Can Prefab Homes Help Address the Growing Housing Crunch In the US?

Updated: Sep 2, 2020

With the need for affordable housing in cities across the United States, demand for prefab and modular homes is rising. The first prefab homes were sold by Sears & Roebuck at the turn of the 20th century and gained popularity during the Great Depression in the 1920s and 30s. But as suburban housing developments grew after World War II, the popularity of prefab homes declined.

“As housing costs have risen across the board, prefab homes offer some relief for those who don't want to spend a fortune but want to own something of their own,” says Howard Rudzki, Principal of Magnus Investment Partners. “Today, prefab homes are not only more affordable than traditional stick-built homes, but they can also be manufactured faster and more people see these homes as both viable and environmentally responsible options.”

In the 1980s, Rudzki was one of the first developers to build affordable prefab homes in Nevada. The project brough more 100 new homes to low-and middle-income families.

Over the past few years, pre-built wall systems have gained increased popularity during a recent labor shortage among framers, and stats from a recent study released by the National Association of Home Builders (NAHB) show that prefab framing saved 66.5 hours of labor versus on site construction, when comparing two identical homes.

According to Triad Financial Services, manufactured homes make up almost 70% of all homes under the $150,000 price point across the nation, and the average cost of a prefab home without land was below $70,000. In many areas around the country, low-cost undeveloped land can still be purchased for a few thousand dollars, making it possible to have a fully functional home for less than $100,000 while remaining within reach of major cities and work centers.

Going forward prefab homes are likely to play a major role in helping reduce the need for low-cost housing options. With budget and time constraints, city governments should consider incentivizing developers to utilize pre-fab housing as they try to address their growing housing issues.

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