10:32 I went through Boxabl's 2023 SEC filing and I'm VERY troubled by their numbers. Are they the headed down the same path as these failed modular companies? Let me know if you want a dedicated video on them!
I have heard that very few banks will finance modular homes. So if I have a plot of land and put a modular home on it the next person that wants to buy it may not be able to get financing. How about a video on modular home financing.
They rank high in investments from StartEngine. But that isn't saying much since it isn't huge capital. They may survive, but that depends on the dynamics of home building costs. In CA, the fees to build are high and there are often confusing requirements for modular homes from the HOA or city. Boxable is also an expensive option compared to building a similarly sized home on site. Then there are the Chinese clones that are starting to enter the market.
I don’t comment often on videos but having been at one of the companies you mentioned that failed and having seen the failure or the others, to me it’s clear they all invested in automation and scale (both vertically and geographically) before understanding building fundamentals and experiencing success in their approach at a local level. My opinion is that most “tech” in the construction space is really not solving an inherent problem in the space and just adding cost/complexity.
As a construction worker I agree with your opinion. The only tech updates we need are to make construction physically easier so that more people will want to do it for longer careers.
Disagree vehemently. There are HUGR problems in construction industry when you look at at ration of costly to quality. Vast vast majority of houses built today are crap, the work force is crap, and methods are crap. There is NO reason houses cant last 100 years WITHOUT major renovations. That said modular isnt going to work until us customers accept SMALLER houses. Modular doens NOT lend in itself to huge spans tall ceilings weird unbox like shapes, and construction IS very complex. And customers wnat TOO many choices as in duty works hard to provide excessive choices and interior designers etc.
Great subject and real insight Belinda-you go girl. One thing you missed ?if codes WERE enforced, modular might make more inroads as they can consistently hit cod quality. Spec small builders get away with numerous code violations.
US prefab and modular producers have a rich history of delivering disappointment to buyers and investors. Be it bad timing, wrong people, intentional fraudsters, inexperience, or whatever. Best to avoid all of these operations anytime near their startup phase. Humble manufactured home builders (AKA mobile home factories), seem to have made the smoothest transitions from HUD homes to so-called BOCA modular construction.
Probably a healthy dose of idealism over practicality as well. Which is a shame, because if a Elon Musk figure tried to do modular homes, I imagine there's a workable product in there.
H Belinda, I live in an area of Arizona that experiences huge development during every real estate cycle. Here many homes are modular. A huge problems are material quality (OSB with poor binder) and workmanship (unskilled people carelessly slamming things together.) Just like the recreational vehicle industry, residential real estate developers have become generally disreputable. All of the factors you noted are very valid, but disreputation is huge.
The founders Galiano and Paolo dumped a ton of shares and pay themselves like crazy for a company with barely any revenue and losing so much investor money. I foresee class action
I visited Boxabl site in LV many years back thinking it was a good investment opportunity, but at the time most of the machines were idle and not too many workers were actually working there so I ended up didn’t invest. Please do a video on them, I would like to know if my decision was correct!
Dear Tech Bros / MBA Grads, the global housing crisis is not caused by the speed and complexity of construction. It's caused by social policies and economics. You can't automate your way out of the problem.
The fundamental problem is that housing can either be affordable, or it can be an investment. Not both. Boomers benefited from affordable housing, and then set about making it an investment.
Thanks for interesting video. I fun a small cabinet shop in Toronto, but also had the pleasure of doing graduate research under Rom Harre at Oxford, one the 20 century's preeminent philosophers of science. I have had lots of arguments about modularity over the years. The problem with the idea of modularity in construction is that it is based on a modern, Newtonian/ Cartesian myth about the predictability of the world: the myth is that with modern science, with enough data anything is predictable and consequently completely controllable, even people. In the 1950s the famous psychologist B.F. Skinner, even suggested science would make freedom and democracy obsolete. This view of science is now completely discredited by modern scientific research into complexity, such as chaos mathematics. Complex environments are inherently uncontrollable. And construction is inherently complex. The only way to cope with complexity is through continuous feedback loops and adjustments to changing conditions. This is what a good framer, drywaller, trim carpenter, or painter, or cabinet installer does with every movement. They just do it so fast that to the untrained eye it is not even visible.
Glad you mentioned BOXABL at the end. Actually inspected your thumbnail first to see if they were on the list because with how much attention they attracted and how much demand there was, I was surprised with how little they’ve actually built. Not surprised they might be struggling as well.
We are finally nearing the end of the process of having a modular 1200 sq ft ADU built on our property. One of the economic issues which is rarely talked about is the cost of moving these huge units and setting them in place. Our's required a crane which ended up costing over $25,000 just for that one step in the process. I don't know what the cost was to move the two giant boxes to our place. Another issue is that the foundation, septic system, water hookups and so on all needed to be done on site. Honestly I don't see how for single house construction modular is going to actually save the maker or user money.
Yup turns out it’s actually quite a bit cheaper to bring wood in on a truck and have some guys put it together, instead of shipping enormous empty rooms.
You will probably find virtually all resistance at state, county, and city levels is from carpenters and associated trades. While prefabricated and modular construction have multiple benefits they don't provide communities and businesses the the sales and local business profits and local economic growth Most of the resources are from a remote area far away from there final location.
