Regional Competition Analysis of Industrialized Homebuilding Industry

Abstract

Industrialized homebuilding (IHB) has been suggested as the solution to the housing crisis around the world. However, there is no clear understanding of the potential impacts of industrialization on the competition structure and dynamics of the homebuilding industry. As such, this study assesses the regional competition dynamics in industrialized homebuilding environment, especially between local and nonlocal home manufacturers of a large regional housing market. The study adopted a bottom-up market competition analysis methodology that involved data collection, market entry/exit analysis, and manufacturer survival analysis. An extensive detailed data sample of home ownership was acquired for manufactured housing in Texas, which was processed to generate the manufacturer data and their time series. The study found that manufacturers from out of state have less market power, illustrated by their smaller concentration, higher exit rate, lower market share, smaller relative sizes, and shorter survival periods than those of nonlocal manufacturers. The main contribution of this study is assessing the competition imbalance of the industrialized IHB industry using representative competition metrics that were derived from a large, detailed sample of home manufacturers.