The “Lego” home building system (Part One)

Given the high cost of housing construction these days. and the inefficient building methods in America and elsewhere, I've always wondered why a "disrupting company" wouldn't come up with a manufactured, modular home assembly system. In fact, I’m a “frustrated architect” (in hindsight, I should have exercised that profession!) 

There’s of course nothing new to my question as lots of of architects, builders, and frustrated home-buyers have also been asking for years. The short answer is yes, many companies have tried to disrupt housing with modular, prefab, or factory‑built systems… but the industry keeps chewing them up. 

On paper, modular construction would resolves everything from factory efficiency, lower labor costs, faster building time with higher quality-control, less waste and much more predictable pricing. But the reality isn’t that simple. Many several high‑profile modular companies have gone bankrupt, including Katerra, Veev, and Modulous. 

Many of these companies have been failing due to cost pressures and logistical challenges. The biggest obstacles include logistics that are brutally expensive with shipping that demands cranes, escorts, special trucks, and careful routing. 

This often wipes out the cost savings. In addition, construction is incredibly local, with each region, even in the “United” States being different with its codes, zoning, inspecting methods, sysmic and other weather specific requirements that make scaling nationally extremely difficult. From a manufacturing standpoint, a modular factory is only profitable if it runs at near‑full capacity and the cyclical nature of housing that make it difficult for accommodated a continued production. 

Finally, developers resist change as traditional home builders have entrenched relationships with subcontractors, unions, local suppliers and as any new system is always perceived as a threat to the entire ecosystem. I would also add that banks and appraisers often treat modular homes as “manufactured” or “mobile,” which hurts resale value and loan terms. 

In the next blog, we’ll explore if there’s still hope for more efficient ways of creating housing...