Monday, November 19, 2018

Amazon’s VA HQ2 No Bonanza for Modular Housing

You would think having Amazon add 25,000 new jobs to a city would be a bonanza for the home building industry and it probably would if this were normal times. With Arlington, VA’s unemployment hovering around 3% just about everyone that wants a job has one.

The VA half of Amazon’s HQ2 will have a tough time getting that many people joining their ranks from the DC area where they will have to pay over $150,000 just to begin attracting people to switch employers.

Photo Courtesy of Westchester Modular Homes

However there is a depressing thought when it comes to housing those 25,000 new hires. Looking at the number of housing units required over the next five years finds modular will not be a significant player in housing.

Of the 25,000 new hires about 50% will be local people simply leaving their current employer which leaves 12,500 new residents to the area looking for housing.

The top ten residential tract builders account for over 80% of the market for new construction and not one of them uses modular construction. They already own a ton of land within commuting distance of the Crystal City area of Arlington.

Most of the new housing units will be townhouses and condos built by these tract builders leaving only 2,500 of the new residents looking to build or buy a new home

Of that 2,500, approximately 275 new homebuyers should choose modular if the 3% of all new construction rule applies. Dividing 275 by 5 years, the projected full employment by Amazon, there might be 55 new modular homes built in urban VA per year.

And that has never, ever happened before in the DC area. In fact, there were only 235 permits issued last year for all new single family homes in that area.

What at first looks like it could be a bonanza for modular housing will not even be a blip on the housing radar.

1 comment:

Tom Hardiman said...

Gary, you are only factoring in the impact Amazon will have on an already "affordable housing" starved area. The Amazon impact may only be 50 or so modular homes, but urban areas across the country are really struggling with how to address this issue on a larger scale. I DO THINK modular construction has a significant role to play here - both single and multi-family.

With the labor shortage, affordable housing inventory shortage, and materials price uncertainty, developers and policy makers would be foolish if they didn't at least consider modular as part of the solution.