer, which McCoy estimated to cost about $160 a square foot, or $192,000 total.  Icon hopes to have 12 similar-sized printers, which they call the Vulcan, in the coming months.

These companies’ goal for now is to print the home’s wall, creating the framework for one-story domiciles.

“The walls are 3-D printed, and the rest of the home is built traditionally,” said Mannheimer of Alquist. “This means that the doors, windows, electrical all are done by contractors after the walls have been constructed.”

The mix of materials used to print the walls is a variation of concrete. Icon, for example, calls its concrete “lavacrete,” and a company spokesperson explained, “Concrete formulations from one to another can be as different as people.”

What is different in these framing materials, McCoy said, is a low water to cement ratio compared to normal concrete.

There is something endearing in the 3-D printed wall’s construction. The printer has a nozzle that oozes the concrete variation, which is then layered and layered and layered, like icing on the world’s most grandiose wedding cake. The layers form an oval that is the basis of the home, and that basis can be printed out in 24 hours.

The few homes completed so far have their own distinct look, partly evoking clay huts or single-story motels of mid-20^th century America.

One present limitation is the weather.

“To print these homes the temperature should be between 60 to 90 degrees Fahrenheit and cannot be below 40 degrees or above 95 degrees,” Mannheimer explained. “Printing can proceed in light rain, but not during heavy rain. Printing should not be attempted during high winds.”

These walls are built offsite, a homebuilding future that connects to a past when prefabricated construction surged to meet demand. There were, for example, prefabs shipped out by Sears Roebuck in the first half of the 20^th Century, as well as the balloon framed wood houses of the late 19^th Century.

“The lightwood frame was one of the greatest inventions they had at the time,” McCoy said. “A man in Iowa in the late 1800s would get a loan from the bank, take a train to Chicago, purchase a home, come back and the house is delivered, and his neighbors help him assemble it.”

That frame was such a great invention it dominates to this day. According to National Association of Home Builders data, most U.S. homes today use plywood frames – just 8% of single-family homes have concrete framing.

This, Robert Dietz, chief economist of the National Association of Homebuilders acknowledges, may now be a problem.

The homebuilding crisis

No one can accuse Ballard, Solonitsyn, Mannheimer and other would-be 3-D home printers of devising a solution to a non-existent problem.

“Homebuilders are at a crossroads,” McCoy said. “They’re stressed on so many fronts right now.”

Last May, Sam Khater, chief economist for Freddie Mac, the government-sponsored enterprise and mortgage purchaser, issued a report with the grim conclusion: “Inventory of both new and existing homes for sale is currently at a historical low.”

Of special concern is the demise of the “starter homes,” which are modest single-family homes or condos bought by first-time homeowners.  

“In 2020, we estimate that there were only 65,000 new entry-level homes completed, less than one-fifth of the entry-level homes constructed per year in the late 1970s and early 1980s.” Khater wrote.

Khater identified five factors for the lack of homebuilding: The high costs of construction materials, not enough construction labor, onerous land use regulations, zoning restrictions imposed by county and city governments, and Not in My Backyard or “NIMBYism” by locals opposing building on the sparse land that is available.

Things have remained uncertain for homebuilding since the Freddie Mac report, with lumber costs hitting historic highs. Lumber prices in the second week of April were at $949 per thousand board feet, down 40% percent from one month before but still 135% higher than what they were at the end of 2020.

The construction worker shortage has also grown worse. In November, the Home Builders Institute published a report claiming that 740,000 residential construction workers are needed each year for the next three years, and that up to 300,000 positions a month go unfilled. 

Today, the most homes since 2006 are starting to be built, at an annual adjusted rate of over 1.1 million homes, according to monthly U.S. Census Bureau numbers. But there has not been a related rise in actual, completed homes.

In fact, according to a breakdown of housing numbers by Realtor.com, the about 16% gap between homes started and homes completed is the highest in recent years, due to supply chain issues. One issue that doubles as a climate change problem is the escalating price of gas to fuel trucks shipping wood from, say, Ontario to Texas.

It’s a problem that has caused even profitable homebuilding companies to feel stymied.

