Monday, December 18, 2017

Is Over-Regulation Killing the Custom Home Building Market?

Before we get into the heart of this subject let’s clear up what is a “Custom Home.” For this discussion a custom home is one built by a home builder building a home designed for a single distinct customer. Tract builders are not included. 


These custom home builders can be of any type; totally on-site, off-site (modular), log and timber, panelized wall and floor, concrete, 3D printed, straw bales, shipping containers and just about anything else that can be used to create a ‘one-off’ custom home. 

Some custom builders only build a few new homes a year while others build 50 or more. What they all share is the ability to build just what their new home buyer wants. They throw out the plan books and sit down with their customers and design a ‘one of a kind’ home. 

Regulations on both a federal and a state level have become extremely onerous over the past 10 years for those who want to build a custom home. Because of the a myriad of requirements and mitigations, costs to comply compound the length of time it takes to navigate through the maze causing some home projects to be delayed up to 3-5 years before the house is ever started. 

Additionally, local municipalities, due to aging or inadequate infrastructure, are requiring more offsite mitigations, which add to the financial burden. Are some of these regulations and mitigations justified? 

Yes, but it is being taken to an extreme that has made the cost of building a on a lot excessive. 

Sometimes the result of setbacks for every kind of problem, real and imagined by state and local regulations, makes even a large lot undesirable for the customer’s new home. 

As recently as 20 years ago small custom home builders ruled the roost. They simply worked with local code and planning officials in an informal way with some building permits being issued within a couple of days. It didn’t really matter what type of system the builder was using, permits flowed quickly. 

With the Housing Recession of 2008 the once large pool of small local builders began to drain away quickly with only an estimated 20% of those builders that were in business prior to the crash still in business in 2012. 

But regulations didn’t stop being imposed on builders making it a less desirable for new builders to enter the market. Fewer new builders are being added to the roll call in the history of single family housing. 

California passed a law that requires all new housing by 2020 to be “net zero” for power usage, meaning that it must be built in a way that does not use more power than it can produce. This requirement is a worthy initiative, but it comes at a very steep price for the purchase of a home. Other states will follow CA quickly with Maryland being one of them. 

Some states and local governments will soon be implementing an “affordable housing” fee on every new home built to be used to build affordable housing. Tract builders will be able to absorb some of these fees but what about the customer that wants their home built by a local custom home builder and finds out this new fee could add 5 figures to their home price. 

Custom home builders are dealing with another type crisis, the cost of building materials has skyrocketed with no relief in sight. Builders can’t afford to give a rock solid quote to the home buyer any longer. Costs to build a new home haven’t gone up 20-30 cents a square foot lately. We are now seeing yearly cost of building increases of $10 and more a square foot. 

Custom home builders are also struggling to find competent labor to address the rising needs, which is slowing production and raising labor costs. Between the cost of lots, the building requirements, and cost of construction, a detached starter home in some regions is now in the $500,000 range. 

Bottom line, whether it is affordable housing, standard residential, or rental housing, the cost to bring these products to market is excessive by national standards because we are in the over-regulated and over-taxed. Custom home building is at the mercy of many factors, not the least of which is regulations meant to improve our lives but in actuality is putting many custom home builders in a bad situation. 

One answer for custom home builders to help combat these myriad of problems is to turn to modular construction. Many of the problems faced by custom home builders can be solved by allowing a modular home factory help design your customer’s home, build it and ship it to your customer’s lot. 

Once set on the foundation, even the most custom home should not take more than 60-90 days to turn over to the customer. 

Yes, the process to build a new home today is not for the weak or faint of heart. It takes more time, effort and money than ever before to remain a custom home builder.

Sunday, December 17, 2017

Is Toyota About to Disrupt the West Coast Modular Housing Market?

I found this hard to believe but I’ve checked several sources and if Toyota Housing, one of Japan’s largest modular home builders, decides to come to America as rumored, they will probably build their first factories in CA and the Pacific Northwest where affordable housing is hard to find.

These will be single family dwellings, built to current IRC code, usually two stories built with a steel frame. The modules are 8’ wide and shipped on flatbed trucks cutting freight costs by a much as 75% over traditional US delivery of up to 16’ wide modules.



The Toyota homes in Japan are set within 24 hours with a smaller crane and a factory crew, again cutting costs. It then takes 2-3 days to finish all the electrical and plumbing connections. The unit’s interior also needS to be painted after setting. Balconies and porches are shipped complete and snap onto the homes.




