Wednesday, February 1, 2012


What type of construction can be built fast enough to feed the overwhelming need for rental housing?  You guessed it....modular construction.

The share of all U.S. privately-owned houses that stood empty fell in the fourth quarter to its lowest since 2006 as the number of houses occupied by renters rose faster than the pace of new vacancies created by homeowners moved out, according to the Commerce Department.  

The number of housing units occupied by renters rose by 749,000 in the fourth quarter compared to a year earlier; some 91,000 fewer homes were occupied by owners, the data show. 

With the fast pace of foreclosures showing no sign of letting up, the U.S. homeownership rate continues to fall. Just 66.0 percent of U.S. homes were occupied by their owners in the fourth quarter of last year – half-a-percentage-point lower than a year earlier. That’s the lowest level of homeownership since the second quarter 1998.

The steady rise in demand for rentals has tightened the supply of housing, helping to push rents higher. Homebuilders report that the market for multi-family units has been a lone bright spot in the overall housing market. While the pace of new household formations has lagged historical averages, those new households are becoming renters. 

That trend is likely to continue until would-be home buyers gain more confidence that the housing market has bottomed.    Source: the Bottom Line

This is great news for both modular home factories and their authorized builders.  Building a four-plex puts more money into both their pockets.  Any factory that isn't preparing to adapt to this change may find that they are building SFR modular homes for a dwindling market.

Builders are usually not prepared to talk the talk or walk the walk when it comes to multi-family projects.  They might have built a couple duplexes but most have never worked with a small developer that is looking for 10 or 20 units.  This is where the factory and the builder need to work together.

The Dodge Report is growing fatter with all the projects coming up but there are still a lot of projects being kicked around in local planning and zoning hearings that only a local builder would know about.  It's imperative that the builder jump on these opportunities and begin working with their factory to get the jump on the traditional General Contractors that use wall panels or still stick build.

If a modular home factory hasn't started to get their builders involved in the hunt for these smaller projects, they are both missing the boat.

1 comment:

Anonymous said...

Coach ...all you say in this article is spot on. the issue is public perception of modular and financing.A lender balks big time when you explain how draws work and how fast the payouts work for the product and the conversation ends quickly. If anyone has a lender in the Pac NW who is forward thinking in this regard...I would love to know who it is.