Could factory-built homes help alleviate the affordable housing crunch?

The terms “expensive” and “housing markets” are practically synonymous these days. While several forces conspire to drive up the costs of both homeownership and renting, the main reason lies with Econ 101: too little supply relative to demand.

Experts and policymakers are increasingly intrigued by the tantalizing promise of factory-built homes to quickly boost the supply of quality housing at more reasonable prices. One ambition of the new federal housing legislation — the bipartisan 21st Century ROAD to Housing Act — is to encourage the production of factory-built housing.

Among the companies using mass-production techniques is Christian Lawrence, founder and chief executive officer at RISE Modular. He played with Legos when he was young, and today his company is “involved in sort of life-size Lego pieces, so to speak,” he said.

RISE and its approximately 200 workers build multifamily apartments in a 150,000-square-foot factory in rural Owatonna, Minnesota. That’s about an hour drive south of the Twin Cities. Modular means the buildings are constructed in factories and assembled like Lego blocks on site to local building codes.

“We're building a three-dimensional, six-sided module that has all the finishes, kitchens, bathrooms finished, and then stacking these pieces like Legos,” he said. “All the finishes are completed inside the factory before they arrive to the site.”

Inside the factory, workers swarm over a number of large wood-framed containers with spaces cut out for windows and doors — think apartment units at various stages of construction. Standing at one end of the factory, Lawrence points toward a long passageway. “This will be the corridor of the apartment building, and you can see units on either side of the corridor,” he said.

RISE operates primarily in the Midwest, Rocky Mountains, and, increasingly, the West Coast. We stepped inside one of the apartment units near the end of the assembly line. Workers are all around us. “You can see the sink is in. We're about to install the plumbing fixtures, faucet, backsplash just got grouted,” he said. “Appliances are in.”

The promise of factory-built housing is that the efficiencies gained from using mass production techniques will lower costs and improve quality. Lawrence said factory construction is about 30% to 50% faster compared to traditional on-site methods, adding that it generates less waste and that prices are about 5% to 10% lower, on average.

Rachel Siegel, senior officer in the Housing Policy Initiative at the Pew Charitable Trusts, is a fan of factory-built housing.

“You've got the efficiency of factory building, and that's true for manufactured housing and modular housing,” she said.

One aim of the 21st Century ROAD to Housing Act is to encourage factory construction. “For modular, it's going to allow for some study from HUD to think about how developments can be made,” she said.

For example, the Department of Housing and Urban Development will look into the benefit of creating a federal standard building code for modular housing.

As for manufactured homes — those built and finished inside a factory to federal standards — Siegal emphasized that the big change is eliminating the requirement that they must have a permanent steel frame for transport. “That’s going to allow manufactured homes to be built in more flexible designs, reduce waste, and lower the cost even a little bit more,” she said.

Factory-built housing — manufactured and modular — could help relieve the severe lack of housing options. However, much more needs to be done before factory-built homes join the mainstream. The new federal housing law is a step in that direction.