Posted On: August 12, 2021
A new report points to modular construction as a possible solution to the nation’s housing affordability problem. Urban Land Institute (ULI) and PwC released “2021 Emerging Trends in Real Estate” last week. ULI and PwC interviewed or surveyed almost 3000 people, who are home builders, real estate investors, bank lenders, and the like. Those interviewed point to “construction technology” as the top disrupter in real estate.
“Many interviewees believe that modular construction solutions that address labor shortages have reached the point where they make more sense from a cost perspective and are seeing greater adoption as a result.”
BuilderOnline.com suggests the construction labor shortage “is one factor responsible for recent home price gains,” which “in turn reduced housing affordability.” As an emerging trend, modular construction could make housing more affordable, efficient and faster to build.
The Modular Home Builders Association (MHBA) describes modular homes as being “built in sections and then transferred to the final home site and joined together on a permanent foundation by a contractor.” While builders typically construct modular structures in a climate-controlled factory, they are not, as many would assume, mobile or manufactured homes. Mobile and manufactured homes “remain on a steel chassis and lack basements.” According to the MHBA site, modular homes are bigger and “comparable to site-built homes.”
McKinsey reports the United States had a post-war modular construction boom in the 1940s and 50s. By 1968, however, an East London apartment tower collapsed, sparking “concerns about the safety of prefabricated buildings.” What followed were decades of negative perception about modular construction. The McKinsey report concludes “high-end” builds are changing the way consumers about modular.
“The design of the different modules, the coordination of the processes within the construction facility, and the optimization of the logistics of just-in-time delivery onsite are just some of the enhancements that are changing the modular proposition.”
The U.S. is in the middle of an affordable housing shortage that experts predict will worsen, due to COVID-19.
“We already had a crisis of evictions in this country, pre-pandemic,” John Hopkins’ Meredith Greif told Futurity.org. “Housing unaffordability comes about through a mismatch between the resources people have and the cost of their rent.”
More families are becoming cost-burdened thanks to job losses brought on the coronavirus. Households that never had to consider affordable housing are now coming to realize they need it. Affordable units are in short supply though. The National Low Income Housing Coalition’s 2020 Gap Report concludes “no state has an adequate supply of affordable rental housing for the lowest income renters.”
“The shortage at the lowest end of the market,” concludes the report, “leads to cumulative shortages of affordable and available rental housing for higher-income households as well.”
Tom Hardiman, Modular Building Institute
Is modular a viable solution for the housing shortage? Yes, according to Entuitive.
“Modular construction is a great way to create more affordable housing quickly and often more affordably for citizens in need.”
Several factors, according to McKinsey, will drive the “adoption of modular construction.”
“Labor shortages and an inability to keep up with demand stand out as the most decisive.”
Navigate believes modular construction is a tool in the Housing Affordability toolbox. The process will be integral to our community development efforts in North Titusville. You can learn more about some of our first homes at LiveOn1st.com.
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