Modular construction will make homes affordable
According to a new report, prefab communities will be a better investment than luxury homes and condos in 2021.
In manufacturing (also known as modular construction), buildings or parts of buildings are created in a factory and assembled on site like Legos. Since modular construction costs 20 to 30% less and construction times can be shortened by 50%, the industry has grown by over 34% since 2015, according to the census.
"I'm watching new technology emerge - panel construction, modular enclosures ... There are some interesting things in the construction industry that are driving costs down," said Byron Carlock, head of US real estate practice for London-based Professional Services Network PwC, has last Week published its survey report Emerging Trends in Real Estate 2021.
Virginia, Fredericksburg, Clayton Homes, Modular Homes for Sale, Red Tag Clearance. (Photo by: Jeffrey Greenberg / Universal Images Group via Getty Images)
The average single-family home produced was $ 55,200 in May 2020, less than one-fifth the typical $ 330,000 US home, according to Realtor.com data as of May 2020, according to the U.S. Census Bureau.
Price advantages led the US Secretary of State for Housing and Urban Development Ben Carson to make modular homes an important item on the agenda during his tenure. Carson enacted the deregulation of prefabricated homes as a solution to America's affordable housing crisis during his "Driving America With Affordable Housing" bus tour earlier this year.
"Today we're proposing changes that will remove the red tape between making safe, high-quality homes and the families and individuals in the country who need those homes to make home ownership a reality," Carson said on a tour of a Clayton Houses modular housing factory in Russellville, Ala. In February.
Rendering of the S2A Modular Manufacturing Factory in California (delivery planned for early 2021). Provided by S2A Modular.
Affordable and mid-range housing is more in demand than ever as the coronavirus pandemic drives migration to the suburbs in the United States. New home sales rose over 32% in September year over year, driving home prices to a median $ 350,000 in September, up 11.1% over the same period last year. The builders are actually trying to slow down sales to keep up with the incoming orders.
“The answer is new and affordable housing. The question is how do we get there efficiently. And I'm excited that the industry is taking leadership roles in trying to do that, ”said Carlock.
United Dwelling Modular Unit Design Rendering provided by United Dwelling.
"Pandemic will move companies to modularize"
The industry was ripe for change even before the coronavirus pandemic. Construction has suffered from labor shortages since the Great Recession of 2008, and labor costs, material costs and labor availability were still the top three complaints from developers in 2020, according to PwC. Prefabricated houses allow companies to build houses where labor and supplies are most accessible.
“I think with more prefabrication and trying to do more in a controlled environment, in a store, some companies are working towards that and working less in the workplace. [You] have more control in the factory, ”said Jarrett LiBuono, a consultant at CREtech Global Innovation Consulting Practice in New York, at the CREtech Consultation Webinar on October 20.
The coronavirus pandemic has only helped make indoor constructions, where processes are systemized and often automated, practical. Thousands of construction projects were delayed during the pandemic due to disrupted supply chains, government shutdowns and ongoing labor shortages - delays that analysts said could have been mitigated in a controlled environment.
“The coronavirus pandemic is likely to encourage companies to modularize and prefabricate components. The efficiency of the assembly lines and the controlled environment of a “factory floor” can lead to cost savings as labor productivity becomes more efficient and project schedules are shortened, ”says Deloitte's 2020 outlook for the engineering and construction industry.
Sarah Paynter is a reporter for Yahoo Finance.
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