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Thank You!

Original Comment

On behalf of the Board of Directors for the Modular Home Builders Association, we want to thank all the sponsors, exhibitors, and attendees at our recent annual conference in Hershey, PA. The conference was the best attended event since we re-formed the organization as MHBA in 2012.

In addition to practical sales advice from Sandler Training and a housing forecast by Metrostudy, attendees had an opportunity to share their thoughts on everything from building codes to the impact of technology on the future of the modular construction industry.

During the business meeting, membership voted in a new board to lead the organization in 2019, while acknowledging outgoing board member Norm Hall of Simpson Strong Tie. The new board will consist of thirteen company representatives from eight different states. We also reported that the association has experienced a twenty percent growth in membership this year. To help address a weak link in our membership base, the board voted to create a special dues category aimed at enticing more set crews/installers to consider joining.

MHBA’s Consumer Awareness Program, currently funded by eight manufacturers, has generated a little over $25,000 through August for industry marketing efforts. MHBA is encouraging more manufacturers to consider supporting this voluntary program to help reach even more potential home owners.

MHBA also announced the winner of our 2018 Home of the Year Award. Over 1,000 people voted on the prior Home of the Month winners to select a home by Heritage Custom Homes and Ritz Craft Homes as the best modular home in the country for 2018.

While serving on the board or one of MHBA’s committees is a great way to get involved, we also want to encourage members to submit articles and images for our website and social media platforms, submit a Home of the Month entry, and encourage other companies to join the organization.

Again, thank you to all who helped make this conference a success!

Started on October 12, 2018 by Tom Hardiman

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That quote I gave you last week isn't good anymore. Have you heard that lately?

Original Comment

When it comes to home construction, more isn't always better, especially if we are talking about more materials price increases and more government regulations. These are just two of the hot topics we will be discussing at MHBA's upcoming annual meeting on October 10th at the Hotel Hershey in Pennsylvania.

Robert Gaudiosi of Heritage Global Inc. will speak on materials price increases and what we can expect for the upcoming year.

Cutting Through the Red Tape – Join IPIA Program Manager and Senior Auditor Neil Jones of Radco, Inc and MHBA Director Tom Hardiman for an overview and discussion of what’s happening at the state and federal levels regarding government regulations.

We will also elect our 2019 board of directors and announce our 2018 Home of the Year at this event. Exhibitor and sponsorship opportunities are available, and registration is now open here:


Started on July 11, 2018 by Tom Hardiman

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After Twenty-Five Years, Industry Makes Progress on Daytime Oversize Loads in Connecticut

Original Comment

The State of Connecticut has long been the outlier in terms of state transportation regulations among the northeastern states. While other industries transport oversize loads during the day, our industry must transport during the night, from midnight to 5:00 a.m. Monday – Thursday.

For the past two years, MHBA has introduced legislation to require the state to treat our industry in a similar manner that it treats others in terms of oversized loads. And for the past two years the CTDOT opposed our bill and killed it.

This year is different. With the support of the State Troopers Association and the backing of CT Transportation Committee Chairman Antonio Guerrera, we found a sliver of light and grabbed it! The DOT was adamantly opposed to any changes again this year. But the State Troopers Association pushed back. Chairman Guerrera basically got MHBA, the State Troopers, and CTDOT in a room and said figure something out.
And that’s what happened. The House bill recently passed the Assembly with the following terms:

One-year pilot program effective from passage date.

Oversized loads (14 feet wide but less than 16 feet) will be permitted to travel during the day with the following limitations – only one per day, Monday through Thursday, accompanied by three troopers.

These day loads will only be permitted on CT highways, meaning only units passing through the state and not delivered to the state will be able to use the day time slots.

State Troopers WILL measure the loads!

The DOT held firm that with the construction activity, oversize loads would be dangerous on smaller side roads in CT during the day. And unfortunately for us, the State Troopers agreed.

We realize that these changes would not help our members and projects going into the state, so we asked for one more concession – move the allowable nighttime moves up to shorten the time shipments sit idle on the NY/CT border. The DOT agreed to this change, but it will happen outside of the legislation, with nighttime moves for oversize loads beginning earlier (details still pending).

While this certainly was not everything we asked for, it represents real progress and a starting point. We felt it was critical to make some progress on daytime moves given that nothing has happened in the last twenty-five years. If there are no accidents or incidents during the pilot program, we have a strong chance of expanding the terms after the one-year pilot program.

Started on May 10, 2018 by Tom Hardiman

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Modular Industry Earns 96% Satisfaction Rate in Massachusetts – Working Towards 100%!

Original Comment

In the minutes recently posted by the Massachusetts Board of Building Regulation and Standards (BBRS) Rob Anderson, Codes Chief in Massachusetts, indicated that a survey was forwarded to the head of each building department in the commonwealth on February 21st asking whether or not they have experienced any difficulties with manufactured buildings over the last 2 years. About 70 responses were received. Most responses indicated no issues, some identify deficiencies that had been resolved and a few reveal ongoing issues. History demonstrates that, in most instances, difficulties relating to manufactured buildings occur during the set.

MHBA is aware of three ongoing issues as reported by Boston’s WCVB-TV. It is unclear from the BBRS minutes if the 70 responses represent 70 modular projects or 70 building department heads who may have experience with multiple modular projects. Assuming 70 total projects, the industry can definitely state the we have a 96% satisfaction rate in the state of Massachusetts (67 satisfied out of 70) over the past two years.

While we all want to achieve 100% customer satisfaction, we know that sometimes there are factors out of our control. We will also put that 96% satisfaction rate up against the site-built home industry any day!

Started on May 4, 2018 by Tom Hardiman

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MHBA Updates

Original Comment

We wanted to provide a few updates on items the Modular Home Builders Association is working on for the industry.

MHBA continues to promote the industry and reach out to potential home buyers to share the advantages of modular homes. This is done primarily though our Home of the Month competition as well as press releases, online advertising, and interviews in other publications. These efforts are funded by the MHBA member manufacturers who voluntarily support our Consumer Awareness Program (CAP) at $10/floor manufactured. This fee is passed on to your builder network and can be capitalized in the cost of the home making it a tiny fractional expense that does a tremendous amount of good for the industry. Please consider supporting our industry’s Consumer Awareness Program and pass the fee onto your builders whether they are MHBA members or not! They are benefiting from these efforts.

MHBA has retained a lobbyist and are working to get an amendment added to a transportation bill in Connecticut that, if approved, would essentially double the number of oversize shipments we can send into and through the state by allowing day time moves. Several members are financially supporting this effort.

We recently received news that the Michigan State Supreme Court has agreed to hear a case involving a modular home owner who built a state and local approved home in a development that had a restrictive covenant against modular homes and the lower court ordered the home removed. The Supreme Court specifically invited MHBA to file an amicus brief on the case. This may be the first time a state Supreme Court has taking up the issue of the validity of these restrictive covenants.

We are talking with various housing authorities and government agencies about using modular to address chronic housing problems, mainly in large urban areas. We have open dialogues going on now with NYC Mayor’s Office, NY Department of State, Fannie Mae, and various contacts in the SF/Bay area.

