Thursday, April 12, 2018

Only 4 Ways to Build a New Home

Let’s get today’s new home building terminology put into its proper place. “Prefab”, “Offsite”, “panelized” and “affordable” are terms we are hearing more and more today. Fact is, all of them should be banished from the home building vocabulary, taken out and beaten to death and forgotten for eternity.

There are only 4 main methods of building a new wood framed home.

"Manufactured", "On-Site", "Component" and "Modular". All the other types of home construction could be put in that minuscule bucket that includes the 3D printed, concrete, tiny, container, log and the rarely used in the US, steel framed houses.

Of these 4 methods one is in a category all by itself, the manufactured home or HUD home. It is the only one federally regulated under the Department of Housing and Urban Development. These homes are usually built on steel frames with wheels and tongue attached. They are well built and a huge segment of the housing market. They aren’t built to the stringent IRC codes that regulate the vast majority of all single family homes in the US but rather to HUD standards.

On-Site home building still enjoys the largest chunk of the single family home building business. Laborers swinging hammers, using nail guns, circular saws, levels and sawsalls can be found at job after job building the same way they have for the past century.

Components have also been around for decades. Factories building wall panels, trusses and even flooring systems have automated part of the On-Site building process doing work that today’s laborers can no longer do at the job site. All that is left for builders using component systems to do is to make sure their laborers can follow the numbering order to put up them in their proper positions. Some component factories are now setting their own product which eliminates the builder's need to even hiring unskilled labor to put the house together.

This type of construction has recently been touted as a time saving, precision method of building the frame of the home cutting the framing time by up to a week and its market share has nowhere to grow buy up as labor shortages continue to hit home builders hard.

The most unique and possibly the best method of the 4 is modular.

When On-Site homes are framed at the job site there is still a lot of skilled labor that needs to be brought to the house, work to be inspected and reinspected, rain and snow that needs taken into account, waiting for subcontractors to show up, more inspections and so on. Yuck!

Modular on the other hand is the only IRC building method that brings all the best of component walls and trusses, skilled labor, factory inspected work (prior to arriving at the job site) and good weather together, loads this skillfully built home on a carrier, ships it to the job site about 80% complete and has it set 2 days or less.

With the resurgence of new home building in the US, the combination of 70% fewer GC’s than 20 years ago and the extreme shortage of day laborers, one has to ask the ultimate question…”Why isn’t every new home builder at least trying modular housing for some or all of their new homes?”

With all the positives for modular home building I have to wonder why modular factories are still pricing their homes like supermarkets selling turkeys at Thanksgiving? It’s the only time of the year that everyone wants to buy whole turkeys and the supermarkets sell them below cost or simply gives them away.

Why are modular factories reluctant to charge more for all this skilled labor they have assembled to build homes which in turn would allow them to pay their production people more and provide the best quality built home the US has ever seen?

It all goes back to turkeys at Thanksgiving and the fear of being the first factory to price their homes properly for all the benefits modular brings to the table.


Terry Wilson said...

These are the 4 most popular ways to build a new home but the ones you threw into the bucket are rapidly gaining market share especially container housing.

Isaac Lassiter, Cutting Edge Homes said...


Thank you for writing about this. I believe that it is an important discussion to be having.

The beauty of language is that it continues to morph far outside of the control of interested parties, experts, linguists, or anyone else. I agree that the terminology used to describe construction methods is confusing, and that it would be better for other names to have been highlighted through public education long ago. The terms that you said "should be banished" are more than technical industry terms like the ones that you propose like "Manufactured", "On-Site", "Component" and "Modular". They are words in usage that can not be deleted from the American public's collective minds, and they are very different words.

You cast a wide net for the type of words that you want to banish:

“Prefab” - A general and vague cultural term that is widely used.
“Offsite” - A general industry term that few members of the public have ever heard.
“Panelized” - A technical industry term covering a method of factory fabricated panels that is not widely understood or used outside of the building industry
“Affordable” - Both a bureaucratic and construction-financing-developer industry term that is commonly used when describing a project that uses government-guaranteed financing sources and/or meets specific zoning requirements to serve the housing needs of targeted income groups.

Prefab - It is a cultural term, not describing an exact method of off-site construction, but an idea that some assembly method is being used that is not on-site construction. "Prefab" does not define exactly "what", and the acceptance of "Prefab" as quality or cheap is regionalized. Many parts of the country may equate "prefab" exactly with mobile homes in parks. In Northern California (our primary market), "Modular" means crappy cheap mobile homes to most buyers, while "Prefab" denotes a quality and contemporary method to build a home (thanks Dwell Magazine) that depends on knowledge of the supplier to know whether or not it is a good option for a buyer in the marketplace.

The word "Prefab" isn't going away, and I would argue that it is gaining traction based on the national media's usage of "prefab" in the current era. Given that the legal term in California isn't modular, but rather "Factory Built Housing," the use of "modular" can be similarly confusing. Prefab is a bigger umbrella than "modular," or "component." With more manufacturers making hybrid products like modular cores or modules with panels assembled together I think that Prefab has the strongest place in the lexicon to be used as an over-arching term. It may put a sick taste in your mouth or the mouths of purist modular builders, but the mass market recognizes it as different from "modular" in a way that doesn't always seem to be associated with "manufactured" housing.

The similarity and overlapping use of "manufactured" and "modular" in the phonetics and actual common usage in America is holding the growth of the entire industry back. A different term would be better to use for growing our percentage of market share in the "modular" industry. We say "modular" is a superior product built to state and local codes, but many people need multiple exposures to this information to understand the difference. Many never understand the difference.

I don't believe "Offsite" is a very important term and will continue to be unimportant to all but wonky marketers in the building industry.

"Panelized" is a slightly smaller tent than "Component," but it is a useful technical term that I do not agree should go away.

Isaac Lassiter, Cutting Edge Homes said...

The use of "Affordable" with the term housing is in a different boat entirely than the rest of the building industry terms that you highlight, and I did not see a reason why you think this word should be banished. "Affordable" is a descriptive word used heavily in financing and entitling projects targeted to specific income groups, and "Affordable" is used and understood in a way that is less confusing (IMO) than words like "modular".

Lastly, as a vested party, I agree that "modular" construction is a great solution, but it isn't a solution for every builder. Demand is not being met with current supply in California, and more supply is cut than added each year. Nationally, with "modular" in the low-single digits of market share, there is not enough supply in modular factories to build 5% of the new construction starts. If every builder tried to use "modular" the industry would collapse from the imbalance between demand and supply. The sales could not be administered, and the production could not match the demand side's schedule requirements, perversely killing future demand in the "modular" market.

I think that the question is, why are entrepreneurs not investing capital and time in developing new modular factories, given that it can meet demand that isn't being met with other solutions? The need is there.