Tuesday, November 3, 2020

Modular Housing’s Success Not Shared By All

Never thought I would be saying this but 2020 has become one of the most productive years for single family modular housing in decades.

With record low mortgage rates and more new home buyers turning to modular, factories are pushed to their limits trying to build all the homes needed for the ever growing demand for modular single family homes.

Some factory owners and GMs are telling me they are out as far as 6 months with more orders coming in every day. This is great news for the factories that were first hit with the housing recession of 2008 which saw more than 40 factories close their doors and this year being forced to shut down for a while due to COIVID-19.

That however is not good news for many small to medium modular home builders, especially along the East Coast and New England. They too are experiencing great sales with some almost doubling the number of signed contracts they had last year at this time.

Now turning those signed contracts into new homes finds their factory has a backlog of six months and an almost weekly price increase for lumber, drywall and products made overseas like plumbing fixtures, making it darn near impossible to know when they will get their home from the factory and even if they will be able to make a reasonable profit.

There is finite production capacity in residential modular housing production, both standard planbook and custom homes, and with no new residential modular factories or expansion of existing plants on the horizon, where does that leave the single family modular home builder?

Recently I’ve heard of modular home builders switching to on-site using wall and floor panels and trusses. Many customers want their home ready for occupancy sooner than the 6-8 months it takes for the typical modular home these days. Even if it takes 6 months from contract to finish of the site built home, that’s still a little faster than today’s modular home completion.

We’ve all heard the stories of on-site new homes taking a year or more to complete, however those modular homebuilders temporarily choosing to go site-built for some of their customers already have the finish workers and subcontractor relationships needed to complete a panelized home.

Going modular to build new homes is still the best way to build new homes. What today’s modular home builder must have is a great relationship with more than one factory, a continuous supply of leads and a great support system and for a lot of small to medium modular home builders, those things are also in short supply.

Gary Fleisher, the Modcoach, is the owner of the Modcoach Network consisting of Modcoach News, Modular Home Coach and Modcoach Connects.

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