Affordable Housing Shortage Highlights the Need for Construction to Enter the Tech Age

Prefabricated housing can address the affordable housing crisis in a revolutionary way. It’s time to acknowledge and invest in the promise of factory-built housing once again.

Editor’s Note: The above editorial declaration and some of the following astute observation excerpts, in italics, are courtesy of Nigel Wilson, group chief executive of Legal & General, a British multinational financial services company headquartered in London, United Kingdom, via online SMART CITIES DIVE, intertwined with our own “in the industry” perspective.

The U.S. affordable housing crisis has reached critical mass for hardworking low to middle-income Americans. “Homeownership” has long been integral to the American dream. Unfortunately, this uniquely American aspiration has been put on the backburner by those addressing the need for affordable housing, conflating affordable homeownership with affordable social high-density rental housing is not consistent with the American dream –  both are needed, but are not one-in-the-same.

There still exists only one high-quality unsubsidized form of housing that addresses the American dream – today’s modern manufactured home –  which is more affordable, better, quicker and safer than traditional site-built housing. Begs the question:  Why wouldn’t you make every home in a factory?

With Apple’s recent announcement that it is committing $2.5 million to affordable housing, matching the combined pledges of Facebook, Google and Microsoft, the ongoing issue of insufficient and inadequate housing is cast center stage.

California’s Bay Area is in perhaps a more deeply etched predicament than many other regions in the U.S., with “a low-income designation applied to a family of four making $117,000 a year. The state of California has more than 134,000 homeless people, and in San Francisco, the homeless population has risen by 17% since 2017.

Tech companies are blamed – and to a degree, blame themselves – for creating the severe wage stratification that has exponentially worsened the crisis. Their response is to take their business elsewhere, to other regions and communities, along with the double-edged sword of prosperity. What this means is that the country is going to need real investment from business, not only to shelter the homeless but to create a lot of housing for low-to-middle- income families. Apple’s pledge is the tip of the iceberg.

Even despite the dropping unemployment and seeming economic boom in the U.S. today, there has not been an accompanying increase in new and affordable home construction. “Stagflation,” a compound term signifying both recession or slow economic growth and high unemployment, as well as inflation, presents a particular problem, as solutions for one problem tend to exacerbate the other. True to form, this has been a major factor in the U.S. with a 32% rise in rents nationally between 2001 and 2015 that has been accomplished by a corresponding increase in wages. And although the economy has been steadily improving since then, wages remain flat and affordable housing scarce.

The reality is that modular, prefabricated housing can exceed the limitations put upon it by popular conceptions of trailer parks and post-war government housing. Not only are they certainly faster – an important factor in cost, as the cost of land and construction, have as much as doubled in some parts of America within the past decade – but also of a higher quality.

This deepening crisis makes it imperative for businesses to get creative: how can we “disrupt” construction, look at it from a new perspective and increase production while concurrently bringing down cost? Planning, funding, and building homes that real people can afford to live in, and eventually own, is a desirable goal, both in a societal as well as a business sense.

Manufacturing has come a long way and the precision techniques that have come to characterize automobile or jet engine manufacturing are eminently applicable to home construction.

Looking back at the U.S.again, where the gap between available affordable homes and the people who need them is even wider, and the potential return on capital invested is likewise far greater, is there any reason to hold out on prefab modular housing? It’s time to acknowledge, and invest in, the promise of factory-built housing once again.
For more information re: Legal and General (L&G) as a modular builder, click our post from 2016 – “L&G Addresses U.K. Housing Shortage, Plans To Roll Out New Prefab Housing”