Wednesday, January 15, 2020

Where’s Modular Housing’s Promised Growth?

A 30 year old study on housing said modular would make up 90% of all new housing by 2020 while an even earlier report predicted the cost of building houses in factories would lower the cost so much that houses and cars would cost about the same in 2020.

The award winning Genesis Cottage by Champion in 2005

I’m really not sure why 2020 was the year they all referred to as the “Pot of gold at the end of the Rainbow” but let me make this perfectly clear….It Isn’t!

Modular housing isn't 90% of all new house starts, it has actually slid down from a high of almost 5% of total housing in 2007 to less than 3% today. Manufactured HUD homes now stand at 10% of new single family homes. OOPS!

So what happened? First we had the housing crash of 2008 which almost killed the modular housing industry. Many factories closed their doors and probably 75% of all modular new home builders left construction. Visit a Lowe’s, where the contractor that built your new home in 2005, is probably working in the lumber department.

Even today single family modular home factories are closing their doors. And on top of that, when was the last time we saw a new single family modular home factory open? And please don’t mention you know of a modular factory opening somewhere in the US building single family homes. Of all the new ones, most can only supply a very limited number of modules a week.

What we need are SFH modular factories capable of producing 40-50 modules a week, not like those new ones that can take up to 8 weeks to build a single home. That’s not really a modular home factory, that’s a builder simply moving their operation under roof.

What we’re getting however, which isn’t bad for affordable housing, are modular factories designed from the ground up to produce up to several hundred similar, stackable, multi-living units which will be shipped to large cities to ease the housing crunch.

Yes, they are modular and yes, they are affordable and yes, many will see the latest in automated production being used. However, if there is a single new modular factory gearing up to build single family custom homes, I haven’t heard of it yet.

Even the most established modular housing factories in the US began building cookie cutter modules they hope will help insure their factory doors stay open. With Marriott hotels leading the charge for modular, a lot of factories that used to produce truly custom homes are welcoming those mega projects deals and in some cases turning their backs on custom single family homes.

To make matters worse, the aging builder base that used to sell custom modular homes is not being replaced as fast as they depart the business. Millennials and entrepreneurship are terms not often mentioned in the same sentence today. Becoming a modular new home builder isn’t on many of their radars. Because of that, only a couple modular factories offer any type of training to become modular home builders.

There is a new program being offered by one of the largest modular home builders in the country and they hope they can reverse this trend and once again bring custom modular single family homes back on the track to becoming a dominant force in housing.

As everyone knows, success breeds success, and if their efforts take root, be prepared to see single family modular home factories opening to meet their demand.

And where does the modular housing industry stand on building homes that cost as little as the automobile? Well, if you want one of those, you need to buy a manufactured home (single or double wide) and place it on a rented lot with no basement or permanent foundation.

Today’s modular home is basically the same price per square foot (the public’s benchmark) as a stick built site home, about $100 per square foot. That is considerably higher on the West Coast where even basic housing of any kind starts at $200 per sq ft.

The added costs of regulations by the IRC code updates, energy conservation, sustainable building materials, state reviews, regulations and approvals by everyone from the housing plan review Gods to the transportation Secretary to the janitor that throws out all those red stamped plans that get sent back to the factory again and again to be revised have all kept modular housing from being the economic benefit they saw just 30 years ago.

And here’s one last thing that has kept single family modular housing from becoming “all it can be.” There is no national modular home marketing program by anyone, anywhere.

That has led to the misunderstanding by new home buyers that modular and manufactured housing are synonymous. And that is nobody’s fault but the modular housing industry itself.

Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog   
and industry speaker/consultant.

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