The notion that factory-built modular homes can serve as the salvation to America's vexing housing crisis has increasingly come under scrutiny, a report summarized recently in Business Insider.
A crippling lack of widespread success for modular housing startups can be attributed to state and federal manufacturing regulatory barriers, a lack of builders’ experience, investors’ overconfidence, local building codes, persistent social stigmas about prefabricated homes, and an overall lack of demand. The inflexibility of the prefabrication process for single-family designs is another factor hindering many businesses as well, according to the article.
Katerra and, more recently, Veev are perhaps the best-known examples. The once $1 billion Bay Area ‘unicorn’ shuttered its U.S. operation in November after constructing 170 units total in 15 years. Veev's failure can be boiled down to a flawed premise of viewing itself as a manufacturer instead of a builder-developer, says KB Home SVP Scott Finfer. Adjustments to the model, including more localized approaches that entrust skilled laborers like carpenters with the homes’ delivery, are seen as necessary to keep the surprisingly old solution viable while market conditions remain the same.
The modular construction industry is expected to grow to $131.58 billion by 2030. Harvard Business Review has a further analysis of the industry's trajectory and limitations here.
15 Comments
First the Neri expose, now modular housing. Business Insider is on a roll!
This article on modular buildings, including affordable and homeless housing, is ignoring one major facet of our industry, which is the manufacturing of a multitude of light gauge steel structures and engineered building components in a controlled environment (factory) - we fabricate turnkey modular housing of the different types, engineered building components such as floor & roof trusses and wall sections (panels) trucked to the building site (called "flat packs") - also contract manufacturing of "tiny houses" (we call ours "Micro-Homes" because they aren't tiny), expanding trailers (www.ExpandingTrailers.com) and finished modular homes (www.MatrixModularUSA.com), and even full-sized manufactured housing units - the point being don't be hamstrung by being a one-trick pony ...
Failure of pre-fab in north america is a mystery. Japanese factory housing holds a good part of the market, from individual houses to low-rise apartments. Maybe only possible because regulations are federal rather than local, so variations are limited enough to make a business practical. Fragmentation of rules and regulations in North America seem to make this kind of company next to impossible. By chance (or not) a common refrain when talking about why the housing crisis is impossible to solve...
I recall that the Japanese single family housing market is unique in the world in that they are not built to last - properties are expected to depreciate and demolished for a new building in a dozen years or so. This is quite unlike most housing markets, where homes are expected to appreciate over time and serve as a solid investment for the long run.
Young architects in Japan reap the benefits as there is a pretty big market for single family homes.
I wonder if this built-to-not-last system lends itself to modular housing too? Not to mention Japanese manufacturing excellence, vertically integrated developer-fabricator companies, and as you point out - a national system of building standards.
That could be part of it. One of the fallacies of that discussion is that the short-term built-to-tear-down market in Japan means that buildings are not well built. That would not be correct. The houses in Japan are generally at least as well built and often better built than what is commonly thrown up in North America. Earthquake and safety regulations ensure quality is pretty high.
There can be a lot of junk for certain, but I would say the prefab stuff is generally quite good. It is certainly not cheap. Buildings come down not because they are decrepit or because they suffer from planned obsolescence issues. It is more true that they are simply not valued monetarily.
FWIW, that is changing lately too.We have worked on renovations from the beginning of our office in Tokyo, but the breadth of what is being considered for renovation is expanding lately.
I would add that there is a market for re-using a lot of the material in buildings as they come down. Pre-fab buildings dont seem to be leaning into this very much just yet, but it could change how housing is produced and used in the future...much more circular at the very least.
Another big difference between home-building in the US and Japan is that the quality of labor is much, much, much, much, much lower in the USA.
except at the high end. America has some amazing builders for the truly wealthy. Japan does not have that kind of inequality to build that brand of craft on. I didnt realize this until recently, and it sounds absurd as I read it aloud to myself, but it is interesting how craft in Japan stays humble as a result of its cultural disinclination to condone or be impressed by ostentation and outsized wealth.
I think it's more that Japanese culture values craftsmanship far higher than American culture does. As the saying goes: "Americans know the cost of everything and the value of nothing."
lol. Maybe so. I think there is a greater appreciation of craft but also a complete lack of appreciation for spending money to get the kind of legacy buildings we see in Chicago or New York, etc. Those buildings almost don't exist at all. It's a really different vibe and culture...
I think the major contributing factors in US adoption of modular building methods for single-family come down to friction and adaptability.
There is a hard limit on the size of modular components relative to what can legally and easily be transported on US roadways. So to build a single-family home to the kinds of plan and area standards American home-buyers expect, the design needs to be broken up into pieces which work for transport and can also be assembled without making it obvious what they are. That's surprisingly difficult, and the tradeoffs involved usually result in homes that are not competitive on design quality with stick-built. And the factory systems for module construction have fairly tight limits on what you can reasonably do with them. Too many compromises.
A bigger issue is misalignment on construction tolerances. Modular components need much tighter dimensional tolerances than stick-built construction, where variations in foundation flatness can be compensated for fairly easily.
And finally, the supposed cost benefits to doing modular typically do not materialize as promised. The time savings on build-out can be large, but this primarily saves on carry cost and mobilization overhead. The modules themselves tend to be a fair bit more expensive than just building the whole thing the conventional way, and they still take time to build.
Modularization strategies that would make more sense for the US single-family construction market would be things standardized at a smaller scale than whole house component modules: standard panels, modularized bathrooms, that sort of thing. But even then, the construction tolerance issues and construction sequencing problems would all have to be carefully worked out first.
that sounds a lot like the old mail-catalog homes of the past in the USA. Slightly modular, but not really.
Housing plants in foreign countries like Sweden and Denmark build up to 90% of their new homes in a manufacturing facility. In Europe, Scandinavia, and Asia off-site home fabrication is much more common than in the United States because home buyers wouldn’t accept the inferior quality, materials, and technologies associated with field construction. Modular cores produced for kitchens, bathrooms, and laundry rooms eliminate the most complicated and risky part of field construction and allow for superior fit and trim, greater energy efficiency, superior quality control, and 100% complete "move-in-ready" housing units on schedule. Factory automation and robotics/cobotics is the path to CNC-controlled production equipment and absolute control of the supply chain as well as responsive architectural design and factory floor fabrication drawings. This is how they manufacture automobiles and countless other consumer products using cutting edge technology and assembly lines.
Not sure if cultural corpulence is really the reason the USA cant have nice things. USA is just a bit smaller than Europe as a whole (and a much smaller population), with about as much difference as might be expected of a country that celebrates distinction and contrariness as much as it does. Maybe the lesson from Sweden or Denmark is simply that scale matters and the kind of scaling we expect of mass-production is hard to achieve with housing when the market is so fractured...? Regionally challenging, nationally next to impossible?
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