We firmly believe that the modular industry has a historic opportunity to gain major market share over the next 12-24 months if we can position ourselves and work together better. We are still a small national trade association with just over 100 total member companies trying to address multiple issues and opportunities. We need your help to move beyond 3% market share. We need more builders and suppliers in the organization to build up our reserves if we are to be able to keep fighting anti-modular rules and regulations. We need more manufacturers supporting industry efforts like CAP. We need to work together better as a unified industry rather than as dozens of individual manufacturers.

Save the Date – MHBA’s annual conference will be October 9-10 at the Hotel Hershey in Pennsylvania. Speakers, sponsorship and exhibitor opportunities, and more details will be posted when finalized.

Started on April 17, 2018 by Tom Hardiman

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We Have a Problem; Someone Should Call the Government!

Original Comment

On any given day in any given week, MHBA may be contacted by a member (sometimes a non-member) with an issue they are having from a government agency. In the past, we have written letters to local mayors, made visits to state lawmakers, and had talks with federal agencies.

I tried to find out exactly how many local, state and federal agencies there are in the U.S. and that task alone is daunting. The U.S. Census Bureau reports that there are a little over 89,000 local agencies in the country, an average of about 1,780 per state.

There are also 50 states plus the District of Columbia, and in each state a legislative, judicial, and executive branch. Under that executive branch, its hard to know exactly how many total state agencies exist. Texas, for example has about 150. At an average of 100 /state, we can add 5,000 to the total agency list.

Now, you think it would be easy to know exactly how many federal agencies exist. It is not. Multiple sources list the number from a low of 78 to a high of 400 agencies. The fact that there is no definitive number says quite a lot!

For the sake of this discussion, I’m going to take the liberty of rounding off the total number of local, state, and federal government entities at 100,000. MHBA has just over 100 dues paying members, so this will be easy. We are going to assign each of you 1,000 agencies to track and monitor to make sure no polices are passed that have a negative impact on our industry.

Of course, no one could do that. MHBA does try to narrow that list and monitor those agencies that are MOST LIKELY to impact our industry. Thirty-five states have a modular or industrialized building program that write and enforce the rules on our industry. That’s our sweet spot. We can also address legislation or legal actions that are directly targeting our industry, as those don’t happen with great regularity. We are currently engaged in direct advocacy efforts in New York, Connecticut, and Michigan. We are also always engaged in relationship-building and “soft” advocacy efforts in a dozen or so other states, including a call with officials from Massachusetts in a few weeks.

What we cannot do is allocate non-existent resources to fight policies and regulations that impact the entire business community. We are not likely to have any influence on changing the federal tax code that impacts everyone. Or environmental policies that impact the whole construction industry. Or transportation laws that impact the entire trucking industry in the U.S. But on that last one, we tried anyway:

About a month ago, MHBA was contacted and asked what we planned to do about the new federal transportation regulations pertaining to required use of electronic logging devices (ELDs) that were set to take effect. The rule, passed as part of the Moving Ahead for Progress in the 21st Century Act (MAP-21) law in June of 2012, included provisions that mandated the use of ELDs. This section of the law became effective in 2016, with a two-year window to implement. That implementation deadline was December 18, 2017.

Prior to that deadline, MHBA spoke directly officials at Federal Motor Carrier Safety Administration (FMCSA) regarding a potential exemption for HUD-code manufactured housing. If such an exemption existed, we wanted it to also apply to modular home shipments. The FMCSA replied - “I don’t have good news for you. There is no exemption for manufactured housing nor any other industry. The only exceptions are those cited on the agency homepage,” listed here:

-Drivers who use paper logs no more than 8 days during any 30-day period.

-Driveaway-towaway drivers (were the vehicle driven is the commodity) or the vehicle being transported is a motor home or a recreation vehicle trailer (at least one set of wheels of the vehicle being transported must be on the surface while being transported)

-Drivers of vehicles manufactured before model year 2000.

Many in our industry are now facing significant shipping increases as a result of these new regulations and wondering why MHBA did not stop them. More specifically, many are wondering why MHBA didn’t get the modular home industry exempt from the law. It took an act of the United States Congress and six-plus years to implement this law. And it will take an act of Congress to repeal it. That isn’t going to happen in the near future. It takes a Herculean effort just to monitor the agencies most likely to impact us. It is impossible to predict and monitor the thousands of other entities that MAY have some impact on our businesses.

Think of it this way: If every company in the modular home industry linked arms and joined forces, we could create a barrier (or perhaps a force field) around the whole industry to protect it. But when one company drops out, it stretches the others and our “force field” becomes thin in spots. When 100 companies try to create a barrier against 100,000 agencies, you can see how challenging this becomes. Conversely, every time a new company joins our forces, we all become a little stronger.

MHBA is very thankful for the support of the one hundred plus companies who have linked arms and stepped up to protect our industry. We are on the right track and we are growing. You may not always see the work we do, and those attacks may come in areas that don’t directly impact your business. In 2018, let’s make it a goal for every member to recruit one more company to join our ranks and make the industry stronger!

-Written by Executive Director Tom Hardiman

Started on January 26, 2018 by Joy Wang

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Modular Home Builders Association 2018 Goals

Original Comment

In 2017, MHBA surpassed the 100-member milestone for the first time in its history. Looking to build on that momentum, MHBA has several goals and initiatives already in place for the new year. Here’s a quick summary:

Less Government – One thing our association does better than any other is to lobby and be advocates for the modular home industry. MHBA is the only national association dedicated exclusively to the modular home industry – no other councils, divisions, chapters, or distractions. Our primary focus of our advocacy efforts are the state modular administrative program requirements. Each time a new form is mandated, your time and cost increases. MHBA maintains good working relationships with state program officials to ensure a fair and level playing field for our industry.

Currently, we are working with officials in New York to streamline the approval process. We also stay in frequent communication with officials in Massachusetts, New Jersey, Pennsylvania, Rhode Island, Maryland, Virginia, Minnesota, North Dakota, Georgia, Arizona, and California. But anytime an issue arises impacting our industry, we will respond.

Removing Barriers to Growth – MHBA is currently involved in a lawsuit before the Michigan Supreme Court in an effort to remove restrictive covenants that prohibit modular homes in subdivisions. This issue has been a thorn in the side of many modular home builders in many states, and we hope that a win in Michigan will spread to other states.

More Marketing and Promotion – MHBA plans to build upon the success of our Consumer Awareness program (CAP) in 2018. Last year, we saw a 21% increase in web traffic from the prior year. The main focus of the program is to drive potential home buyers to the website, so they can learn more about modular homes, then contact a local builder. One of the highlights of the program has been our Home of the Month contest, promoting the great works of our member manufacturers and builders. The MHBA CAP program is the only marketing effort aimed at helping to grow the market share for our industry. Member manufacturers fund the program by remitting $10/floor to MHBA specifically for marketing. Those participating companies are: Apex Homes, Manorwood Homes, Muncy Homes, New Era Building Systems, Pennwest Homes, Premier Builders, Ritz-Craft Custom Homes, Signature Building Systems, Simplex Homes, Superior Builders, and Westchester Homes.

