Monday, September 7, 2015

Will Delays Continue to Hinder Modular Housing?

Being based on the East Coast gives me a very unique benchmark to use for talking about and sometimes criticizing the modular home industry. The modular home factories East of the Mississippi with the possible exception of the deep South are built on wood joists with little or no steel framework under the floor.

This, in my humble opinion, makes them as close to site built homes as one could find. They are built stronger, with more wood studs and better inspected than any site built home. They are also inherently greener than almost any other type of home construction.

So why isn’t modular housing used to build more homes than 3% of all new home starts?

The answer is complicated. Some say the industry should do more promoting of modular housing. Others say the home buyers need better educated and still others find that the manufactured housing folks intentionally muddy the word modular.

Whatever you think is hindering modular growth in the US, you are probably partially right. But there are other factors, hidden behind curtains and stalking in dark hallways that are causing more problems than most of us will admit.

“Delays” are becoming the leading culprits in holding back our industry. Here are just a few:

Mortgage Approvals:
This culprit has been lurking around every bush and tree causing major delays not only to modular housing but some site built homes as well. It seems that every week new regulations are forthcoming that makes many new home buyers want to live in their parent’s basement just one more year. One builder recently told me that he has had customers wait up to a year to get mortgage approval

Now a new wrinkle has appeared. It seems that Dodd-Frank may no longer allow construction to permanent mortgages. The banking industry lawyers and legislators are currently working to fix it but some larger banks are already stopping them until a decision is made. Welcome the two close mortgage back into your life.

Transportation Delays:
This isn’t unique to the East Coast and New England as every part of the country has problems shipping oversized modules.

If you are a PA modular home factory shipping into New England, and most of the homes shipped there are built in PA, then you have the ultimate big bad wolf guarding the front door. Connecticut has some of the toughest transportation restrictions in the nation. It would be easier to build a home in PA, truck it to the Port of Wilmington, put it on a boat and send it to Hawaii than to get it to RI or MA through CT.

Wide loads can’t be shipped though CT on any day ending in the letter Y. Highways and Interstates are only open at certain times and days. Oh, don’t forget about the lottery. I suspect that site builders run the CT DOT but can’t prove it.

Manufacturing Delays:
This is one delay that I’ve begun hearing about from a lot of modular home builders. It used to be that one of the biggest selling points of modular housing was it’s slight price advantage over site built homes. Transportation costs erased that advantage. That leaves time to build a modular home as the last remaining major selling point but that seems about to go the way of rotary phone.

I can remember the good old days before the 2008 recession when a builder ordered a home and it was given to the engineering department, priced, built and shipped within 5-7 weeks. For many factories and their builders, those were the Happy Days.

Today builders are telling me that they are given approximate dates that their modules will go into production and they plan excavation and foundations only to be told that the factory just put a large commercial/multi-family/motel/dormitory on line and they will have to wait an additional 4-6 weeks until their home goes onto the line.

By the time they learn this valuable information they cannot take the order to another factory. They have to face their buyer that was promised a move in date and tell them it will be another 2 months. Very unhappy folks I’d say.

Regulatory Delays:
Modular home builders feel they are singled out and punished by regulations, codes and laws that hinder their business. Well, I don’t want to be the one to tell you this, but you are!

State and local code enforcement people look at modular as if it were built in a third world country before being shipped into their state or local community. It is easier in most code offices to get a building permit if you are site builder than a modular builder. 

Regulations are imposed on modular sooner than for site builders. Maryland is a big culprit in this area. Modular shipments into MD have dropped 80% in the past 5 years mainly because of over-regulation. For example, sprinklers were required for modular housing years before they were required for site builders. There are still counties in Western MD that require sprinklers in modular homes but not in site built.

I’m sure there are many more areas that delays have a devastating effect of modular home sales but I think these will be enough for now.

Who can modular home builders and factories turn to for help? 

Well, it certainly isn’t the Manufactured Housing Institute as they confuse home buyers when they call their product modular housing. And it certainly isn't the Building Systems Council which I think would rather see modular be an asterisk than an alternative building method. 

So that leaves the Modular Home Builders Association which is just beginning to flex its muscles and tackle two of the biggest problems facing modular housing production and sales…legislation and marketing. 


Anthony said...

That is a great article that brings to light, AGAIN, a lot of our industries big problems. We ALL need to ban together to solve these problems. I love our industry but am extremely frustrated of how we are treated as a third class red headed step child.
I hope to see many of you at the boot camp summit next week to work on a plan to put on industry on the map and gain the respect is so rightfully deserves. Thanks for a great article as always!

Tom Hardiman said...

Thanks Gary. I think this is dead on. Its a little bit of a mortgage issue, marketing, and manufacturing. But it is a LOT of over reaching regulation. You cited several examples that MHBA is currently working on. We just hired a lobbyist to work to loosen up the CT DOT premit process. Their new rules add between $1,000-$2,000 per shipment! Maryland is another hotspot. We have a small group of industry folks meeting next week w HCD to discusss this. Big problems lurking in Michigan again with sales tax issue that could add up to $2,000 in tax liability per home for every home built since Jan 2006! Transportion, taxes, codes and administrative regs are choking this industry. I'll be at the Boot Camp next week with more details but hope and expect to see A LOT more people at MHBA's annual conference on Oct 7th in Philly to start addressing these issues.

Josh Margulies said...

We will get close to these regulators. We will keep them close and find among them friends and allays. We have an Association now. It is up to us to give support for an appropriate voice to our industry, for our industry, otherwise will continue to be weak and desperate. We will not survive.

No one should have any doubts how very hard the road for the MHBA will be without the forceful, rational, concise and tenacious resolve of its members. Members must be responsible now. Members must be responsible for finding more members, for defending their livelihood and for honoring the business they have chosen. Members are responsible for knowing that when the rights and commerce of other members are impinged be it in another state, in another region, to a competitor, to a stranger, to a constitutional ass, then ALL MEMBERS are aggrieved and, with one voice, must respond diligently to the transgression.

Unknown said...

As a person seeking to buy a modular home, the websites of individual companies are horrendous. I want to see what the house will look like and approximately what it will cost including shipping. The websites want to put me on calling lists or ask for me to fill out lots of forms. All I want to know is how much it would be to put a smallish cabin, 800-1200 sq. ft on my land in SW Michigan, but that information is impossible to find. I have been on Google for two hours with no real success. If one website would call it like it is and would give me some idea about what I was looking at financially I would be very happy. Most of the websites seem like scams because of the lack of info.

ModularGuru said...

Jane, i would recommend that you check out Once you register with the site you have access to do a pricing estimate for virtually every home displayed. You have the ability to do this yourself and then print, share, or email that estimate. Each estimate also provides estimated payments information based on the information you provide.