Can Modular Homes Save Buyers from a Perfect Storm?

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As the building season for 2018 starts, home buyers are facing a perfect storm.  A “perfect storm” is defined as “a particularly bad or critical state of affairs, arising from a number of negative and unpredictable factors.

For the housing industry, the perfect storm is due to three factors that are each significant, but together pose a real concern for homebuyers.  There is a critical shortage of homes on the resale market, an unprecedented shortage in critical labor categories needed to build new homes, and at the same time buyers are facing sharply rising prices for both existing and site-built homes.

CNBC reports that U.S. home prices increased in late 2017 to an annual growth rate of 6.3 percent.  According to the much-watched S&P CoreLogic Case-Shiller national home prices index, the pace of growth in prices is up .2% from earlier in the year. Forbes reports that prices rose between 5.92% and 12% as of late 2017 and experts believed similar growth in prices is likely in 2018.

At the same time the Wall Street Journal, in an article titled “The Next Housing Crisis: A Historic Shortage of New Homes” reports that builders are turning away potential customers because they can’t keep pace with the demand.  They further report that the National Association of Home Builders estimates its’ builders will start fewer than 900,000 new homes in 2018, less than the roughly 1.3 million homes needed to keep up with population growth. The NAHB also reports that a growing number of builders are plagued by critical shortages of skilled labor and subcontractors.

The Modular Home Industry has remained very stable, however.  Many homebuyers do not realize that factory-built or system-built homes are identical in every respect to homes built onsite in terms of construction techniques, materials, and finishes.  They meet or exceed building codes for wood framed homes built by local contractors.  Modular factories have not seen critical labor shortages.  Workers commute only to the factory each day and factories are not seasonal like onsite construction; workers do not have bad weather days and enjoy employment 12 months a year.  A stable and well-trained workforce has allowed factory production to increase while local contractors have reduced production due to labor shortages. Modern, well equipped, modular home factories can produce homes at the rate of up to 5 homes per week. Many large developers can’t manage that pace.


Modular home prices have also remained very stable. Factories this year have passed on material cost increases of between 1.5% and 3%, while site-built homes have increased significantly.  Building a new custom modular home can be many dollars per square foot less than purchasing a home on the resale market or a new home in a development.

New home buyers in 2018 may very well be saved from this perfect storm by the modular home industry. Building custom wood framed homes in a controlled environment with consistent production 12 months of the year may be the best way to bring an affordable home to many families.


This is a guest post by Harry Cooper. Harry is a Custom Modular Home Consultant with Impresa Modular and serves the Southeastern Region. He has many years of experience in construction, particularly modular construction. One example of his wide ranging background was Harry’s participation in the team that moved and placed modular buildings at the South Pole for a research station community.

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