“The supply side of the equation has been extremely challenging, with no clear signs as to when things will get better,” Pulte Group president and CEO Ryan Marshall said on the Atlanta-headquartered homebuilder’s most recent earnings call.

Like Khater at Freddie Mac, Dietz of the National Association of Homebuilders believes there are issues that precede the housing demand boom plus supply chain issues over the past year-and-a-half.  

“Over the last three decades,” Dietz said, “Homebuilding has seen just about a 10% gain in productivity compared to 40% for the overall economy.”

These issues – glacial productivity, relying on expensive and hard to deliver materials, a labor shortage – is exactly what machine printing a home frame could solve for. Right?

The sobering truth about housing costs

Remember those five factors Khater of Freddie Mac identified that can slow down or stop homebuilding? Turns out the other three – zoning, building codes, and NIMBYism – may have a greater impact than labor shortage and material costs.

Back in 2014, Joseph Gyorko of the University of Pennsylvania Wharton School of Business and Raven Molloy of the Federal Reserve Board of Governors released the paper, “Regulation and Housing Supply.”

The study found a “strong, positive relationship between regulation and home prices” and a “strong negative relationship between regulation and construction.”

Perhaps most interesting about Gyorko and Molloy’s findings is what they couldn’t conclude about regulation, because homebuilding laws – from where you can build, to how far buildings must be away from other buildings to the installation of electrical outlets and carbon monoxide detectors – are largely the domain of municipalities.

“Heterogeneity in land use restrictions across localities is so extensive that it is almost impossible to describe the full complexity of the local regulatory environment,” the authors conclude.

Hell hath no fury like a local zoning board scorned, something 3-D printed home projects have encountered in their brief history. Alquist’s Williamsburg project, a single home done with Habitat for Humanity, was put through the ringer at a city zoning meeting, McCoy said.

“We can have zoning officials who can just say, ‘We don’t like the look of it,’” McCoy said. “They can find things to nitpick on.”

It is in part because of regulations, said Mark Stapp of Arizona State University, that current cost savings from 3-D printed homes are limited.

A professor at the Center for Real Estate Theory and Practice, Stapp provided an itemized form of the costs to build a new home.        

In his example of an Arizona home that eventually sold for $875,000, an empty lot cost $219,000 to acquire. Then, there was an $11,000 financing cost, a $49,000 tab for an open house and general expenses, and $28,000 toward a real estate agent’s sales commission.

That’s $307,000 in non-construction costs.

The construction costs themselves totaled $481,000, spread across many different expenses. About 15% of this sum went to exterior finishes, 4% to roofing, 4% to plumbing, 4% to electrical, 4% to heating ventilation and air conditioning, 4% to drywall, 2% to insulation, 3% to painting and so on and so on.

Around $72,000 or 15% went to framing, the part of the home building job that 3-D printing companies do.

“Instead of having someone frame that structure, you use 3-D printing by concrete,” Stapp said. “And you can probably reduce that 15% by 50%.”

That means a 7.5% cut in construction costs: Not revolutionary, but significant.

Stapp, though, wondered if the unusually constructed and distinctly shaped homes can jump through the other hoops of housing approval, namely the owner qualifying for a conventional 30-year mortgage loan.

“Someone will have to appraise this,” he said. “Appraisers don’t do well with weird things.”

“Currently,” Sapp said. “We’re not at a point where 3-D printing would even have a marginal effect at solving the housing problem.”

Habitat for Silicon Valley Humanity

Last week Mighty Buildings fired off a press release, but not regarding the 15-home community in Rancho Mirage the company had said would wrap up this spring. Instead, Mighty Buildings announced new company executives, including a chief operating officer, Russ Atassi, who is arriving following stints at Airbnb and Facebook.

Asked what happened to the Rancho Mirage project, Solonitsyn emailed a statement that Mighty Buildings is now prioritizing a different project: 40 dwellings in the Desert Hot Springs, consisting of 20 larger homes and 20 accessory dwelling units, a project also done in conjunction with developer The Palari Group.

