Thursday, June 21, 2012

Modular Home Builders Hit Hard Last 7 Years

In 2005, before the housing industry took a nose dive, it is estimated that there were 73,000 builders and building companies closing on 1.3 million homes.  That’s average of 18 homes per builder.  Of the total number of builders that year it was estimated that there were over 3,000 building modular homes. 

Now we come to the 2011 totals and we find that there are only 34,000 builders left to carry on business and they built approximately 300,000 homes; less than 9 homes average per builder.

Courtesy of the Builder
With less than 1,500 modular home builders left to build houses for the factories and each doing less than 9 homes a year, the total market penetration for modular housing is only 13,500 +/- new home starts.  Ouch!

No wonder the modular factories are going after commercial work.  That’s where the business is and who can blame them.  

If the average modular home builder expects a gross profit of 20%, but actually makes 14% and has a before tax net profit of 4%, then I’m just not sure how they are staying in business with only 9 homes a year and most are doing less than that.

Sounds like the modular home factories need to figure out a way to help their builders find more sales and produce more profit from each one.  Do I think that will happen?  Probably not but it would be great if they would.

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