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Sunday, January 6, 2019

Custom Modular Home Builders No Longer the Big Dog

Lately there has been a push by all areas of construction to move into prefab. That would include panelization, concrete, steel and wood modular and manufactured housing.

With such a smorgasbord of ways to build something and all the new technology coming into the prefab construction industry you would think that every segment would be ramping up production to meet the needs of builders and developers.

A Custom Modular Home by the Westchester Homes factory

Prefab factories are popping up everywhere. Entekra, factory OS, Katerra, Blueprint Robotics and Kasita are just a few of the names that weren’t on anyone’s radar just a couple of years ago and more are on the horizon.

But all these new prefab factories have one thing in common, they have a lot of new automated machinery and specialize in supplying apartment developers, tract builders and hotels with product.

It doesn’t matter where in the US you look you will find one or more of these new prefab factories either supplying the area or new ones under construction to meet the demand.

A Custom Modular Home from custom builder Express Modular

Lost in all this automated, commercial cookie cutter world of off-site construction is a very small niche market that is finding it hard to find product or factories willing to serve them. It’s the modular custom home builder.

Prior to 2008 you couldn’t drive 20 miles in any direction in eastern Pennsylvania without seeing a custom modular home factory churning out product to hundreds of custom home builders.

Since 2008 more than half of those factories have closed their doors. Companies like Haven Homes, Avis America, Mod U Kraf, Barvista and Penn Lyon once considered some of the best at building custom homes have locked their doors and disappeared.

Related Article: Modular's Fallen Flags

A lot of the custom modular home builders also left the industry during and after the housing recession never to return.

It seemed the only way for modular home factories, especially in the Eastern US along the mid-Atlantic and New England states, to remain open and keeping their production lines operating was to begin doing multifamily and commercial projects.

At first it was just for survival but as these East Coast modular factories got better at producing cookie cutter apartments and hotel rooms they began shifting their focus from custom modular homes which was once their biggest profit center to commercial work leaving many custom modular builders and their new homes as an afterthought.

Today both independent site custom new home builders and their modular sibling, the modular custom home builder, are becoming a rare commodity and because of that many modular factories either can’t or will not serve the custom modular market.

Many custom modular home builders contacted me in 2018 to help them find a buyer for their business as they have reached that age where they want to retire. Unfortunately there are no new builders on the horizon as neither Boomers nor Millennials want to start building houses. Compounding the problem are current custom modular builders that chose not to have their children enter the business.

To be honest, becoming a custom modular home builder is not an easy road to travel. Very few factories have any type of recruitment and training program designed to bring new builders into the modular way of building homes.

It seems that most of the factory sales reps, especially in the East, are on the constant lookout for that next new developer or small tract home builder. Today that is the low hanging fruit.

To bring new custom modular home builders into the modular lifestyle and also to keep existing custom builders happy is going to require some dedicated effort by the modular factories who traditionally have not really had a close knit relationship with each other.

Is there hope that we will see true custom modular home builders in the industry in 10 years? Let’s hope so or new home buyers will begin paying huge premiums to build a custom home simply because the number of new custom home builders, both site and modular will continue to decline.

4 comments:

bill hart said...

Intentionally separating us ie Eastern Modular folks from the NAHB was a big mistake!! Further yet.. not even passively on occasion cooperating with their Building Systems Council of the NAHB is also a very big mistake. Result..No major Washington lobby, no measurable clout among other disadvantages. Bet the panelizers you mention ARE deeply involved in NAHB.. just read their PR copy and releases...A while back..I even talked my Canadian fabricator cohorts into joining the NAHB's Budding Systems Council, and automatically, I got free access to all lists of active builder names location and data..as SM. that gave me a running start in identifying and thus attracting builder-dealers in the US. In retrospect if you intentionally set out wanting to isolate the NE and Mid Atlantic mod folks from the world..ie by ignoring the NAHBs obvious benefits ..we here..in Pa we/you could not have done it more effectively, better if we had tried! Food for though, an addition to your list Gary...Bill

Anonymous said...

Amen Bill

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