Average cost in the US will be about $90,000 and could carry a 60 year warranty. They will also be New Zero ready with solar panels and High Performance engineering.

Limited customization is also possible. Using steel allows them to bunch smaller segments together to form larger rooms.

I can’t wait to see the first Toyota factory open in the US. It will be a major disruption to our housing industry.

Friday, December 15, 2017

Steve Padgett Explains DAP's Foam System for High Performance Modular Home Construction

It’s an Insulating Foam.  No, it’s an Air Seal.  It’s Both an Insulating Foam and an Air Seal

Remember the iconic Saturday Night Live sketch about Shimmer, the dessert topping and floor wax?  http://www.nbc.com/saturday-night-live/video/shimmer-floor-wax/n8625?snl=1 Believe it or not, Chevy Chase wasn’t that far off. 

Back in the 1950’s, a man named Aaron Lapin invented an aerosol valve that he attached to a can of whipped cream and invented Reddi Whip.  He later started packaging other products including polyurethane foam through his company Touch and Foam.  That company is now owned by DAP Products, America’s largest manufacturer of caulks and sealants.

Spray foams are used as an easy to install insulation that offers an R-value of about 4-5 per inch.  But in addition to air sealing, closed cell foams also prevent water leaks. 

High-Performance modular homes require great attention to insulating and air sealing.  Mating walls, attics and sill plates are three places where air sealing and insulating must be perfect.  Spray foams are the best solution for these applications. 

The industry refers to spray foam as either one-component (1K) or two-component (2K). You may not think so, but there’s a big difference between 1K and 2K technologies.

One component (1K) foams are easy to use but aren’t well suited for large applications because as they cure, the small gas bubbles concentrate into large bubbles.  The result is large gaps in the core of the foam, which can reduce the sealing qualities.  This does not occur in smaller beads, but if you’re filling a large gap, it may affect the quality and the insulation R-value.

1K foams can be packaged three ways.  The most common is the readily available straw grade can.  It uses a plastic straw that attaches to the valve.   Straw grade foams are somewhat messy to use because of the run-on of the pressurized foam between the valve and the end of the straw.  They are also one-and-done, meaning that the polyurethane foam can cure in the valve and is impossible to use again.


The next step up is to use Gun Grade 1K foam like DAP Touch N’Foam Professional All-Purpose Polyurethane Foam Sealant.  This uses a separate foam gun.  The gun’s  valve is at the end of the nozzle. There is absolutely no run-on, zero waste and a much cleaner application.

Here’s the challenge.  Because many foam guns are poorly made you may have been disappointed because they also seem to be one-and-done.

That’s not always the case.  There are hundreds of different guns on the market and they don’t all perform the same.  DAP has great confidence in the guns we sell.  They can be left on a shelf for up to 30 days and will still perform.

Here are a couple maintenance items to remember. 

ALWAYS LEAVE A CAN ATTACHED TO THE GUN

Ok, just one maintenance item.

Leaving the foam can attached to the gun assures that there is no opportunity for foam to cure inside the gun.

DAP and all other foam manufacturers sell foam cleaners.  Cleaners are pressurized solvents that are used to clean out the guts of the gun.  To use a cleaner, remove the foam can, thread on a can of cleaner and spray it into a trash can.  Soon, it will come out as clear spray.  Let it sit for a couple minutes then repeat.  

You only need to do this once in a while to keep the insides of the gun clean.  You can also use the spray tip to clean uncured foam sealant off the gun barrel and basket.

Another thing you’ll find is that you get more value with gun grade foam. Turbulence in the straw may prevent the foam from fully forming and results in more density, limiting how much yield you get out of a can.

For example, one straw grade foam sealant yields about 250 linear feet with a ½ inch bead.  That same product, in a gun grade can will yield almost 700 linear feet.

So, by switching to gun grade, even of a more expensive brand you will save time and money by getting more sealant out of each can and wasting less time changing cans out.  You’ll have less trash and waste too.  Your crew will also work faster and with more precision.

IK foams are also available in large disposable cylinders similar to a propane bottle.  DAP Touch ‘N Seal Quick Cure comes in 10 lb and 16 lb cylinders complete with a hose and a wand.  A 24 oz can of Quick Cure yields 1900 linear feet of a ¼ inch bead while a 16 lb cylinder will yield 24,000 linear feet. That’s 4 ½ miles of foam.

2K (two-component) foams are quite different.  There is no risk of air pockets because the chemical reaction is  part A mixing with part B.  This gives  a highly defined cell structure and no air pockets which makes for higher performance.


