Wednesday, July 22, 2015

Lead Time Could Become Huge Advantage for Modular Home Builders

As anyone who follows housing knows, single-family construction and sales are still running at depressed levels despite sitting near post-recession highs. The June report on new home sales data shows that it came in near or at those highs.

However, one part of the report shows labor shortages plaguing the housing market continues to hamper site builders and modular home builders. The shortage of masons and workers to pour slabs and the shortage of framers.

One consequence of this shortage is that a site built home built now takes longer to complete and studies show they are not as good as a site built home just 10 years ago.

Modular homes simply don’t have that problem because of the way we build them has not experienced that drop in quality as hard as our brothers in site building.
The industry has lost a lot of workers and one theory is that many of the lost construction workers are making better money in the oil and gas industry. If so, the current plunge in oil prices should push these workers back toward construction.

But the most curious aspect to the labor shortage in the housing market is that multi-family construction (5 units or more) now sit at levels last seen in the late 1980s. Perhaps labor shortages are preventing even MORE construction given rents in many markets continue to soar. Perhaps multi-family has absorbed a lot of the labor needed by smaller builders.

This is where modular home builders and their factories can really take the lead. It takes no longer to build a 5 plex than it does to build 5 homes in the factory. In fact a factory could build a 5 plex in the time it would normally take to build 3-4 homes.

If you build modular homes and don’t exploit this national labor shortage to your advantage, you are missing the boat to extra sales and profit. The more problems site builders have finding labor, the more you should be smiling.

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