The story of how Jim Price, selling homes one-at-a-time, passed William Levitt, who sold one thousand in two days, contains a lesson for today. Although Price is not a name known to many while Levitt’s will be forever associated with his Levittowns, both pioneered production lines that cranked out low-cost homes.
Price, Levitt, and another New Yorker, Fred Trump, survived the lean war years by building government housing. Then, after the War, they all turned their attention to housing for the returning veterans. Levitt built sprawling suburban tracts, Trump built urban high rises, and Price built 750 sq. ft. ranch houses.
The huge scale of Levitt’s projects enabled him to subdivide the task of building a house into a 26-step process, using highly specialized work crews, presaging the practice of subcontracting. His crews pre-cut lumber and put together plumbing fixtures offsite in a massive building supply yard, but did all the assembly onsite, gradually scaling up his production from three to seven houses per day in the suburbs of New York City. Yet, he wasn’t nearly as successful scaling his production downward for smaller markets.
Contrarily, Jim Price was a pioneer in prefabricating parts of homes offsite and assembling them onsite. Because he began in rural Indiana, he had to master the process of packaging and shipping his houses long distances. He grew by acquiring prefabricators serving major population centers and proved the scalability of his process. He became the largest homebuilder in 1960, producing 45,000 units, and turned out a total of 500,000 units by the early 1970s.
While neither builder survived beyond the 1980s, only Price’s technology has survived, and, in fact, is alive and well in an increasing number of integrated homebuilders and component manufacturers. NVR is by far the best homebuilder practitioner, followed by Toll Brothers in select markets, and Pulte with renewed efforts. Among component manufacturers, Builders FirstSource dominates the field with 160 operations.
For more on the story of Price and Levitt, be sure to check out my upcoming article in the March issue, Wall Panel Technology Prequel: Birth of the Component Industry.