These foams are packaged in a self-contained unit complete with hose and wand.  To use a 2K foam, simply open the valves on the A and B cylinders, attach the mixing nozzle to the wand and spray.  This video shows how easy they are to use. https://www.youtube.com/watch?time_continue=5&v=Fds3pi8Ib0o

The DAP foam system kits only require basic PPE.  Safety glasses, latex or Nitrile gloves and a respirator when working indoors.  A disposable painters suit will protect your clothing.

Surface and air temperatures are critical with 2K foams.  Cylinders should be stored above 70°F and the surface temperature must be above 60°F. 

2K foams are measured in board feet of coverage.  For instance, a DAP Touch N’ Seal Foam System 200 will cover a 12” wide board, 1” deep for 200 linear feet.

In high-performance Modular construction, 2K kits are perfect for sealing mating walls and sill plates, both areas where air infiltration must be controlled to achieve excellent blower door and  HERS ratings along with homeowner comfort.

Another area where 2K foams excel is in attic insulation.  A 1-2” layer of DAP foam between each truss joist performs three functions.  It provides an unequalled air seal, a dense first layer of insulation and helps provide for an acoustic damper to keep the home interior quieter.  Cellulose or fiberglass insulation above that completes the insulation package.

This can also be done during manufacturing on walls in conjunction with blown in or batt insulation.

DAP 2K foams kits range from 15 to 600 Board Foot sizes with even larger sizes available in refillable units.  They meet all applicable codes and standards including flame and smoke ratings.

As an insulator and an air seal, 1K and 2K foams are unparalleled in their performance with modular builders.  DAP stands ready to assist you in your next project.

For more information, go to www.touchnseal.com or email spadgett@dap.com

Wednesday, December 13, 2017

MHBA Announces Modular "Home of the Year"

Virginia Building Solutions and Ritz-Craft Custom Homes have created a masterpiece 2-story on the waterfront, with beautiful views of the Chesapeake Bay from the Northern Neck of Virginia. 


The Scott Home is custom designed to appreciate the beautiful Bay view right outside. The 3,200 s.f. home features a vaulted great room in which a wall of windows and two triple doors face the water. The focal point of the room is a 20-foot floor-to-ceiling stone fireplace with custom bookshelves on each side. The floor plan also features a master suite on the first floor with a view of the Bay and a tray ceiling with crown moldings and recessed lighting. The master bath includes a large walk-in “infinity” shower. 


The eat-in kitchen opens to the family and dining rooms and is accented by a generous center island with granite countertops, providing a pleasing contrast to the custom raised panel cherry cabinets. The switchback staircase is open on two sides with custom railings and iron spindles leading to the loft/balcony overlooking the vaulted great room. The exterior of the home features a blend of craftsman and waterfront cottage features, including shake siding accents and pvc trim to complete the finishing touches on this idyllic home. 

The Scott Home best represents the pinnacle of the modular home industry for the year, and we are happy that Virginia Building Solutions was able to feature their home and this award during a recent tour of the company given to Congressman Rob Wittman. 

On receiving this award, John Garrett, President of Virginia Building Solutions, said, “I am honored and humbled to receive this award, and greatly appreciate the opportunity to represent the industry.” 

The Modular Home of the Year contenders are selected from the twelve prior Home of the Month winners and then voted on by the general public. For more information on these awards and previous winners, check out: http://www.modularhome.org 

A Fireproof Modular Home Begins Production in California

A unique new factory has started up in the eastern Coachella Valley near Indio, CA building modular homes that can withstand natural disasters like devastating wildfires and floods. 

At a recent open house for Quadrow Specialty Environments, a blow torch burning at more than 800 degrees for more than an hour was not able to burn through the material the company uses to build homes. 


Walls are made of magnesium oxide and are supported with steel. 

With homes burning in wildfires across Southern California, engineers at Quadrow said people could turn to the latest technology to rebuild. 

Their design, while not the prettiest in town, has one unique feature that could make this ideal for wildfire, earthquake, tornado, hurricane, insect and mold protection. The outer skin could be covered with a variety of exterior products including vinyl siding and the core of the house would remain protected. 

I predict this new startup will find a small but eager market for its homes mostly in wildfire prone areas but don’t expect much customization in their design. 

"Nothing is going to break and nothing is going to crack. It has all been designed to withstand earthquakes, hurricanes, all these natural forces, including floods," said Guy Assif, CEO of Quadrow Specialty Environments.

