Trend Watch: Factory Built Housing Poised to Grow?

Codewatcher Flex House Factory Built

The construction labor shortage, stronger building codes, and the need for affordable housing means possible growth for the industry. 

Builders today face a number of challenges in the face of a national shortage of available and affordable housing. At the top of the list is a deficit of skilled labor, a lack of construction knowledge by consumers and real estate agents, and a declining number of experienced and qualified general contractors for both onsite and modular home construction.

Factory-built home construction advocates argue that their construction process can tackle many of these issues. To get a clearer picture, Insulation Institute spoke with Ed Hudson, Director of Marketing Research Services at Home Innovation Research Labs, and Jay Young, Marketing and Licensing Agent for William Poole Designs about the current housing situation and the future of home construction in America.

The Current Landscape

According to Ed Hudson, despite the numerous advantages of factory-built construction (modular, panelized, pre-fab), the practice has yet to receive national market penetration. In fact, the 2016 Builder Practices Survey on wall construction conducted by Home Innovation Research Labs showed that 89 percent of new home walls were constructed ‘on-site,’ with only 11 percent comprised of panels, modular, SIPS, or post and beam. Moreover, the U. S. Census Bureau, which tracks new home construction, reports that 97 percent of new construction was ‘site-built’ and just 2 percent were modular (one percent other methods). That figure has remained unchanged despite the inherent advantages of partial and full factory-built.

So, what is keeping factory-built construction from taking off? Hudson, one of the co-authors of a report published a decade ago on factory-built homes and the American home buyer, believes that while consumer perception is one consideration in the slow growth, it’s not the main one. “Market perceptions play a smaller role than the challenge of getting many individual builders to change from constructing site-built to factory-built homes, although the tight labor market will help more builders make the switch. It’s currently happening with factory-built roof trusses, albeit at a modest growth rate,” said Hudson.

If the tight labor market and loss of skilled construction workers will help builders see the myriad of advantages of factory-built homes, what will convince American consumers that factory-built homes may offer a better option for them? Jay Young from William Poole Designs believes that construction education and knowledge, along with great marketing of show homes and beautiful neighborhoods will help custom home designers and architects convince the future American home buyer.

The Early Adopter in Factory-Built Homes

Eleven years ago, William E. Poole Designs, an award-winning and recognized firm in home design, was approached by several modular manufacturers to introduce exciting floor plans for the industry. Attracting a prominent name with a history of successful real estate developments spurred awareness of the modular/factory-built industry and increased credibility. William E. Poole is both a home designer and a general contractor, who during the 90s, decided after years of research that factory-built construction was the future of home construction in America.

The company sees two characteristics as the driving forces in its business model, quality construction and delivering value so that customers know what their investment in a home buys. Customers need to understand the value proposition and the building process and how it differs from site-built homes, which are typically constructed in six to eight months in various weather conditions. Factory-built construction, on the other hand, occurs in a climatized facility in three to four weeks, is shipped to the job site, and completed with a home occupancy certificate in less than four months.

William E. Poole’s team of trained home sales professionals provide and demonstrate to consumers the building methods and techniques it implements during construction and how they differ from site-built homes. “Our future consumers will be able to make an educated decision when choosing the different construction methods,” said Young. And when it comes down to price alone, he uses the following example: “Ask a typical consumer the following question, to save $10,000 on the purchase of a new Mercedes Benz, would you be willing to have your car built unprotected in your backyard over six months by local mechanics? Or would you prefer to have your car built in a modern automobile factory in Germany? Everyone says in the factory in Germany! Why? Because with automobiles, consumers understand factory-built construction, which is also true with other factory-made products, including airplanes, boats, computers, aircraft carriers, and submarines. Almost all consumer products are built in climate-controlled factories…except homes. Because the American consumer just does not understand the process. That will change.”

Related Story: The main photo for this story is of the Flex House, a right-sized modular home showcasing solar and smart home tech. Learn more about it here. 

Builder Controlled Quality

Young also pointed out what he believes are some of the most important benefits for the builder and the consumer, including:

  • Construction in a climate-controlled environment
  • No down time waiting for the weather to improve
  • Very little building material waste in the factory
  • Components built separately, which guarantees all walls and flooring are plumb
  • Experienced and skilled factory labor under strict supervision
  • Approved and authorized builders that consumers can select…and are held accountable
  • No waiting on sub-contractors to show-up each day
  • More than 250 inspections performed in the factory
  • 6 to 15-week normal construction process based on the size of the home

The Future of Factory Construction

“Japan and Germany are light years ahead of the United States in factory-built construction, technology, and consumer awareness,” said Young. “We will change that perception in America. Unfortunately, American consumers still view modular homes as cheap, single or double wide homes with no excitement.” William E Poole Designs is taking its experience, exciting floor plans, and professional business associates and partners to a new level through the implementation of major real estate developments throughout the United States that will likely gain the attention of consumers and builders. Trained sales professionals at each neighborhood will educate visitors about the benefits of factory-built construction and how simple it will be to modify a William E Poole Designs home to their family’s or property’s needs. “We also have plans to begin a National marketing campaign with YouTube and televised videos to expand consumer knowledge,” said Young.

If Hudson and Young are right, factors like the present tight labor market, the desire to control manufacturing and construction quality and costs, and the desire to reduce the home construction time frame may lead to a factory-built home building boom in America someday.