All Forum Posts by: Robert Carpenter

Fair points.   However offsite construction is roughly twice as efficient as site built.  You get same sq ft at half the cost.  Also with site built there is a critical minimum size below which construction is not profitable.  Next time you are in a house look for the phenomenon of superfluous space.  The tendency in site built is to put in two or three   living rooms and two dining rooms rather than fulfill the promise of Wright's open plan living, in order to boost profitability.   The kitchen, the most expensive part of a house, has been deliberately outsized and  repositioned to  the middle of the living room while the dining room is often pushed some ways away - for the purposes of boosting profitability - and in my opinion making a mockery of the open plan.  The great awkwardness of the site built home is a function of the builders need to pad it with extra space in order to be profitable.  On the other hand there is no such constraint with off site.  Homes can be designed which are just the right size.  Now where the trend in site built is to expand the house and shrink the lot - so that outdoor space is all but gone and what there is is never used because it has no privacy, offsite presents the great opportunity to include large, pleasant, private garden like courtyards situated between each  home.      

IMO, the future of residential real estate will belong to manufactured housing. Recall that the last time the US economy entered a protracted period of stagflation was in the late 1960s. In consequence, during the next four decades manufactured housing sales surged, the highwater mark being nearly 400,000 in annual sales. It was only when jurisdictions aggressively moved to enforce exclusionary zoning that manufactured housing sales began to decline. The incipient environment of stagflation can be expected to produce comparable effects on the housing market. Proposals to rework HUD's AFFH rule to more vigorously make use of its preemptive powers to prevent exclusionary zoning will I believe herald a new golden age for manufactured as people discover it to be the better and cheaper alternative to both multifamily and site built.

The problem with site built housing is of course that it has to exceed a certain minimum size in order to be profitable for the builder.   By contrast, manufactured housing,  because its is produced in the factory, is under no such constraint.   At the same time, manufactured runs about half the sq ft costs of site built.  By transitioning  from site built to offsite construction,  the BTR entrepreneur gains a twofold competitive advantage:  Homes can be kept to just the right size and at half the sq ft cost. 

Technically a manufactured homes is a factory built home built to the HUD code standards. Factory built homes built after June 15, 1976 were required to be built to HUD code standards. There are REITs whose business model is buying distressed parks ( parks with vacancy rates of 20% or even 30% or more ) and putting in new homes. Prior to the 2008 real estate crisis lots with manufactured homes were often sold as a single unit of real estate much like a more traditional tract home financed with 'conforming' Freddie Mac loans. Post 2008 and because of Dodd Frank, park owners lost the discretion to finance such properties. Whether the home buyer was eligible for financing was governed by the regulations laid down in the Dodd Frank legislation. In response the REITs began to move to the home rental model. This BTW seems to make more sense than the site built house rental model. Much better to have say 400 manufactured homes on a single 50 acre parcel with onsite management than to have 400 site built homes on 400 parcels scattered far and wide. In my opinion this market is still in its early stages. Longer term I expect offsite built housing will begin to give the multifamily apartment some serious competition. And its not unreasonable to expect site built housing will start to give ground to the all manufactured subdivision, and subdivisions where homes are mostly rented rather than sold.

Yeah the whole fiasco with Katerra was most discouraging.  Could be they tried to do too much too soon.  Elon Musk talks about how every startup needs to first take baby steps, to start out small so you only have to correct small mistakes.    I actually think the solution might be a hybrid of mobile   and modular.  Mobile seems perfect for the small stuff, for bedroom, bath, kitchen, dining where you  can install  appliances, hvac, electrical, and plumbing in the factory - supplemented with  a kit based barn style garage and storage with large open plan living room above.   Anyway thanks for your input.

Thank you for that.  As for your question, doesnt the answer largely depend  on who 'yourself' is :)   If youre a municipality which must fund public schools from property tax revenue then you probably don't want more affordable housing.   In fact you are incentivized to use zoning ordinances to prevent the construction of affordable suburban mobile home communities.  On the other hand if you are an hourly wage employee you might just  think such a deal is heaven  sent.   My thinking is that the looming stagflation is going to  price more and more out of the site built market so that the middle class home buyer of the future may have to resort to manufactured by necessity rather than by choice. 

As the US economy is driven into 'stagflation' - as prices rise and real purchasing power falls -  will manufactured housing drive out site built ?  At present the number of  site built homes is around 15X the manufactured number.   Manufactured home builders have raised the bar on interior quality, fit, and finish so much as to now be on par with site built -  and at somewhere around half the cost of a comparable site built house.   Are developers beginning to see the writing on the wall ? Will  future  suburban subdivisions be comprised of manufactured homes ? 

Sounds intriguing and I'm   curious as to

The possible size of the development

The ballpark price point of the homes 

Whereabouts the development will be developed

Cheers,

Robert