Never, now that’s a strong statement! With over 800,000 projected new home starts for 2023 and modular home factories currently building about 2.5% of that total or about 20,000 new homes, what it would take to just build 10% of that total is incomprehensible.
Looking at the logistics of building just 10% of those 800,000 new homes as modular almost seems unreachable.
But there are some things we need to understand about modular construction before looking at those logistics.
There is more to modular than just building houses. Relocatable modular buildings consisting of man camps, portable schools, and other buildings are not counted in that 800K even though they are modular.
In most cases, ADUs and Tiny Houses aren’t counted. Just like any statistic though, different states count new home starts based on many criteria. California may count ADUs as home starts while New Jersey and Montana may not. So take any statistic about housing with a grain of salt.
Commercial modular is and isn’t counted. Building a 60-room dormitory is not a housing start but building a 60-unit modular apartment building is. Tiny house villages are not counted as housing starts…or maybe they are. Who knows!
HUD code manufactured housing built over 100,000 new homes last year and the reason for that is the Federal building code they are built to rather than the independently owned state building codes modular homes are required to meet. But that’s a story for another day.
Getting back to single-family modular home (SFMH) starts, the idea of building 80,000 new homes a year compared to the current is mind-boggling.
The Numbers
If the average number of modules needed to build one new home averages three and the average SFMH modular factory produces 12 modules a week, that means the average factory builds four new homes a week. Now that’s actually very impressive.
That equates to approximately 80 current factories primarily building new SFMHs in the US. If each of those factories could produce enough homes to meet the 10% of 80,000 homes a year, it would take an additional 240 new factories capable of building at least 12 SFMH modules a week.
With new modular home factories costing well over $20M to build, that equates to $4.8 Billion Dollars of investment in today’s dollars.
Those factories will also need over 30,000 new laborers and with current modular factories not being able to find workers for their production lines, where will the new ones come from, and what about the higher wages our industry will have to pay to attract them? Yikes!
Two Overlooked Items
Two more areas that will feel the impact if we could actually build those 240 new factories are transportation and set crews.
Currently, many factories use minimum-quality carriers to load completed modules and ship them to job sites. At one of the older factories on the East Coast, I counted over 200 shipping carriers in the yard. Some had modules on them waiting to be transported, some lined up for those 12 modules being produced that week and well over a hundred more just setting there waiting for their turn to be loaded.
Carriers aren’t cheap. In the good old days of the 1990s, carriers weren’t expected to carry more than 13-15 tons. Today those same carriers are expected to carry up to 30+ tons each trip. The less expensive carriers used recycled axles and tires removed from manufactured homes after delivery. The frames in many cases are built by a local welding shop. Frame twisting and blown tires are major expenses built into every one of those carriers. Cost: $22,000 to $35,000 each.
There are other carrier manufacturers that build better carriers using pneumatic leveling, better braking systems, adjustable height mechanisms, heavier gauge steel along with top-of-the-line axles, and commercial-grade heavy-duty tires. Though expensive at $100K each, they quickly make up the cost difference through the better materials used, safer ride, and less maintenance.
In addition to carriers, the other expense that many factories have is using their own crews to set the modules in place and some even finish the homes.
Here comes that ugly math again. Today there is a shortage of ‘qualified’ set crews available. Adding 240 new factories could be devastating if there are no set crews to put them up.
Factories that have their own crews will need at least three completely manned crews to set the average number of houses produced each week.
Bottom Line
We need more modular SFMH factories. That’s a given as on-site builders are retiring or passing away and few new, younger builders are picking up the reins.
When you hear someone say “We need modular construction to be 20% or more of the single-family housing market”, they simply haven’t thought it through to its obvious conclusion.
Yes, it would be super if we could have 240 new automated factories built quickly but those automated ones can cost up to $100M each and that’s before any other expense to start them or transport and set what they produce.
If we could actually get 4 new SFMH factories added every year, it would still take 60 years for modular to reach more than 10% of the market.
There Are Options
Yes, there are alternative housing options coming up through the pipeline. There are foldable houses, ADUs, alternative material houses, and tiny houses, each with its own group of followers.
The questions that need to be answered about these alternatives methods of housing construction are:
Will they meet state and local codes?
There are housing factories currently trying to raise millions of dollars to build homes that haven’t even been approved for occupancy yet. What happens to those factories if they can’t get those approvals because of the way they are built?
Will people like entire communities of little houses?
When all the houses look exactly like their neighbors, what happens later? Remember the Levittowns built after WWII? GIs bought them in huge numbers but after a few years, most of the owners began adding additions, changing the appearance so their home didn’t look like everyone else’s home, and some, in later years, were torn down and replaced.
FACT!
If the 60 years to build those new factories is even remotely possible, maybe a few of you reading this will be around to see them. Probably not.
Gary Fleisher is the Editor in Chief of Modular Home Source and Offsite Builder magazine. Email at [email protected]
