How Housing Demand is Changing Perceptions and Policies
Setting aside the major issues of labor and lumber availability for the moment, the affordable housing shortage is one of the biggest challenges we face today. I am not going to rattle off all the statistics on housing, but each year we fall further behind with no real plan in place.
But that is all starting to change.
The overall demand for housing has been the biggest driver for increased interest in modular construction in recent years. In fact, the multifamily market has grown from virtually nothing, to seven percent of total factory output in 2019, to twenty-one percent in 2020, making this the fastest growing sector for the modular construction industry in North America.
It seems that at least weekly, someone on our team is having a conversation with a local, state, provincial, or federal agency about housing needs.
For the past two years, we have been working with a multi-agency coalition in Virginia to help them implement an “all-of-the-above” approach to housing, including modular, manufactured, panelized, containerized, and tiny homes. As part of their low-income tax credit program, Virginia offers “innovation credits” for projects that can deliver housing more quickly and at less expense. Multiple modular projects have received funding as a result of these credits.
We have been involved with similar conversations recently among key agencies in California to increase the use of factory-built housing to address their massive needs. In fact, just yesterday Governor Newsome announced a new $12 billion initiative to address homelessness and specifically included modular construction as part of the solution.
Just this week, the Michigan State Housing Development Authority (MSHDA) announced it is allocating $2 million for its modular housing program to create affordable builds. Through this program, MSHDA is awarding up to $200,000 per recipient to aid in the construction, marketing, and sale of a modular home that can serve as a catalyst to encourage new construction of affordable homes within the community.
We have mentioned in previous posts about the industry-led action taken by Salt Lake City Council earlier this year, adopting language from the new ANSI standard for offsite construction. This effectively opened the City for more modular developments.
After talking with our Owner/Developer Council, we began reviewing state Qualified Allocation programs (QAPs) to see which programs offer incentives favorable to modular construction. In addition to the Virginia and Michigan programs, Colorado’s program has language favorable to our industry. Specifically, the program states: “Applicants demonstrating that the development team will maximize efficiencies in design, development, and construction practices including new building technologies will be considered favorably in the award selection process.”
But we are also finding allies in unexpected places. The City of Chicago, historically a union stronghold, recently led an effort to get a bill passed prohibiting the State from imposing more stringent requirements for modular projects than site-built projects. The City believes it needs to have more resources available to address its housing needs – and we agree! Our team contacted state lawmakers and submitted support letters for the bill which is expected to pass.
In New York, we were able to kill a bill last session that would have required New York City licensed (union) plumbers and electricians for all modular projects entering the city. This bill would have a chilling impact on any future modular projects going into the City. The bill reemerged this session with even greater support, passing the Senate unanimously. Through our Seals-funded lobbying effort, we were able to raise enough opposition to the bill to get it stalled for a second look. When New York affordable housing advocates recently weighed in opposing the measure, the momentum for passage hit a wall. More to follow on this bill.
But the single largest push from a government agency for the modular industry in North America came from north of the border. The Canadian Mortgage Housing Corporation (CMHC) announced its “Rapid Housing Initiative” last year allocation $1 billion for modular only housing developments. CMHC received over $4 billion in qualifying applications, prompting the agency to allocate a second round of funding this year to the tune of $1.5 billion!
We are not suggesting that the modular industry alone can address all the housing needs. But we can and should play a larger role. As we get these platforms to discuss housing, we will advocate for needed policy changes and greater incentives for our industry. Your support of our industry Seals program will continue to fund these advocacy efforts.
Started on May 12, 2021 by Tom Hardiman