Latest trends in concrete construction from our Annual Builder Practices Survey.

August 10, 2018

Concrete Evidence: Trends in Luxury Homes, Others in the Future?

Earlier this week, the Wall Street Journal ran an article in its “Mansion” section entitled, “The Rise of the Fashionable Concrete Home.” Home Innovation’s Director of Market Research, Ed Hudson, was interviewed and provided his expertise based on data and trend information from our Annual Builder Practices Survey. Below is a deeper dive on what he’s seeing in terms of trends for concrete in home building.

Concrete homes are not new, and in a lot of places throughout the world they wouldn’t be described as particularly “fashionable” or trendy. There is concrete in nearly every home in the United States, particularly at the ground level and below, while above-grade portions of most residential structures are built primarily with structural wood framing. Less than 10% of new U.S. homes are constructed with above-ground concrete walls, and that hasn’t changed much over the past few decades though there has been a bit of ebb and flow.

Most concrete wall construction in the United States is concrete block, and that’s mostly used in Central and South Florida where water, wind, and termites are plentiful and, in combination, can be the enemy of wood structures. Less than 3% of new homes in the United States are constructed with either site-poured or precast concrete walls – including variations such as insulating concrete forms, pre-cast wall systems, and autoclaved aerated concrete.

Outside of Florida, concrete is typically found in higher-end homes – based on data from our Annual Builder Practices Survey, concrete walls are about three times as likely to be found in a luxury home than a starter home. Going back to my earlier premise that concrete is not typically considered very fashion-forward in most circumstances, you may wonder why it seems to have settled so naturally into the luxury construction niche, typified by high-end finishes and features. There are a couple reasons for this.

Proponents of concrete homes tout that it provides a quieter, more comfortable, more durable, and more energy-efficient home. Some even venture to claim that these benefits come with a construction cost comparable to walls made of wood sheathing and lumber – though in most circumstances concrete walls are at least modestly more expensive to build than wood frame walls. A study Home Innovation conducted in the early 2000s found that homeowners could expect to pay 3% to 5% more for a home with concrete walls, assuming similar size and features, compared to a home built with wood framing.

Single-Family Detached Homes with Poured or Precast Walls, Above-Grade, 2017

Source: Home Innovation's Annual Builder Practices Report, Structural Wall Systems

Percent of New Luxury HOmes with Poured or Precast Concrete Walls, Above-Grade

Source: Home Innovation's Annual Builder Practices Reports, Structural Wall Systems

Poured and precast concrete homes are also more likely to be built by small-volume builders — builders who construct fewer than 10 homes per year are nearly four times more likely to build homes with poured or precast concrete walls than those building 50+ homes per year. This speaks volumes about the production implications of building concrete homes. They are still the domain of builders who dedicate much more time (and cost) to an individual home to address the specific, customized needs of the buyer.

Percent of New Single-Family Homes with Poured or Precast Concrete Walls, 2017

Source: Home Innovation's Annual Builder Practices Report, Structural Wall Systems

So what’s the future of concrete homes? Its use in the Southeast (Florida) and Luxury markets will no doubt continue for the same reasons it has in the past. In addition, there may be growing opportunities as the building industry responds to piqued consumer interest in durability and resilience. This aligns with an ongoing population shift from the more populous Northeast to the South and West where disaster-resistant construction is in high demand. And, because affluence seems to have driven the market for concrete homes in the past – see in the chart below how concrete construction took a big dip in the years following the Great Recession – growth in U.S. income and wealth seems to bode well for concrete. Overall, however, demographics continue to favor more modestly-priced homes.

Percent of Single-Family Detached Homes with Above-Grade Concrete & Masonry Walls

Source: Home Innovation's Annual Builder Practices Reports, Structural Wall Systems

There’s also the issue of jobsite productivity and the current skilled labor shortage, which is a recurring topic within these Trends articles. For most existing concrete wall systems, this probably weighs against increased market share. But don’t count concrete out. It has some distinct advantages that could substantially reduce construction time and skill required if implemented. For example, concrete can be formed with textures, colors, and shapes that give it the potential to reduce labor costs associated with exterior and interior wall and floor finishes. Panelized wall systems used in this way are becoming popular in many parts of the world today; with the right system, it could also become popular in this country.

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