In 2018, we plan to revamp the MHBA website to help improve customer navigation. In doing so, we anticipate an increase in the number of leads generated and distributed to our builder network.

In summary – less government, more marketing, and more leads!

We are excited about the opportunities in 2018 and want to ask you to continue your support of the industry trade association by renewing your 2018 membership at www.modularhome.org. Feel free to contact dave@modularhome.org with any questions about your membership.

As always, thank you for your past support!

Started on January 3, 2018 by Tom Hardiman

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MHBA Weighs in on Michigan Legal Case

Original Comment

The MHBA Board of Directors recently voted to file an Amicus Brief on behalf of the Goyings family and their case scheduled to appear before the Michigan Supreme Court. At issue is whether a developer or subdivision can restrict an otherwise compliant home based on the manner in which it was constructed or assembled, directly addressing poor language used in decades old restrictive covenants.

Case summary: The Goyings built a system-built home through a local modular builder. Their neighbors then sued to have the house torn down, arguing that it violated restricted covenants that barred “modular or prefabricated homes” from the neighborhood. The Goyings’ home was of superior quality, and substantial parts of it were to be “stick-built” on-site. Unsurprisingly, then, the trial court agreed that the Goyings’ house wasn’t a “modular home” of the kind described in the restrictive covenants. But the Court of Appeals reversed, holding that the Goyings’ home was a modular home because it contained modular components.

The attorney for the family argues that the trial court’s reading is the right one: that “an entirely modular, premanufactured or prefabricated home” couldn’t be placed in this neighborhood—but the Goyings’ home falls outside that definition. He reads various provisions of the neighborhood covenants together, and he explains why the contrary reading—requiring 0% modular components—would eliminate a huge swathe of homes.

As amicus, MHBA’s role would be a little different, stressing the broader policy implications of the Court of Appeals’ approach: less consumer choice and less affordable housing options, with little benefit (given the high-quality and aesthetically appealing nature of today’s system-built homes).

The inspection and quality control process in Michigan is more robust for a modular home than for a conventional site built home. Furthermore, these restrictive covenants that prohibit “modular homes” do not prevent a site built home from being constructed in a poor manner and lowering the value of surrounding homes.

In this age where Fortune 500 companies and developers around the world have embraced modular construction, it’s absurd that we still have to deal with the misconceptions of the prior generation in these template-based covenants. Every home and building contains some degree of prefabrication or component from roof trusses, to mechanical subassemblies. Why should it matter HOW the pieces are assembled, when the focus should be on the final product.

In addition to the legal case, MHBA is considering having legislation introduced that would prevent banning the method in which a home is constructed. While these are longer term efforts, we feel they must be challenged on multiple fronts.

Started on November 13, 2017 by Tom Hardiman

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What's Next?

Original Comment

In my first two articles about the proposed Chicago deal to build 20,000 housing units, I expressed my frustration that City leaders chose a foreign company over the dozens of nearby modular manufacturers. I also expressed my frustrations over excessive regulations that hamper the growth of existing manufacturers. But competition and regulations are reality in our business. The real question we need to be asking ourselves is this: What can we as an industry do to better position ourselves for future opportunities?

I am 100% absolutely certain that modular construction will be much more widely adopted in North America than it has been in the past. When leading companies like Marriott, Google, Amazon, and Starbucks start embracing modular, you can bet it will catch on.

McKinsey Global Institute (MGI), one the world’s premier business consulting firms, cited deployment of modular construction as one of their five ways to close the housing gap in California. In fact, MGI stated that using modular construction would save California $100 billion over the next eight years.

The interest in modular construction is here!

Why then, aren’t more people using it? There’s a question I get asked a lot. I think a big part of the answer is that the industry is largely regional in nature. Sometimes a market (like multifamily) gets hot in a region where there simply are not many modular factories who can (or are willing) to service that area.

The modular manufacturing base is primarily located in regional “hubs” across North America including in places near Harrisonburg PA, Douglas GA, Elkhart IN, Dallas, TX, Riverside CA, and Calgary, Alberta. But the multi-family housing needs are in places like Chicago, Philadelphia, Boston, San Francisco, and Vancouver. Transportation costs of the modules are often a limiting factor in determining service area.

In order to expand the service area, we must find ways to reduce the costs of transportation, or alternatively, reduce other costs to offset transportation. Those opportunities exist within the factories by gaining efficiencies through more automated processes, streamlining production steps, and improving the work “flow.” Implementing new technologies and communication strategies that make it easier for your customers or builders to understand your products is another “under-explored” area within our industry. Manufacturers must continually be looking to improve upon their efficiency.

We can also address added costs that result from excessive regulations. The industry as a whole needs to actively and aggressively push back on new regulations that target our industry and add no value or safety for the end user. Regarding industry government affairs efforts, I’ve heard it said dozens of times from many companies - “that issue doesn’t impact my business so I’m not interested.” If the industry has an issue in Maryland, for example, every company needs to be concerned, whether they do business in Maryland or not. An attack on one of our companies is an attack on all of us! We need to bring the full weight of the industry to the table at each for each and every and challenge we face and speak with a unified voice.

In many of these cases, it’s not the distance from factory to site that matters. Often, the manufacturers within a particular region may or may not have the experience or interest in building for that sector of the market (multifamily, for example).

Business owners need to be regularly scanning their environment, identifying new market opportunities, and investing in market research and analysis. In short, the industry needs to have an insatiable appetite for learning. But beyond this, industry participants must be open to the POSSIBILITY of changing their own business models to pursue new opportunities (easier said than done, I realize!).

These are fairly high-level recommendations that can easily go overlooked by readers. So, I will boil it down to a list of more tangible items the industry needs to focus on if our goal is to grow market share:

1) It’s hard to speak with a unified voice when many companies in the industry are not supporting their respective trade associations! MBI serves companies engaged in commercial modular markets (education, healthcare, retail, administrative offices, institutional facilities, hotels). MHBA represents the single-family home market. If you are a modular manufacturer or contractor/builder, or a company that supplies services or materials to this industry, you need to join one or both of these organizations! If you don’t like the direction these organizations are heading, join, get involved and make your voice heard, rather than criticizing from the sidelines.

2) Both groups have services in place to help fight excessive regulations. But we don’t always hear about issues when they first arise. Believe it or not, the state agencies don’t inform us of what they are doing behind the scenes. We are counting on companies being our eyes and ears in the field. If you are having regulatory issues, let us know about it.

3) MBI has its “Seals” program whereby manufacturers are asked to acquire one $20 seal (label) for each commercial module manufactured. The funds from this voluntary program are earmarked to address government affairs issues and to further promote the industry through greater marketing efforts. Only about half of MBI’s manufacturers support this program. As a result, the funds and actions we can take are obviously limited.

4) MHBA implemented its Consumer Awareness Program (CAP) about a year ago. We ask all manufacturers to voluntarily add $10 / single family module manufactured. Those funds are earmarked exclusively for marketing and promotion to potential home buyers. Only eight of MHBA’s manufacturer members currently support this effort.

