No matter how hard government and private industry try, affordable housing in the areas that need it just seems to be out of reach. Instead, our industry is handed a cocktail to calm us down. It won’t help.
At the beginning of 2022, most of the offsite construction industry expected falling sales. Instead, the first nine months of 2022 saw incoming orders and sales increase like we haven’t seen in many years.
At the same time, however, the already high construction prices were continuing to climb higher. Even that didn’t slow the number of new projects going under contract. However, everything changed with only three months left in 2022. New orders dropped drastically in some regions and developers and builders were beginning to cancel their contracts with factories for projects and homes.
This means that our companies are not making any more sales in real terms, only the orders are becoming more expensive. And brings us back to the cocktail you were just handed.
So, what’s in this crisis cocktail?
LABOR
One of the biggest ingredients is labor. The huge skilled labor shortage in our industry isn’t getting any better. Help Wanted signs are up in almost business in the US and the hourly wages companies are offering have almost doubled over 2021 in some areas. Try as we might, most companies are having a hard time with not only maintaining a minimal skilled labor staff but are now seeing shortages in middle and upper management positions.
Accounting, for example, has seen almost a 50% drop in new people entering the business and the competition for senior accounts is increasing.
MATERIAL
The cost of building materials goes up one week, stabilizes, and then goes down, only to repeat this scenario up to a couple of times a month. And to make matters worse, no two products are on the same schedule.
Buyers and estimators at the factory level have to stay on top of every product they buy, not only for price fluctuation but availability as well. What were once fairly stable jobs in the factory have now become two of the most fluid and stressful.
GOVERNMENT
The meaning of Affordability changes from one day to the next as do the government regulations that determine where they get built, how they get built, and even if they can be built at all.
Local governments should address outdated zoning policies and reform them based on today’s needs instead of zoning which is about 60 years out of date. To make housing more affordable, cities need to be zoned to allow housing to be built at a greater density further away from the city’s downtown.
Cities should be asking how to increase total housing units while minimizing the negative impact on the city. A tough challenge indeed. There are too many ultra-luxury units geared towards Millionaires but not nearly enough housing for the typical city workers that are employed in retail stores and restaurants that are the lifeblood of a city.
One local chain of convenience stores has switched from preparing any food on site and having their sandwiches and salads shipped in. They only have one worker in the store during some shifts because the company installed all self-serve checkouts and only accepts debit and credit cards, no cash. Robberies have stopped but shoplifting has increased.
MORTGAGES
Mortgage companies can make it easier to get financing on manufactured and non-conventional prefabricated homes.
Tiny and prefabricated homes have been having a moment in the last few years. These minimalist homes, typically under 500-square-foot dwellings, can cost as little as $30,000 to buy — a far cry from the typical home prices that hit over $400,000 this year.
There are numerous draws to these types of homes with their small footprint, largely due to the affordability and flexibility they offer.
This isn’t the only “Crisis Cocktail”
No matter the type of offsite construction industry you work in, there are many cocktail choices for you. Some are specially mixed for upper management, others for middle managers, and supervisors, and there are also many choices of cocktails for the production and transportation people.
Just remember, while you’re NOT enjoying your cocktail, someone else is trying to enjoy their bad cocktail. Nobody will be exempt from being served one in 2023.
Gary Fleisher is the Editor in Chief of Modular Home Source and Offsite Builder magazine. Email at [email protected]
Gary Fleisher, the Modcoach
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