Thursday, January 21, 2016

What is the Future of Modular Housing in America?

No one has a crystal ball but there are some hard realities that can affect the modular housing industry today. We build a lot of modular homes in this country but our percentage of all new home starts is abysmally small, less than 3% nationally.

Other countries around the world have a much higher percentage of residential construction including the Scandinavian countries where modular construction rules the new home market. They use automated prefabrication of standardized components for many of their homes with entire communities having homes that look alike.   

That is not the case in the US even though their are some new factories opening here that will emulate the European approach to modular and prefabrication.

Before we get started on Modular’s future there are some basic terms and practices we have to understand.

The first is “Prefab”. Prefabrication can include entire walls or rooms, usually wet areas like baths and kitchens, constructed off-site in a factory and shipped by truck to the jobsite and put in place in a systematic process. “Part A attaches to B”  I remember Evans Products producing just bathroom modules in a factory near my home back in the 1970’s and shipping them by rail to NYC for highrise apartments and condo projects.

Factories that manufacture panelized walls and trusses are considered to be prefab. Even Blu Homes with their unique folding boxes is prefab as it needs to have additional steps done at the jobsite that would have taken place at a normal modular home factory.

The second is “Modular”. Modular housing for this article means a home that has been built in modules that are complete for their section of the new home. A two story home typically has 4 modules identified as A, B, C and D while a ranch would have an A and a B module. Craned in place, they are connected and finished on site saving time and some money.

A decade ago modular factory sales reps would tell builders that they could save between 10-15% over site building because of mass production, reduced construction times and lower labor costs. Those days have long since disappeared.

In the US the relationship between the home builder, the Architect and buyer is unique. This means that standardized prefabricated sections being run done the assembly line does not fit this scenario. When we combine that with other factors like town and county planning commissions and their requirements; national, state and local building codes; site restrictions; OSHA and other unique factors such as buyer’s change orders during construction, site builders have an advantage.

Is it any wonder that modular residential modular home construction is so low in comparison to site built homes.

Modular can reduce construction costs, but other innovations for conventional (site-built) houses can deliver savings as well. Improved tools, machinery, information systems and training are reducing the costs of conventional construction which continues to evolve and stays competitive with, and/or outperforms, the modular techniques. Isn’t this the entire point of International Builder's Show this week?

Modular has been around for a long time, but so far it hasn’t had a big impact. Today it accounts for less than 3% of all new home starts. For this to change, there has to be an external shock to the system. Unfortunately that shock hasn’t arrive.

Most new home buyers don’t want modular houses simply because of misinformation about our being compared to manufactured housing and the lack of marketing and training on our part. A large number of people need to won over before modular housing gains serious traction in the US marketplace.

Large multi-million (or multi-billion) dollar projects warrant upfront investment in design, and the modular approach can deliver significant cost savings, so it’s looking more and more likely that modular will take a leading role in the commercial and multifamily construction industry.

Modular home builders and factories need to begin working together to promote our homes to a wider audience showcasing to both prospective new home buyers and site builders all the advantages modular brings to the market; quality, convenience and time.

On January 28th there is a Builder Round Table in Lewisburg, PA happening for this very reason. There are still a couple of seats left for you to help make a difference for the modular industry.

1 comment:

Anonymous said...

Is it an interesting commentary that there are still a couple of seats available for the conference? Curious if anyone knows the average age of the owner for a residential modular building firm and how many employees they have on staff?

Hopefully positive constructive steps for builder/factory cooperation will emerge from these conferences!