5) There are all sorts of learning opportunities available for the modular industry. Some of which are hosted by the above-named groups and many by other organizations such as the NAHB’s Building Systems Council, or the National Institute of Building Sciences Offsite Construction Council. I understand that training is time consuming and sometimes costly for many companies, but what’s the alternative? Manufacturers must embrace a continuous improvement mentality and an appetite for learning as much as they can about new technology, processes, skills, markets, etc.

6) More quality projects delivered! The best thing any company in the modular industry can do is to deliver a quality project – be that a home or a hospital. We try to showcase our best projects through various outlets and always need more case studies. For single family homes, the easiest path is to enter your project in MHBA’s Home of the Month contest. For MBI, we use Awards of Distinction entries year-round for our marketing efforts. Make sure to get your projects in for consideration.

I think we have many pieces of the puzzle readily available for this industry to take off. But like any puzzle, it’s hard to complete without looking at the bigger picture to see how all the pieces go together. And it’s impossible if some of the pieces are missing.

Started on August 16, 2017 by Tom Hardiman

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Who's Courting You?

Original Comment

With all the political chatter about building a wall or imposing travel bans to keep certain people out of America, there is no such conversation about keeping foreign investment out. In fact, most public officials in the economic development arena are actively recruiting foreign companies to open facilities on U.S. soil, often offering generous incentives to do so. And I’m not suggesting that is a bad thing.

Reuters analysis of federal jobs data shows that out of 656,000 new manufacturing jobs created between 2010 and 2014, two thirds can be attributed to foreign direct investment. More recent jobs numbers are not yet available, but over $700 billion in foreign capital has poured in over the last two years bringing total foreign investment to $3.7 trillion at the end of 2016, a world record.

For example, German carmaker BMW has invested $8 billion in a 1.2 million square foot assembly plant in Spartanburg, South Carolina, which has become the largest single exporter of cars by value from the United States. (source: Fortune Magazine June 30, 2017).

And again, I’m not suggesting this is a bad thing, because it does bring much needed jobs.

In my last article about the 20,000 modular home development in Chicago, I admitted that maybe I was naïve or even jealous. That was wrong. The appropriate emotion I’m feeling is frustration!

I’m wondering if anyone reading this has ever built a home or modular building in Chicago. If so, I’d love to hear your story about how the city leaders greeted you with open arms, with reporters on hand to take pictures, and the tax incentives and training grants that economic development officials no doubt showered on you.

Didn’t happen like that? How about this – you felt as if you were being prosecuted for crimes you hadn’t yet committed while city officials had their eyes on you. They buried you in a mountain of paperwork, permits, and approvals. You were questioned about the quality of your work and your workers’ union status.

My point is simply this – while its all well and good for elected officials to go after new employers, who’s taking care of the existing ones? Who is making sure that the company that has already been employing local people and paying taxes is healthy? Because our industry is made up of a lot of smaller companies, we don’t often make the splashy headlines or land the mega deals – or gain the attention of our elected officials.

There are over 150 commercial and modular home builders in North America (excluding HUD code builders) each employing an average of 65 people in their plants. That’s 10,000 factory workers, not including all the builders, subcontractors, suppliers, and others supporting the industry.

Now there have been some deals made to existing U.S. manufacturers recently. President Trump was quick to the podium to pat himself on the back for saving 1,000 jobs at the Carrier HVAC plant in Indiana. And it seemed like State officials opened the coffers and worked overtime to make that happen.

So yes, its frustration I’m feeling. It’s fine that foreign companies and being asked to the prom, and great that some larger U.S. manufacturers have been shown some interests as well. But who’s courting the existing modular manufacturers?

While foreign companies and large manufacturers ae being showered with incentives, existing companies are being showered with regulations, taxes, fees, and tough labor laws.

I’m not feeling the love; are you?

In my next article on this subject, I’ll focus on what our industry can and should be doing to better position ourselves for industry growth (I’ve been getting A LOT of input on this lately).

Started on August 9, 2017 by Tom Hardiman

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US Steal? America for Sale

Original Comment

U.S. Steel is one of the most iconic companies in the history of the United States. They even got mentioned in the Godfather! U.S. Steel was the company that built Disney’s Contemporary Resort as a modular building in 1971. U.S. Steel’s South Works facility in Chicago once employed over 20,000 people. The company was a symbol of this country’s manufacturing prowess.

However, beginning in the 1970s, South Works began a long period of downsizing, finally closing for good in 1992. Twenty-five years later, the lot still sits vacant. Despite several efforts to develop the property, nothing yet has materialized. Until now.

The Chicago Tribune reported a plan involving two European companies to build as many as 20,000 modular homes on a 440-acre unused tract of land known as South Works. The Tribune quoted Mayor Rahm Emanuel as saying “this agreement is a major milestone towards converting an unused stretch of land that represents Chicago’s industrial past into a vibrant community that will contribute to the Chicago’s economic, cultural and recreational future.”

On one hand, you have to admire the grit and tenacity of Mayor Emanuel to make something happen with this land. Embracing modular construction is another bold move for Rahm, one that will need to be squared with construction unions. But is selling off part of the Windy City to foreign interests really a good idea? Even if it is the “baddest part of town”, to quote Jim Croce.

The two companies cited in the story are Emerald Living, a unit of Dublin-based WElink Group, and Spanish partner Barcelona Housing Systems. Now, the last time these two names surfaced in the same news story, we learned that a U.K. housing authority had cut a massive US$3.3 billion deal with them. Under the deal, five factories would be opened in the U.K., employing U.K. residents and building 25,000 prefab homes for the U.K. over five years. Sweet deal for everyone, right? Well, not the U.K. modular manufactures who were left out of the deal.

Oh, and one more thing – there was a third partner in the U.K. deal: Chinese mega corporation, China National Building Material Company. It is actually the Chinese company opening the plants and building the homes in the U.K. “based on designs pioneered by Spanish specialist Barcelona Housing System.” Why are those words important? Because it’s the same language that appears in the news stories about the Chicago deal - “The site will have a substantial residential component of up to 20,000 housing units built with innovative, environmentally-friendly technology pioneered by Emerald Living’s partner, Barcelona Housing Systems (BHS).”

The Barcelona deal was apparently selected over a “vague” Chicago-based proposal and another proposal from a Chinese company. But who exactly will be building these homes?

Who cares, you say – no one else was building anything on the southside. Let a Spanish (or even Chinese) company have at it! It will ultimately be better for the city and better utilize an unused piece of land. All true.

The sitting mayor of Chicago is going to tell people it’s a good deal to have a Spanish (and perhaps Chinese) manufacturer build 20,000 homes on a piece of land once occupied by the mighty U.S. Steel? Why? Because part of the deal included the company opening a factory in Chicago and agreeing that factory would be unionized. That’s how Rahm squares the deal with labor bosses.

The modular home industry builds between 25,000-35,000 homes nationwide on an annual basis. A project for 20,000 homes would keep ten modular factories, each employing an average of 125 workers, busy for the next ten years! Oh, and by the way, Elkhart, Indiana is less than two hours from Chicago. That area is also home to nearly a dozen residential and commercial modular manufacturers who would probably like a bit of that action (remember when then-President Obama visited the area multiple times during the recession)? So many questions:

-Is it good for overall industry growth that 20,000 new Chicago homes will be modular instead of site--built?

