Warren Buffet, 2009 http://www.berkshirehathaway.com/letters/2009ltr.pdf
The second reason that manufactured housing is troubled is specific to the industry: the punitive differential in mortgage rates between factory-built homes and site-built homes. Before you read further, let me underscore the obvious: Berkshire has a dog in this fight, and you should therefore assess the commentary that follows with special care. That warning made, however, let me explain why the rate differential causes problems for both large numbers of lower-income Americans and Clayton.
The residential mortgage market is shaped by government rules that are expressed by FHA, Freddie Mac and Fannie Mae. Their lending standards are all-powerful because the mortgages they insure can typically be securitized and turned into what, in effect, is an obligation of the U.S. government. Currently buyers of conventional site-built homes who qualify for these guarantees can obtain a 30-year loan at about 5 1⁄4%. In addition, these are mortgages that have recently been purchased in massive amounts by the Federal Reserve, an action that also helped to keep rates at bargain-basement levels.
In contrast, very few factory-built homes qualify for agency-insured mortgages. Therefore, a meritorious buyer of a factory-built home must pay about 9% on his loan. For the all-cash buyer, Clayton’s homes offer terrific value. If the buyer needs mortgage financing, however – and, of course, most buyers do – the difference in financing costs too often negates the attractive price of a factory-built home.
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We have tried to qualify more of our customers’ loans for treatment similar to those available on the site-built product. So far we have had only token success
The truth of the matter is that this is bullshit. The "hotel in 2 weeks" story already appeared on HN and was thoroughly discredited. This doesn't seem much more plausible.
In the end, if you want the building to stand for more than a year or two, it will take a certain amount of engineering, effort, and time to do it. The Empire State Building took more than a year to build. That sounds about right for any skyscraper, even with our more advanced tech.
I would expect that hotel is still standing strong for years to come; I think China really are the world leaders when it comes to construction these days (I heard somewhere that they're putting up some insane number of coal power-plants every month?!). What I'd really like to see is an entire prefab, skyscraper filled city built in a year.
At the beginning of the design stage? When the first prefab wall panel starts being built at their factory? When you break ground?
The Chinese quildings are cheap because they lack any sort of extravagance. In contrast, the Chinese structures which do feature prominant decorative features (i.e., the Bird's Nest or CSTV HQ), took almost as long to build as they would have anywhere else.
The Dubai buildings take a long time because they are built to exacting standards using the most opulent, expensive materials the Royal Family can buy. Everything is done to spec, and it shows.
Who's to say it won't happen here ?
And in any case , i read that the Chinese buildings are very cheap to build. For many people that's much more important(as long s reliability and functionality is maintened) in an apartment.
http://www.telegraph.co.uk/news/worldnews/asia/china/5685963...
http://en.wikipedia.org/wiki/All-China_Federation_of_Trade_U...
(post Soviet and all)
The video for the 15 story hotel they built super quickly seems to show an innovative design that is also very high quality-- probably higher quality than alternatives.
The construction is impressively earth quake resistant. The air purification system, if I understood what was happening, was also innovative. The 4 pane glass windows seems cool, and since they are sealed, there's no need to clean the blinds.
Certainly China can bring more cheap labor to a project than the USA can. But this company seems to be re-thinking things in ways that the USA could emulate-- for instance, building floors offsite (including laying down the floor tile) and then trucking them to the site for assembly.
Walt Disney experimented with modular assembly back in the day, and certainly a lot of other US companies have tried it to varying degrees. This company seems to have fully embraced it in a way that the US-- despite having a head start it seems-- has not. Not sure why that is, as offsite construction of major components seems advantageous to me.
It's not as pretty as you think.
http://zjj.house.sina.com.cn/zhuanti/yuandajiemi/index.html
scroll down to the bottom.
http://zjj.house.sina.com.cn/images/U4528P915T3D125F161DT201...
This is the 15 story hotel entrance. Can you imagine?