More than a century ago, Americans were fascinated by the speed and convenience of personal, motorized travel. Rather than feeding, housing and otherwise caring for horses that needed prepped for riding or drawing a carriage and would take a long time to get to their destinations, automobiles offered a vastly more convenient mode of transportation. In place of lining up for a spot on a crowded streetcar or feeding a horse that needed fuel to live and not just to carry its owner, car owners purchased gasoline that would be used only while the car was operated, and the car was always at the owner’s beck and call. There was no need to worry about illness or vet bills and no mucking of stalls. A car could be parked in front of one’s house, eliminating the need for a barn or a meadow where a horse could sleep and eat. The more urban car owner no longer had to race downtown to catch public transportation.
While that first generation of motor cars had many doubters, in less than a decade most people could see that automotive travel was the wave of the future. Nearly every household wanted a car. The problem was that few could afford to own one. In 1915, the average annual pay for a man was $687. The average pay for a woman was about half that. Meanwhile, a typical car cost $2,005, nearly three years wages for the average man. The disparity between what people earned and how much cars cost made it impossible for most Americans to purchase a car.
Some American entrepreneurs, recognizing the seemingly unquenchable thirst for cars in our country, searched for ways to satisfy that thirst while generating profits for themselves. Most prominent among them was Henry Ford. In 1913 and 1914 Ford put his assembly line into operation and worked to perfect it so that he could bring the reality of automobile ownership to the masses and make a killing for himself in the process. Already producing one of the more affordable everyman’s cars, the Model T, Ford’s assembly line lowered the cost of manufacturing that popular model by more than 65 %. Within a couple of years Ford had reduced the price of the Model T to $360. For nineteen years Ford manufactured the Model T and sold 15 million of them, which was half of the automobiles manufactured in the world during that time.
Today there is a housing shortage in our country that has been forming for more than a decade. Following the boom-and-bust cycle that ended in 2008, the United States had an excess of available housing. Then, as the new home construction industry reeled from the aftereffects of the bust, builders were not able to keep up with the rising demand for new homes. Indeed, from 2012 to 2022, 6.5 million more households were formed than new homes were built. The Covid-19 pandemic and the financial and labor issues that flowed from it have only exacerbated the problem. Housing experts estimate that the shortage of available housing today approaches seven million homes. Not only are builders not building enough homes, but potential buyers are finding it difficult to afford the homes that are being built.
More than a century after Henry Ford revolutionized the auto industry by mass producing the Model T,there is another seemingly unquenchable thirst in our country—not for cars this time, but for homes. Ford designed a car for the masses and figured out a way to spend less in the manufacturing process and thus was able to meet his customers at a price point they could afford. We believe today’s builders can take a similar approach to quenching America’s thirst for housing.
Seniors who are downsizing and younger first-time home buyers want homes with a smaller and cozier footprint than they did a generation ago. Homes built in clusters in mixed use developments are more popular now with some buyers than the large single-family homes with half acre lots that dominated the market twenty years ago. Smaller homes with simpler layouts and roof designs on smaller lots could be the product that not only appeals to more of today’s buyers, but also can be afforded by today’s buyers. Like Ford’s Model T, these homes could be the backbone of any builder’s inventory.
Affordability was only one reason for Henry Ford’s triumph. Another was a leaner and more cost-effective method of manufacturing his cars. The manufacture and use of modular housing components is one way a builder can reduce costs. Another is the repetitive design of, for example, row homes. The row functions like an assembly line, except that the tradesmen move along the row rather than the items to be worked on passing in front of them.
There is a thirst in the land for affordable housing. Whether using Henry Ford’s ideas, some of ours, or better ones, we know that our member builders will quench that thirst and provide another generation of Americans with high quality and affordable new homes. When those homes are built, do yourself and your buyers a favor and place an RWC warranty on every home you sell.
Over nearly four and a half decades RWC has provided warranty protection on more than four million homes. We offer a wide variety of warranty options like our standard ten-year warranty, our Day 1 coverage warranty, our extended appliance and system warranties, and our specialty warranties for remodeling projects, detached garages, and commercial construction. Only RWC has developed and offers its members a customized state warranty that mirrors each state’s statute of repose and accommodates other state specific issues. All RWC warranties provide clear performance standards that help create realistic homeowner expectations and provide a road map to resolve even the stickiest customer complaints.
At RWC, every guarantee our warranties make is backed by Western Pacific Mutual Insurance Company, RRG. Western Pacific has an "A- (Excellent)"rating from A. M. Best and only insures home warranty and similar new home construction risks, like builders’ general liability, which can be offered through the RWC Insurance Advantage program to RWC members. No other warranty company has an insurer with this kind of strength solely dedicated to covering builders and their homes.
There are a lot of thirsty homebuyers waiting out there for you. Go build their homes and leave your warranty concerns to us. We’ve got you covered!
Have a great fall and winter!