Building Modular Housing Factories Near Areas With High Housing Costs

Affordable housing developers are keenly aware of the growing need to house struggling residents quickly. The pandemic has only exacerbated the mismatch between housing supply and housing need. There is, of course, also an economic crisis, and affordable housing development is a proven strategy to spur job creation and spark positive ripple effects across multiple sectors.

However, operational challenges precipitated by the pandemic—not to mention the strain on public resources‚ have made affordable housing developers extremely sensitive to the costs of building new developments. This has increased the appeal of modular housing construction, which has been promoted as a way to boost productivity, cut costs, and force innovation in traditional construction. Modular homes are residences built to near completion in factory environments, and later transported in sections to construction sites.

However, that potential has not yet been realized, and one of the reasons is the expense and delay that comes from shipping the modular parts in from distant factories. If components of a modular home are built at a local factory situated nearer the construction site, developers have the convenience of both logistical and cost efficiencies, cutting down project time and contributing to a smaller carbon footprint.

A strategy that would address housing supply, construction cost, job creation—and even the jobs-housing mismatch—would be to locate more modular housing factories directly in regions with high housing costs, in parts of those regions that suffer from lack of jobs and long commutes to what jobs there are. Developers seek certainty in the building environment, and a robust set of local fabrication facilities could bring efficiency, reliability, and timely delivery.

Take Southern California, for example. The Southern California Association of Governments (SCAG), the metropolitan planning organization for the region, has been told by the state housing department that the region will need ...