-Does the development and potential revitalization of the southside of Chicago justify selling off part of the iconic city to foreign interests?

-Do we care if worker paychecks are from Spanish or Chinese companies?

-Is this “modular developer” the new industry model?

Maybe I’m just naïve, or even jealous. Why aren’t more developers working with U.S. manufacturers on innovative solutions to our urban housing issues?

This article is not intended as a wake-up call for the modular construction industry. It’s a far bigger story than that. This is a wake-up call for the North American construction and manufacturing industries at large. And it’s a wake-up call for our political leaders.

There is way too much information here for me to properly vet and vent in one article. I plan on writing a series of articles about this issue, what it means for the industry, and most importantly, what we should do about it.

Started on August 4, 2017 by Tom Hardiman

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State Updates

Original Comment

Massachusetts Update:
We recently spoke with Rob Anderson Chief of Inspections for the State of Massachusetts. Mr. Anderson provided many updates to the program including the fact that the manufactured program has been moved from Department of Public Safety to Department of Consumer Affairs and Business Regulation.

The new building code for commercial and residential (9th Edition) becomes effective on July 1, 2017. Builders have a six- month “concurrency” period to pick either 8th Edition (based on 2009 I codes) or 9th Edition (based on 2015 I codes), but cannot mix and match code editions.

On January 2, 2018, all newly submitted projects must be built in accordance with the 9th Edition. The Department is still determining what sort of grace period will be allowed for projects approved under the 8th Edition prior to January 2, 2018, but not yet started.

For the foreseeable future, there will be no new modular program administrator. Linda Shea, the current office administrative assistant, will continue to be point of contact for the industry and issue BBRS numbers. Fifteen regional code officials in the state will be the reviewing authorities for any new project in their respective region with Jeff Putnam, serving as the State Supervisor of those fifteen officials.

New York Update:
New York Department of State recently announced that all modular projects, including New York City, will go through their program. The agency will accept third party approvals for residential projects. For commercial projects, the agency MAY accept third party approvals “at their discretion.” The current backlog and delay in approvals is partial caused by agency understaffing which is out of the control of the agency itself (budget issue). We will continue to pursue more third-party approvals for commercial projects to improve the approval process.

Pennsylvania Update:
Mike Moglia, the new director of the PA modular program indicated that he is not sure the PA program will come on line for commercial modular in November as intended. No one has been hired to fill either of the two staff vacancies created by the retirement of Mark Conte and Milt Stoltzfus. To be proactive and better prepare for the transition, the program is currently doing the following: 1) Accepting applications from Third Parties but not requiring their payment until the program moves forward. 2) Third parties need to acquire their Accessibility certifications through the Department of Labor & Industry.

The intent is that the Third Party be the authority for plan review and inspection in the factory, instead of Labor & Industry. Local inspectors are also being brought up to speed on commercial accessibility, since the existing program dealt only with residential.

Started on June 7, 2017 by Tom Hardiman

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Modular Summit Rated a Success by Participants

Original Comment

The most recent Modular Home Summit in Springfield, Massachusetts was rated as “excellent” by over 70% of the participants. Co-hosted by the Modular Home Builders Association and Modcoach, the event attracted fifty-seven total participants who heard about code and regulation updates from New York Department of State (NYDOS) and the Massachusetts Board of Building Regulations and Standards (BBRS).

Rob Anderson, Chief of Inspections for MA BBRS, started the day with a series of updates from the recently approved 9th Edition of the building codes. Rob stated that the new codes go into effect on July 1, of this year, but builders still had the option of using the 8th Edition until January 2, 2018.

Joe Hill, Don Thomas, and Daryl Andreades presented on behalf of NYDOS and answered pre-submitted questions from the industry. NYDOS still accepts third party reviewed and approved plans for residential projects. For commercial projects however, the decision to accept third party approvals is “at their discretion.” Regarding the use of foam only assemblies, the state will continue to allow this practice while working with the manufacturers of the products form more details.

Mr. Hill also advised the industry to review and comment on the upcoming 2017 supplement to the code, which includes a provision that may trigger mandatory sprinkler systems in single family homes. If you build a two-story home and add a habitable attic space, that will trigger the requirement for sprinkler systems to be installed in the whole house.

Mr. Hill also clarified that all modular homes going into New York, including New York City, need to go through the DOS program. Regarding systems package approvals once the 2017 supplemental code is adopted, factories will not have to resubmit entire packages referencing the supplement, just an updated cover page.

Alex Pollard from the Massachusetts Department of Energy Resources (DOER) gave a brief presentation about a $1 million grant program to build new modular homes to replace older manufactured homes in Massachusetts. DOER is looking for developers/partners to submit a turnkey plan on how they will use the funds to meet the program objectives. The solicitation information can be found at www.commbuys.com under the Zero Energy Modular Affordable Housing Initiative.

Mary Gaiski of the Pennsylvania Manufactured Housing Institute and Tom Hardiman of MHBA gave a history and update of transportation issues in the Northeast. It is clear that this issue will need to be addressed state-by-state, starting with the most extreme situations in Connecticut.

Rick Wenner of PFS and Chuck Osterday of NTA closed out the summit with several recommendations and best practices as to how to speed up the approval process.

The event was sponsored by Muncy Homes, Champion, Universal Forest Products, and Harvey Building Products.

Started on May 19, 2017 by Tom Hardiman

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Massachusetts Governor Announces “Zero Energy Modular Affordable Housing Initiative”

Original Comment

In 2016, The Baker-Polito Administration announced the Affordable Access to Clean and Efficient Energy Initiative (“Affordable Access Initiative”). Lead by the Department of Energy Resources (DOER) and the Department of Housing and Community Development (DHCD), in collaboration with the Massachusetts Clean Energy Center (MassCEC), the Affordable Access Initiative aims to help low- and moderate-income Massachusetts residents access cost-saving, clean and efficient energy technologies. The Affordable Access Initiative launched with the creation of an inter-secretariat Working Group and a commitment of $10 million in funding from DOER and $5 Million from MassCEC.

Recently, the Baker-Polito Administration announced the results of the Affordable Access Working Group as well as several program opportunities through this Initiative. Those recommendations include the Zero-Energy Modular Affordable Housing Initiative (ZE-MAHI). DOER will fund programs that demonstrate significant potential improvements in the energy performance of manufactured housing in the Commonwealth through the replacement of existing manufactured homes with new modular zero energy housing. This grant opportunity builds on DOER’s successful Pathways to Zero grants for commercial zero-energy buildings.

More details about this grant opportunity can be found here.

Started on May 5, 2017 by Tom Hardiman

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Industry Meets with Maryland Department of Housing and Community Development

Original Comment

A few weeks ago, representatives from the modular home industry met with officials from the Maryland Department of Housing and Community Development including Secretary Ken Holt. MHBA Executive Director Tom Hardiman, Ken Semler of Express Modular, Harris Woodward of Finishwerks, and Rick Wenner of PFS participated in the meeting for the modular industry.

