There is change coming in the modular housing industry. It
started during the last housing crisis. Fewer independent home builders are
available for the modular factory to recruit to keep the factory working. In fact, the percentage of builders building
less than 5 homes a year has never been lower in the history of our industry.
Once upon a time, small home builders were the heart and soul
of modular housing. Factories could send their sales staff out every year and
find dozens of new builders that would be willing to try modular housing
construction. Today the entire modular industry combined would be hard pressed
to find a dozen new builders.
What’s causing this change? There are many factors that keep
new people from stepping up and becoming new modular home builders. Among them
are:
- The longer lead times between the first contact with a buyer
and signing of a contract. Just 20 years ago that time frame could have been a
little as one month. Lately I’ve been hearing stories from builders of buyers
taking a year just to get mortgage approval. - Today’s builder faces delays from government agencies over
increasingly restrictive building codes, complicated fee processes, energy
requirements and oppressive levels of taxation. - Add in things like health insurance, business insurance and
all the other insurances that a builder needs and the profit keeps going down.
There are other factors that are hampering new builders from
switching from site building to modular building. One of the biggest is the industry
itself. Very few, if any, actively recruit and offer training in modular
construction to any builder. The factory sales reps are no longer trained on
how to approach small site builders or given the proper tools to identify them.
That is why most “new to modular” builders only build one or two homes and then
go back to site building. Nobody from the factory has the time or monetary investment
to help them succeed.
Certainly not the least but one of the biggest is that the
factories are increasingly starting to sell direct to the consumer bypassing
the builder as the sales agent and using them only as an assigned GC. Many
factories are now their own GC’s.
The independent prefab companies like Method Homes and Blu
Homes have based their entire business models on selling direct to the consumer
and sell to builders only when the builder pushes them. Established modular
factories, primarily on the East Coast, have the opposite business model.
Will our industry ever see the glory days of having an
overabundance of small home builders feeding the factories? No. Is there time
to slow down this change? Yes. It will take planning by the factories united in
a common goal but it can be done.
As Pogo said “We have met the enemy and he is us”