Tuesday, December 12, 2017

Three Warning Signs for Modular Home Factory Management

Everyone waits until the last minute to make New Year resolutions. Many of us vow to lose weight, be nicer to others or something that improve our lives. But what happens to a modular home factory if 2018 is the same as 2017, 2016, 2015, etc.

If you own a modular home factory, work for one, sell to one and most importantly buy from one, ask yourself if your factory needs a New Year resolution of change for 2018.

Here are three warning signs every failed factory has had in the past that should be addressed in your resolutions for 2018.


The earliest sign your modular home factory is failing is when there have been no new builders added for six to 12 months. Add to that an exodus of current builders to another factory. This early warning should tell management that something is wrong somewhere in the organization.

Areas that might be of major concern in this situation are:
* The Sales Manager and/or the Sales staff
* Quality Control on the Production Line
* Design and Engineering department
* Service Department

If none of these has changed over the past year, then special attention should be given to new hires in the chain of command. There could be a power struggle going on within the company that is effecting how builders are treated and served.


Deep price cutting and discounting is another warning sign that a major problem is happening.

These deep discounts keep eroding away the profit margins every modular home factory needs to survive. Stop competing solely on price, increase prices to a fair market price and add value where possible. 

Expert and excellent service goes a long way to appeasing builders querying a price rise. Most builders would love to simply have a fair price and outstanding quality and service in lieu of deep discounts, poor quality and service. 


A high staff turnover is the third warning sign that things are taking a turn for the worse. Every time an employee leaves it is an intellectual capital loss, and often the loss of their builders as well. 

A factory in any industry won’t survive without loyal sales reps and staff. Builders being shifted from one new sales rep to another will probably send them looking for their old sales rep and the factory they joined. 

With the exception of Deep Discounting, the early warning signs of a dwindling pool of authorized builders and the loss of sales and support staff could be slowed down significantly with just a couple of changes. 

Begin training and teaching events for all your builders. There is so much they need to know about what happens within your factory. Be transparent. An educated builder is a happy builder. Have your builders help each other. Encourage them to network. 

Your sales reps have probably had very little actual sales training. Most of the time it’s simply ‘on the job’ training at their first modular home factory. There is nobody to set training guidelines and schedules. Only the sales manager, in most cases, reviews what each sales person is doing and if, God forbid, your factory has a lazy or incompetent one, the sales rep will suffer but more importantly, the factory suffers. 

Three warning signs that your modular home factory may be on the verge of failure. There are many other signs but these always seem to be present in every failed factory. 

Sunday, December 10, 2017

Confusion Still Surrounds Small Business Health Insurance Costs

As small business owners including modular home builders learn what their 2018 health insurance costs will be, some are considering providing different types of coverage for their employees.

Companies are receiving notices of premium and coverage changes for 2018. The changes vary, depending on factors including the state where a company is located, how many employees it has and how comprehensive its insurance is. But many owners are seeing rate increases of double-digit percentages, finding dramatically reduced coverage, or both. Health insurance consultants expect more owners to rethink their strategies beyond 2018 and choose alternatives like paying for claims themselves or adding health services that can lower costs.

Under the Affordable Care Act, companies with fewer than 50 employees aren’t required to offer insurance, but many do because they feel it’s right or because it helps them compete for and retain top workers. Fifty percent of companies with three to 49 workers have offered health benefits this year, according to the Kaiser Family Foundation, which studies health care trends. That compares with 53 percent of all employers, and is little changed from the previous three years.

Republicans, as part of the tax overhaul legislation are considering repealing the individual mandate, which requires most people to buy health insurance or pay a fine. All the uncertainty makes decisions about health insurance for next year even more complicated.

If the mandate stays in place, a single person like you would have to pay a penalty of $695 a year or up to 2.5 percent of your income (but no more than the total annual premiums you'd pay on a Bronze plan), whichever is higher.

When you rarely go to the doctor, going without pricey health insurance is pretty enticing. Premiums alone will cost you more than $6,000 a year for something you're not using much. So, the penalty may seem like a small price to pay.

But keep in mind that if you go without health insurance, you could rack up tens or hundreds of thousands of dollars in medical bills if you have a major health issue.

If you have insurance that meets the standards for coverage set by the Affordable Care Act, the total amount of money you are required to pay for in-network care in a single year is capped at $7,350 as a single individual. That doesn't include the premiums that you pay.

But if you don’t have health insurance, there is no limit on your out-of-pocket costs for your medical care.