Changing focus on what projects to prioritize and announcing new hires is what young tech-focused companies tend to do. Companies based in Oakland (Mighty Buildings) and Austin (Icon) are usually no exception.

Both Icon and Mighty Buildings have also touted their ability to raise money from venture capital investors. Icon said it has raised $451 million. Mighty Buildings publicized raising over $100 million.

For some observers, these garden-variety characteristics of tech start-ups would be fine if Mighty Buildings and Icon were, say, creating an app to search and review tiki bars, or even creating an aerial drone to accumulate information about commercial buildings. They can be disquieting when the company’s mission is to solve the affordable housing crisis.

“The venture capital scene still doesn’t seem to have the expertise to distinguish a sleek slide deck from a technology or business model that can incisively navigate the infamously complex workings of the California housing market,” said Pullen, of the Terner Center.

Whether Pullen’s criticism is well-founded or not, the use of venture capital money means that Icon and Mighty Buildings are, at the end of the day, for-profit companies, seeking returns for their investors.

Icon is a for-profit company that works with several non-profit partners on housing projects. The company’s mission is to deliver, “Affordable, mainstream market rate, and disaster relief” housing, a spokesperson said.

In addition to working with non-profits – like San Francisco-based New Story on 3-D printed homes in Nacajuca, Mexico – Icon also has a federal research contract with the Air Force. This includes funding from NASA, a company spokesperson said, “To begin research and development of an off-world construction system planned to support future exploration of the Moon and beyond.”

Iowa City-based Alquist, meanwhile, is focused on continuing to “work with foundations like Habitat for Humanity” and working with cities, “To assist them in getting grants and other government aid.”

The business model, then, has echoes of an array of multifamily housing developers who seek affordable housing grants, minus, perhaps, the ambitions of robots and drones taking over, and the vagaries of moon construction.

“The problem with any innovative business model can be the personalities involved,” McCoy said. “Each stakeholder has to have consistent motivations. If you’re working with a builder who only cares about profit, and then you have a nonprofit who is working to drive the affordable side of it, it quickly doesn’t work.”

Part of the toolbox

By age 29 in 1964, Millard Fuller was a millionaire through direct mail sales of products including 20 train carloads of tractor cushions, rat poison, candy, toothbrushes, and published books including “Favorite Recipes of Home Economics Teachers.”

At the urging of his wife, Linda Fuller, Millard Fuller eventually gave away his money, developed a multiracial, Christian commune in Americus, Georgia, began building housing for people living in poverty, and in 1976 founded Habitat for Humanity.

“We want to make shelter a matter of conscience,” Fuller told Chicago Tribune reporter Shirley Barnes in a 1995 story. “We want to make it socially, politically, morally and religiously unacceptable to have substandard housing and homelessness.”

Habitat for Humanity remains a nonprofit homebuilder, claiming to construct over 800,000 homes since its inception. These include two completed 3-D printed homes – the Virginia project with Alquist, and an abode in Tempe, Arizona completed with engineer PERI USA.

“3D printed technology is evolving to show promise,” said a Habitat for Humanity spokesperson. “But we are continuing to invest in research and learning more before we can definitively say it is a sustainable solution or one that can be done at scale.”

3D printing is “one of many new construction technologies that Habitat is exploring,” the spokesperson said, with others including “off-site production, modular production, compact housing,” and iterations of accessory dwelling units.

McCoy feels similarly about the future of 3D home printing. “I’m not here telling you it’s the solution. It’s one solution. We need to have a pretty broad toolbox.”

One other solution is the use of industrial printers to create reproducible panels that can be shipped to the home site as walls and floors. Such is the strategy of Veev, a San Francisco-based company that said it built 140 homes offsite then shipped to the Bay Area.

Amit Haller, the CEO of Veev, slammed the “round corners” and “toothpaste texturing” of early 3D printed homes as excessively quirky and not conforming with other component home parts. But Haller expressed agreement with the vision of Ballard at Icon and others of off-site, mass-produced manufacturing.

“You have to start to think about the home as a product, and not a construction site,” Haller said. “This is the ultimate consumer product, the home.”