By Deborah Smith
December 1, 2022
Disrupting Manufactured Housing
Manufactured housing gets a tech-driven makeover
Manufactured housing is not a new, new thing. Not even close. I remember talking about it with a group of multifamily developers years ago during my days at CBRE Global Investors (now CBRE Global Investment Management). So, why are we talking about it now? Technology. That's right - the niche sector of manufactured housing is due for an overhaul, with technological advances in additive manufacturing, otherwise known as 3D printing, at the center.
But let's back up and clarify what we are talking about when we say "manufactured housing." These are houses made in components in a factory (prefabricated) and shipped to a location for permanent, on-site installment and assembly. We are not talking about the mobile home or trailer segment (but, as an aside, 3D printing may make these segments obsolete at some point in the future).
Now, let's talk technology. The industry still considers 3D printing new and in its infancy. However, the technology is fast evolving (remember when cell phones and the internet were new, new things? It won't take long). 3D printing enables the formation of an exciting new mainstream future. Imagine living in a community where every house is unique, with different floorplans, with different designs and materials spanning basic to luxury. Envision pitched and shingled roofs and spacious layouts in a variety of configurations. Don't forget the amenities! Spas, fireplaces and high-end kitchens, to name a few. Two-story houses too? No problem. How about Victorian-style houses or a traditional New England colonial-style home? Again, no problem. These houses would be virtually indistinguishable from a regular, stick-built on-site house. There is a pool out back, the streets are lined with beautiful trees, and right on the corner is a bustling playground. Sounds like a regular neighborhood. But what if we said that every house in this neighborhood was built in a factory in a handful of days, for a fraction of the price of a typical house, and can be delivered and installed on-site? It's affordable. It is also made from sustainable materials and methods. That is the future of manufactured housing. Technology makes it possible. Therein lies the new, new thing.
This requires a mental imagery adjustment; manufactured housing has a lousy reputation, especially among institutional investors. The average investor doesn't think about owning a beautiful, unique home in a grassy community when they think about manufactured housing. They think about trailers. They think about trailers on rented land plots in confined spaces. They also think about flat roofs, box-like structures and cookie-cutter designs. The industry has an image problem. And in the factory, the manufacturing process has functioned pretty much the same way for decades. We think it's time to reimagine what's possible.
According to the Manufactured Housing Institute, manufactured housing accounted for approximately 9 percent of total new housing starts in 2020. Doesn't seem like a lot - which means opportunity. We don't need to reference the endless statistics to know there is a massive housing shortage in the United States, or that the housing shortage is also an affordability one. With interest rates on the rise, you don't need to look far to find a report about how Americans can't afford to buy a home anymore. According to the National Association of Home Builders, with a $1,000 increase in the median new home price ($346,757), 153,967 households are priced out of the market (based on 2021 estimates).
3D printing offers a choice to build houses more quickly and cheaply, with less waste and more efficiency, than a regularly constructed house. 3D construction companies also say their materials are more durable than most traditional building materials. There may be something to the claims - according to Allied Market Research, the global construction robot market is projected to grow at an annual compound growth rate of approximately 23 percent from 2020 to 2027. It's worth adding that the construction robotics industry not long ago didn't even exist. 3D-printed manufactured homes can be installed with less impact to the surrounding environment and only require the pouring of a concrete foundation before the home can be delivered.
The technology is here, albeit in early rollout. Habitat for Humanity has advocated for 3D-printed homes as an approach to addressing the affordable housing shortage in the United States. They broke ground on two 3D-printed home projects in 2021, one in Williamsburg, Va., and the other in Tempe, Ariz. The Williamsburg home was 3D printed in around 28 hours. Think about the benefits 3D-printed homes could have in rural communities where there are both housing and labor shortages.
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