Before you decide to go without insurance, check out these options for ways to make health insurance more affordable for you.

Most modular home builders have a lot less than 50 employees which might help the builder avoid having to up home prices in 2018. However, almost every modular home factory falls under the ACA mandates and with rising health insurance costs in 2018, the cost of modular homes will probably see an increase unrelated to material costs.

Word to the wise: If you haven’t begun to shop for health insurance for 2018, Run, don’t walk to your health insurance agent and learn where you and your employees stand.

Saturday, December 9, 2017

KBS Builders Plant in Waterford, Maine is for Sale

Paris, Maine-based KBS Builders has put its Waterford plant on the market for close to $1 million.

KBS Builders' Waterford, Maine factory


The Dunham Group in Portland is marketing the 61,850 square-foot manufacturing plant at 947 Waterford Road for KBS Builders for $995,000, according to the Dunham Group’s webpage.

A “For Sale” sign has been placed at the site.

Established in 2001, the modular home company was formed as KBS Building Systems, offering a diverse line of housing and commercial and industrial buildings. The main office and factory are in Paris.

In late 2007, KBS Building Systems purchased the former Waterford Homes property in Waterford from a Massachusetts firm. Waterford Homes had defaulted on mortgage and loan payments and closed in 2006.

The Waterford manufacturing plant was reopened early the following year with some 20 new workers, boosting KBS’ production by as much as a third.

It is unclear what effect this sale has on the operation of the KBS Builders or its employees. Efforts to get a comment from KBS officials were unsuccessful Thursday.

In recent years, the plant has traditionally closed in the winter and laid off from 20 to 60 employees, or moved them to the Paris plant. Officials have said in previous years that the lack of commercial building work in Maine and overhead costs in the Waterford facility were the major reasons they shut the plant down each winter.

In April 2014, Minnesota-based manufacturer Aetrium purchased KBS Building Systems from Robert Farnum in a deal reportedly worth $10.5 million. Aetrium is part of the semiconductor industry.

The buyer retained the approximately 200 employees and changed the name to KBS Builders Inc.

The property is currently assessed at $814,200, according to town records. That includes $50,600 for the land and $763,600 for the building. A tax payment was made last month for a total of $12,416.55 paid in property taxes for this year. The taxes are paid through Dec. 31, 2017, the town clerk’s office said.

Friday, December 8, 2017

Britain Starting New Modular Factories at an Increasing Rate to Meet Demand

Berkeley Group ,a large housing and neighborhood developer in England, has submitted a planning application for a 160,000 square foot facility in Gravesham in Kent. It bought the site from the Homes & Communities Agency.

“We have assembled a team of specialists who are working with the group's construction teams to design the factory space with the first components undergoing testing,” said Berkeley chief executive Rob Perrins.

Berkeley has already put a toe in the water with 22 prototype modular homes at its Kidbrooke Village.

The British Government is helping with the push to use modular construction which they have found faster, greener and less expensive than conventional site building.

If only our state and Federal governments would put this much trust into our modular industry by making it easier to get projects approved and financed, we might start building new and reopening modular factories.

Just a thought.

Thursday, December 7, 2017

Two of the World’s Tallest Modular Buildings Coming Soon to London

Croydon, England, the leading commercial district of London, has given the green light for a twin-tower scheme of build-to-rent flats that will become the world’s tallest offsite scheme.


Tide Construction will deliver the project using its off-site manufacturing system, Vision Modular Systems.

Tide Construction, with funding from investor Greystar, is planning to build the 44 and 38-storey scheme on the former Essex House site near to East Croydon station.


The 546-flat towers scheme, drawn up by HT Design, will be worth over US$200 Million and will be a trailblazer for modular construction methods.

Presently, the tallest prefabricated building in the world is a 32-storey block in New York.

Tide is both a development and contracting company, and has delivered several projects in recent years using its off-site manufacturing system, Vision Modular Systems.

Tide claims its modular based building program often results in a 60% time saving, compared with conventional construction schemes.

Christy Hayes, chief executive of Tide Construction said: “This project is a huge milestone for both us as a company and for modular developments as an innovative, modern method of construction.

“This development emphasises the true potential of modular construction as a genuine solution to the UK’s housing crisis, where high-quality homes can be delivered at pace in sought after urban areas. Both the government and industry are realising the benefits of modular construction, with 101 George Street being a pivotal moment for modular construction in the UK.”

Tide developed the 28-storey Apex House, featuring 558 rooms, in less than a year. That development, in Wembley, is currently the tallest modular tower in London.