The purpose of the meeting was to discuss ways to improve efficiency and to streamline the process for approvals in Maryland. The main goal of the industry was to better ensure that modular builders have “parity” to site builders in terms of regulation.

When the state adopted the building codes without amending the sprinkler system requirement for single-family homes, the Industrialized Building Program immediately fell under those requirements. However, the counties had the option to delay adoption of the new codes, and in particular that requirement, and did so. The result was that for a three-year period, the modular industry had to include sprinkler systems in homes in counties that did not require it yet, while site builders did not. The impact was added cost for modular homes and a significant loss of revenue for the industry.

Today, all homes are required to have sprinkler systems. The industry wants to make sure that in the future if new provisions are required by the code or regulation, the adoption or exceptions are more closely matched between the state and counties. Secretary Holt ensured the industry that the State wanted to work together and that the program would allow such variances on requirements in which the counties opted out.

We also discussed ways to streamline requirements for sprinkler system installations and potential delays caused by the Department’s review of third-party approved plans deemed to contain code deviations.

Division Director Allen Cartwright informed the group of the State’s plans to create an online submittal process (similar to the State of Florida) and expects that system to come online in 2017. This would allow the builder, manufacturer, ATF, and agency to better track the progress of a project. The Department also inquired about offering an expedited approval process at a higher fee if the industry would be interested. While it remains unclear what that fee would be and how much more quickly the plans could get approved, the industry expressed interest in this option.

In all, the industry felt that the meeting was productive and the agreed upon changes could speed up the overall process by about two weeks with possibly more efficiencies gained if the online system and expedited process are implemented.

Started on April 12, 2017 by Kellie McDonnell

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Industry Gathers in Boston

Original Comment

I want to personally thank the twenty plus industry representatives who endured downtown Boston traffic to meet with me this week. We discussed many issues happening in Massachusetts, and I gained valuable insight and guidance from local builders.

We also talked about MHBA’s Consumer Awareness Program and some other recent success stories. Members enthusiastically offered their opinions and insights into our marketing efforts and ideas on how the association could grow.

I was particularly pleased with the level of passion and commitment to work together that I heard from many of the builders and manufacturers. The following day, I testified at the public hearing for the 9th Edition of the proposed new Massachusetts Building Code. Most of the comments I heard focused either on the inclusion of sprinkler systems in one and two family homes or the inclusion in the energy codes of electric vehicle and solar panel wiring readiness. It seems as if our building codes have gotten away from providing a minimum level of safety and entered into the world of personal behavior modification.

Rather than discuss the specific code changes, I felt it was important to send a broader message to the board. I have included that testimony here. Oral testimony for BBRS Public hearing on March 7, 2017:

Mr. Chairman, members of the BBRS board, thank you for allowing me to speak today.
My name is Tom Hardiman and I am the director of both the Modular Building Institute and the Modular Home Builders Association, representing the commercial and residential modular building community.

Yesterday I had the opportunity to meet with about twenty modular home builders, manufacturers, and developers to discuss not only the issues we are having in Massachusetts, but the opportunities for growth here.

We feel that the modular industry can help the state address important social issues such as affordable housing and homelessness as well as reduce the amount of construction waste that ends up in our landfills. We feel that the industry can build high quality, energy efficient homes and buildings and do so in a safe and controlled working environment.

However, to do this, we need a set of fair and predictable rules and regulations. We are here today to commit to working with the BBRS and the program to ensure public safety while also providing a path towards greater economic opportunities for Massachusetts businesses and workers.

We also need a program director. We do not feel that this program can operate efficiently without filling the current vacancy. Given the enormous growth potential in this state, it is necessary to have a fully staffed and fully functioning program.

Our goal is to work with the BBRS and within the program to demonstrate why we believe “Modular Means More.”

Again, I thank you for the opportunity to speak here today.

Started on March 8, 2017 by Tom Hardiman

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2017 Building Trends - Don't Forget the Gen Xer

Original Comment

The past decade has seen transformative technological advancements in society, powered by shifts in connectivity. At the same time, home building business and operations are stuck somewhere in yesteryear. As millennials begin to enter the market as home buyers, the “must-haves” they demand may finally spark innovation. There’s pressure on builders to build better, faster, smarter, and more efficiently. See story here.

But don't forget the Gen X generation. Members of Gen X are increasingly the typical buyers of newly built single-family homes. For homes built from 2010 to 2015, approximately four out of 10 were purchased by a member of Generation X. And this share will rise in the coming years. See story here.

Started on March 7, 2017 by Kellie McDonnell

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Some more interesting information on Generation X financial position



Updated on March 7, 2017 by Steve Lefler
Tiny Homes Cracking The Code

Original Comment

At the most recent ICC code development hearings, the tiny house construction appendix received the necessary 2/3 majority vote required for inclusion in the 2018 International Residential Code (IRC). As an appendix to the code, it is not an enforceable part of the code unless specifically adopted by a jurisdiction. However, the appendix provides useful information for code officials to reference and a stepping stone for future inclusion.

The appendix specifically defines the term “small house” as a building containing one dwelling unit and having a floor area of not more than 500 square feet. The appendix goes on to list several exceptions to the IRC for “small houses” including exceptions to the minimum ceiling heights, floor area, door sizes, and hallways.

We previous penned an article stating that tiny homes were not modular homes yet and specifically referenced certain exceptions to the IRC would have to be made. With the passage of this appendix, it seems as if some of the groundwork is being laid for tiny home compliance. Find our original article here.

Started on February 27, 2017 by Kellie McDonnell

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Where in the U.S. Are the Most New Homes Being Constructed?

Original Comment

Frazzled home buyers can breathe a (little) sigh of relief—particularly if they live in the Northeast.

In a sign of more new homes to come, builders secured 4.6% more permits to construct brand-new homes from December to January, according to the seasonally adjusted numbers in the latest residential sales report jointly released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. Permits were 8.2% higher than in January 2016.


Started on February 17, 2017 by Kellie McDonnell

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Tiny Houses Are Not Modular Homes....Yet

Original Comment

I recently attended a meeting with the Georgia Department of Community Affairs Industrialized Buildings Advisory Committee (IBAC). One of the main agenda topics was the regulation of tiny homes, roughly defined as a dwelling under 500 square feet.

Tiny homes have recently emerged and have grown in popularity in part due to two cable shows featuring people wanting to downsize and change lifestyles. What rarely gets mentioned on these shows however, are the codes or standards the home is built to and the zoning challenges.

For example, many tiny homes are built on a chassis and have wheels for ease of mobility. Typically, a “mobile home” like this would fall under the federal HUD code. However, HUD specifically exempts homes under 400 sf.

So if its built offsite in a factory, it would be considered a modular home, right? Well, no. Not if it’s on wheels. So if it’s not permanently affixed to real property and under 400 sf, where does it fall? And that is the current challenge faced by this emerging cottage industry (pardon the pun). More often than not, tiny homes are built to meet or exceed the same standard as a recreational vehicle.

