Monday, September 27, 2010

Want to Get in On the Ground Floor? Try Modular Housing

We build houses pretty much as we did hundreds of years ago: each one built individually, with an architect for each building--none of the benefits of mass production.

Imagine instead that a company hired world-class architects to design say 10 models, each consisting of some of the following modules: bedroom, great room, living room, dining room, family room, home-office, kitchen, full bath, half-bath, deck. Each of those would come in three sizes: small, medium, and large. Each buyer could select low, medium, or high-grade finishes, and paint in the colors of their choice. Options would include, for example, a wall-built-in home entertainment system, home-office package, fireplace, whirlpool bath, etc. Of course, each buyer would customize further by decorating it to taste.

The same sort of approach could be used in building office buildings, restaurants, factories, etc.

Of course, modular home building has been around for a long time but has mainly been used for vacation homes and storage buildings because customers have preferred to pay the additional costs of an individually built home in exchange for greater flexibility of design and the good feeling of knowing your home wasn't stamped out by the hundreds. Also, quality had been variable.

But if, as I predict, the American economy is likely to remain weak or get even weaker, people will not be willing to pay so much for their homes not only because they won't be able to afford it, they won't be able to count on it appreciating in value. People used to think, "Okay. I'll spend a lot on the house now but it will be worth more as time goes by." Fewer and fewer Americans now think that way.

At the same time, improved high-tech manufacturing methods have improved modular homes' quality while reducing build time and cost. Currently, cost savings versus stick-built homes average just 10 to 20% but I predict the cost will decline as the technology advances, housing resale prices decrease, and demand increases.

So if I were looking for an industry to enter, modular housing, especially condominiums and mixed-used commercial/residential, would be on the roof top of my list. After all, it's good to get in on the ground floor.

For more on the modular housing industry, including the video referred to in the caption, click HERE.


ST said...

I started out in a mobile home. In fact, I'm thinking that when I retire, I may get another one. A mobile home, of course, is similar to a modular home, but built to be pulled similar to a trailer or semi. I started out in the stereotypical aluminum one that's always shown in the movies when depicting "trailer trash". But, I moved up to one that had 3 bedrooms, two baths with whirlpool & skylight, fireplace, HUGE sunken kitchen. It had a shingled roof, vinyl siding and interior white drywall (not the paneling you typically see).

Now, I live in a town home, but it has three levels, and as I get older (and even now when I run lots of miles :) ), I can see eventually getting a one level place. I would probably get what's called a double wide, which is essentially two single-wides (which is what I had), placed side by side along the peak of the roof. They're pretty much as large as a good sized ranch home.

When I had to move for my job across state, I moved the mobile home with what would be equivalent to a moving company to a nice park close enough to my job. My town home isn't that far away now, and I just drove by a couple weeks ago and it's still there looking in pretty good shape (about 25 years old).

Jeffrie said...

I think modular homes are a great idea. They're economical and come in a variety of sizes. I was just thinking about this last night. It's a great way to own a brand new home, and you don't have to have a family to have one, either. I've seen them in cottage size, too.

If you want to rent or sell new homes to others, it's also a good way to have them ready for market quickly. Or rebuild neighborhoods after disasters, like the Katrina Cottages were designed to do.

I live not far from the recent gas pipe explosion in San Bruno, CA. Something like that could happen anywhere. It might help the families get back on their feet more quickly if they use modular housing to rebuild.


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