The Georgia IBAC struggled with this exact same question – how do we regulate a home that doesn’t meet the International Residential Code (IRC)? While this decision was moved to the next meeting of the IBAC, there were many indications of where it’s headed.

In order for a tiny home to be regulated under a state program like Georgia’s and receive an insignia from the agency, it cannot be a tiny home on wheels (THOW). It must be affixed to real estate. According to Will Johnson, CEO of Tiny House Atlanta, about 75% of the potential customers of tiny homes are looking for one permanently affixed to a specific plot of land, rather than the mobile option.

In addition to the “permanency” requirement, manufacturers of tiny houses will have to significantly redesign some units in order to comply with the IRC. For starters, the 2012 IRC defines a dwelling unit as having at least one habitable room not less than 120 sf. That minimum requirement was lowered to 70sf in the 2015 IRC, an indication that perhaps the general public is trending towards smaller homes. There is also the issue of ceiling height and stair geometry. Many tiny houses have bed lofts above the living space with minimal clearance above. This would not meet the code as there has to be a minimum of 5 feet between the floor and the ceiling or that space cannot count towards the minimum room size requirement. The code also requires that each dwelling unit have a water closet, lavatory and bath (or shower), as well as a kitchen with a separate sink. And if those lofts had stairs leading up to them, the rise/run requirements in the code might call for the stairs to take up a majority of the living space. And, unless this house is going on the lot behind your current home, it’s not an accessory structure as defined by code either.

None of this is to say that tiny houses cannot meet the IRC – they can. It will just take a bit of creative designing and perhaps some exceptions to the code in future versions. As it is written now however, it would be impossible for the tiniest of tiny houses to comply given these requirements.

Beyond the code requirements, tiny houses still face many local zoning restrictions. For example, many localities have minimum size requirements for dwellings. However, we are seeing more zoning boards approve “tiny house developments” where several of these units are placed to form a tiny house community. There are also talks that HUD may reduce or eliminate its 400 sf minimum requirements, opening up the possibility of federal regulations for this niche.

So, while it’s a super-cool idea, make sure your tiny home complies with your local codes and zoning requirements before you run out and buy one.

Started on August 5, 2016 by Tom Hardiman

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Tiny Homes move a step closer to code recognition.
At the recent ICC hearings, the tiny home movement made big advances towards recognition in the International Residential Codes with the passage of a proposal to include tiny homes as an appendix in the 2018 IRC. The proposal is still in the ballot phase and must be approved by two-thirds of the voting members of the ICC before it gets approved – a tall hurdle to clear. The appendix makes certain exceptions and exemptions from the IRC for tiny homes, defined as 400 sf or less. Whether this proposal received final approval in this cycle or not, we expect the tiny house movement to continue to gain momentum and traction.

Updated on November 18, 2016 by Kellie McDonnell

This is a great post! The industry is struggling with the tiny house concept and coding. It is being viewed differently state by state. This has a huge impact on granny pods/elder cottages, another growth opportunity for the modular industry! Look forward to more on the subject.


Updated on August 5, 2016 by Ken Semler
Modular Home Builders Association's Annual Membership Meeting Shows How Modular Means More

Original Comment

The Modular Home Builders Association (MHBA) held its Annual Membership Meeting October 19-20 in Harrisburg, Pennsylvania.

The annual membership meeting provided professionals in residential modular construction a forum to network, exchange ideas, learn from experts, discuss issues, and grow professionally. Attendees participated in a discussion on MHBA’s Consumer Awareness Program led by Mike Zangardi of Ritz-Craft Homes and Ken Semler of Express Modular. Outgoing Chair Pat Fricchione of Simplex Homes and incoming Chair Robert Bender of Commodore Corporation led a discussion of what’s to come in 2017, including upcoming marketing efforts and promotional materials.

Tom Hardiman, Executive Director of MHBA, provided an outlook of government affairs in the modular industry, giving insight into federal, state, and local ordinances that could have a significant impact on the industry.

“There have been over 20,000 federal and state regulations introduced in the last 6 months. MHBA’s role is to prevent over regulation and push back when government gets too aggressive,” Tom said.

Harris Woodward of Finish Werks gave a presentation on high performance homes and how the modular industry is best poised to capture this market.

Special recognition was given to MHBA outgoing board member, Mike Clementoni from Muncy Homes, Inc., for his years of commitment and dedication to MHBA and the modular industry.

The event closed out with the announcement of the 2016 Modular Home of the Year. Congratulations to Zarrilli Homes from New Jersey! Their custom beach house was created as the perfect home for a large family to come together. With an open floor plan and custom finishes, this beach house is the perfect setting for a weekend away. See more photos at http://bit.ly/2016_HOY

Started on November 9, 2016 by Kellie McDonnell

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Not Welcome Here!

Original Comment

From time to time, we hear about local officials who want to ban or prohibit all new modular homes from entering their towns. Such is the most recent case in O'Fallon Illinois (population 29,000).

Apparently City leaders are not happy with the looks and site orientation of a recent modular home. Their solution? Ban all new modular homes going forward. Now, that's about as uninspiring and brain-dead solution as I've ever heard. You can still build a home that looks identical to a double-wide, you just have to build it on site, I suppose.

The Planning Commission has a public hearing on the matter next Monday June 27th. MHBA has already contacted the City's Development Director and expressed our concerns and let them know that these types of bans will not be allowed to go unchallenged!

Maybe local officials will see the light on this one and redirect their misplaced biases.

Started on June 22, 2016 by Tom Hardiman

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A win, but not a victory. The O'Fallon City Council voted 11-1 to approve an AMENDED ordinance aimed at curbing modular home construction in the City. The original ordinance called for an outright ban of all new modular homes. MHBA hired an attorney and rattled enough cages to get the city leaders to at least amend the ordinance.

Any new modular home will now require a special permit upon being approved via their "planned use" requirements. This is by no means the desired outcome we sought, but a marginal win compared to the outright ban.

MHBA is considering its next steps including legal action against the City.

Updated on July 6, 2016 by Tom Hardiman

well done tom

Updated on June 30, 2016 by Joshua Margulies
Ways a Modular Home Can Save You Money

Original Comment

So you are in the market for a new home and heard that a modular home might be a less expensive option? Given that modular homes are built with the same materials and built to the same codes as conventional site built homes it would seem that the costs would also be the same. Generally speaking, the costs are comparable, but there are a few ways that a modular home can save you money.

Construction Loan – During the construction phase of your home, typically you will have a construction loan. Payments (or draws) are taken from this loan to pay contractors, subcontractors and materials, with the borrower (home owner) paying the monthly interest payment. Once construction is completed, the construction loan will be paid off with your permanent mortgage loan. One of the key advantages of modular construction is the shorter construction schedule. Construction of your home is occurring at the same time as the foundation work. When the foundation is completed, it is generally only a matter of weeks before your home is set. It is not uncommon for a modular home to be completed two to three months sooner than a comparable site built home, saving you the interest payments for those months. The amount you save here depends on the principal amount, the interest rate and the draw schedule. For illustrative purposes, the monthly interest payment on a $200,000 loan at 5% is $833.33.

Materials/Waste - The U.S. Environmental Protection Agency estimated that a staggering 164 million tons of building-related waste was generated annually in the United States. According to the National Association of Home Builders (NAHB) construction of a typical 2,000-square-foot home generally produces about 8,000 pounds of waste. That's four tons of waste going to our landfills for every new homes built! A home built in a factory controlled setting yields far better results. NAHB's study concluded that on average, 4 pounds of waste is generated per square foot of new home construction (4lbs/sf). The typical modular manufacturer generates about half a much waste during the construction process.

On a modular home site, you do not see the row of dumpsters filled with drywall, lumber, and excess building materials like you do on nearly every conventional site. Excess lumber on a modular home is either used for additional wall bracing while the home is being constructed in the factory, or stored and used for a future home. Additionally, it is much easier and cost effective for the modular manufacturer to separate and recycle items that often land in the same dumpster on site. As a result, the hard costs of waste disposal are reduced.

Waste Disposal Costs: This might equate to $300-$400 on a 2,000 square foot home. But there is also the upfront cost purchasing the material that was wasted. It is not at all uncommon for site built contractors to order a little extra for all materials delivered to the site. Why? Because they don't want to run short and have to stop the project and go order more.

Materials Cost: While material waste depends largely on which materials we are talking about, we will use a "waste" figure of 10%, meaning 10% of the materials you pay for do not end up in your home with a conventional builder. That can be a significant amount when you consider as much as 25% of the total cost of your home is materials expense. This is a 2-2.5% savings on your total cost alone!

Let's use that 2,000 square foot home as an example to show the savings:

Total home cost = $240,000
Construction loan = $200,000
Cost / sf = $120
Materials cost = $60,000
Materials waste cost = $6,000
Materials disposal cost = $400
Construction loan savings (2 months of interest) = $1,667
Total cost savings with modular = $8,067 = 3.4%

When you factor in workforce labor productivity (it takes fewer labor hours to construct a comparable size modular home), as well as overall energy efficiency of the modular home once occupied (due to higher quality control and tighter building envelop), it's easy to see how a modular home can end up saving you 5+% overall.

Obviously it is impossible to apply all of these assumptions to all modular homes, but this article does demonstrate the potential savings you can realize with your new modular home.

Started on May 27, 2016 by Tom Hardiman

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What is the HERS Index?

Original Comment

With all the talk about green rating systems, we thought we’d devote some time to trying to explain what some of these programs mean to the average home buyer.

“HERS” is the acronym for the Home Energy Rating System. The HERS index is a nationally recognized system for home a home’s energy efficiency is measured. The HERS program also sets the standard for home homes are inspected and scored.

The HERS index was created by an organization known as RESNET (the Residential Energy Services Network) in order to give homeowners and buyers a standard by which they could measure the energy efficiency of their home.

According to RESNET, the HERS score is similar to an automobile’s miles per gallon. Only for homes, a lower HERS score is better. Here’s how it works:

A certified Home Energy Rater assesses the energy efficiency of a home, assigning it a relative performance score. The lower the number, the more energy efficient the home.

The U.S. Department of Energy has determined that a typical resale home scores 130 on the HERS Index while a standard new home is awarded a rating of 100. So a home with a HERS Index Score of 50 is 50% more energy efficient than a standard new home while a home with a HERS Index Score of 130 is 30% less energy efficient than a standard new home.

There are advantages of the HERS score, according to Steve Baden, the executive director of RESNET. “Today’s new homes are much more efficient in comparison to homes built just a decade ago. These homes are more affordable to maintain, comfortable, and have a higher value”.

To learn more about HERS or RESNET, go to http://www.resnet.us/

Started on May 23, 2016 by Tom Hardiman

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A 3rd party HERS rater validates the building envelope from which the computer building energy efficient program calculates the score in design. A HERS rater inspects those items during construction to validate to the local Building inspector the reported work and the actual work was performed and is correct. Once a residential house is complete; a HERS rater conducts a Duct and Door Blower test to determine its passing score. Many fail since it is after the fact of finsihed construction. A local building Inspector looks to the HERS rater for energy efficiency independence.

Clean Power Plan Rule

Because EPA has encouraged states to use building energy efficiency, including the imposition of building codes, as a way to comply with these targets, NAHB has been engaged from the beginning, which has helped to significantly improve EPA’s treatment of energy efficiency in the final rule. Additionally, NAHB, along with several partnering associations, filed suit against EPA over the Clean Power Plan Rule.

Updated on May 23, 2016 by Steve Lefler
Black Model Ts

Original Comment

For the past several years, the modular home industry has accounted for about 2-3% of all new home starts in the United States. Amazingly, this figure has held steady for the past decade despite a big upturn in housing, followed by one of the biggest economic collapses in history. Three percent through it all.

This week I have the honor of participating on a panel to hear a defense of a dissertation by a PhD. candidate at Virginia Tech, one of the leading schools of architecture in the country. Bandar Alkahlan is seeking his Doctor of Philosophy in Architect and Design Research and is set to present his research to this panel. Alkahlan chose to write his dissertation on the modular home industry, specifically “Integrated Design and Manufacturing (IDM) Framework for the Modular Construction Industry.” In reading his dissertation, the decade-long market share figure was confirmed. But his research really brought to light many reasons why our market share remains stagnant.

A key take-away from the paper for me is that, perhaps our market share is stagnant because our research and innovation is stagnant. Don’t get me wrong, I still believe modular is a far superior process for home building than the traditional “sticks and bricks” approach. But even within our industry, we still build relatively the same way as we did twenty years ago.

Alkahlan interviewed thirteen industry participants and asked them a series of questions, one of which focused on how companies integrate information technology. The choices ranged from use of two dimensional CAD, in which all thirteen respondents indicated using, to 3D CAD (6 of 13 answering yes), to Computer Aided Manufacturing (CAM), where only one respondent answered yes. None of the thirteen respondents answered affirmatively to more advanced processed such as BIM and 3-D printing of components and none indicated that they invest in R&D. Granted, there hasn’t been much in the way of excess revenue lately to invest in these programs and processes. But hear me out.

Alkahlan makes a comparison to the auto industry. The assembly line was truly an innovative break-though and allowed Ford to mass produce thousands of Model Ts at an affordable price. (You can have any color you want, as long as it’s black). When the US auto industry failed to adopt new processes in the 1970s, the Japanese automakers gained considerable ground, and in some cases lapped our manufacturers. Today, the auto industry has largely moved away from the straight assembly line production process. Now various car components are manufactured at multiple locations and assembled in the factory, based on consumers’ choices.

I’ve often said that every major industry from communications, to the auto industry, to entertainment has evolved and improved in productivity and efficiency. Every industry except the construction industry. But all of those other industries embraced new products and processes along the way which accelerated their growth.

This mass production mentality (vs. mass customization) is just one of the key points in his dissertation. But it’s a point that I think the industry must address. Is it possible that we are only 3% of the market because we continue to build homes the way Henry Ford built model Ts? Well, at least we are not still building horse drawn carriages like the site built guys!

Started on May 17, 2016 by Tom Hardiman

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