You get resistance or at least you have to prove every innovation to the building officials. Also realty perceptions will downgrade "modular"--I am not sure about banks.
Also, general contractors think they deserve to make 30-40% on every home they build. The day will come when everyone will need to be their own contractor if they want a house. The modular companies also think they deserve 30-40% profit and when the economy softens or material prices increase construction stops.
I'm a third generation independent builder. The extra regulations, zoning restrictions, and red tape that have been introduced in the last 10 years have been the biggest factor driving cost increases. Modular homes don't fix that. Once the foundation is in, our shell, mechanical, and trim out costs are not significantly different than 10 years ago. It used to be that getting shovel ready (ready for footings) was maybe 10% of the cost, now it's 50% or more of the cost. Virtually every septic needs engineering, every lot needs a wetlands survey, zoning is so restrictive in some areas almost every project requires a variance. Our average time to develop an empty lot and get it ready to build is about 2-3 years because of all the hearings and permitting. When I was learning the trade with my dad 20 years ago it was 2-3 months.
Of all of those additional delays, which do you find the most restrictive or which would you like to see the change the most? Or which you see the least need for? My gut feeling tells me it's zoning but I don't know if that's correct is I don't work in the industry. If there is a way to safely streamline the building process for both residential and commercial needs without compromising on environmental impact then that's definitely what I feel we should be doing. There's supposedly a homeless building project to go up in my area which on paper is fantastic, we need many more of those but so far it has experienced constant delays for all the reasons you mention. Some I'm sure are necessary but I'm wondering which ones are just their to pad the bottom line for someone or because of ineptitude. The funding for the program was approved about 2 years ago from what I hear but so far nothing has yet been laid on the ground they say they're still in the preparatory stages. I'm hoping it's not too much longer before they start actually building. Of course we don't want shoddy or unsafe construction but like you I'm wondering how much of today's red tape is actually necessary.
One major problem in many jurisdictions is that "considerate" agencies have now given neighbors the governing say into exactly what can be built. Nothing can be started until all the neighbors approve, which leads to endless expensive redesign to please everyone except the new developer. Of course this puts additional costs that effectively stop new projects.
Too much red tape and bureaucracy at planning stages. This drives the cost of land because it takes too long to get land build ready. In the US it’s zoning, in the UK its decentralised and “personalised” planning application. Watch NZ Builder and see the flexibility and enabling planning approach they appear to have in NZ. You could never have such readily approved applications in UK. In my opinion, “innovative builders” they try solve a planning problem with a design or methodology solution. In the end no matter how or what solution modular builders attempt to introduce, the approach is not economical. I would welcome a comparison with European models e.g German /Polish/Scandi modular SIPS systems. I don’t have information or planning processes in those countries so cannot make a straight forward comparison. However, the common “modular” SIPS construction method seems to work very well there. There are MANY, MANY, successful and long running companies offering modular customisable homes on the continent. Here in the UK, even with our obsolete but tried n true brick homes, forget asking any big home builder to vary anything on the “approved plans “. The answer is always ‘No, can’t deviate from the plan.” Therefore, the conservative and restrictive planning and zoning laws make building innovations in USA and UK unprofitable.
In Europe there's a strong cluster of prefab houses in Poland: Dom3E and Sendom Smart (this one is impressive, they deploy the turnkey house in just 8 hours).
@@BelindaCarr It is also about marketing. Too commercial looking, design issues limitations. Warranties, Local bureaucracy and so on. But speedy construction and quality manufactured is a plus.
@@BelindaCarr it would be interesting what would be your say on System 3 E from Poland. It's blocks made out of perlite, with no extra insulation required.
Great video Belinda!!, I have to say theres one more crucial point for the analysis. Financing is extremely hard when prefabricating modular homes. Banks are not friendly with this mode of construction. I had a modular factory and failed (but not for any of the reasons stated)
My takeaway? They're making them way to complex. Strangely enough, this would work in a Third World nation. Just make rectangular boxes with Vee shaped roofs. Look at the cliches of American low cost housing for the last two centuries. Shotgun shacks, balloon houses, Levittown houses. The houses that were actually built by the million. They have one thing in common. They have extremely simple construction.
I live in a wood framed rectangle. Love it. Built in the 70s and still standing. I put a minisplit on opposite ends of the house so now I'm ready for climate change. Only problem is the bank charged me half a million American dollars for this stucture that was built and paid for the first time 50 years ago.
@@zhonguocha Exactly. Which proves my point. The reason for high prices is not that "they're" not building houses for low income people. The reason for high prices is scarcity of supply. Ask these people to define who "they" is and they give you a blank stare.
No it won't work in third world nations. In my country we wouldn't even by a house made out of wood. That's considered crap here. We use bricks. Labour and materials here sre different from the US, also the culture. Things like that won't work
If I was consulted by these companies, would had told them “you may actually need to be the community developer as well as manufacturer” Buy offering an option does NOT mean the general contractor will use YOU and your product. Why should a developer use your product when all they know is General Contractor and SubCon? People are NOT interested in save money for YOU. There is a lot of wiggle room or mark up when using GA and SubCon. The final cost of a home can be a nice 30% profit, “so screw saving your budget”. If I were one of these manufacturers, I would buy land and build a dozen to sell and lease. Remember, in the Midwest (Ohio, not Chicago), a modest AND nice home can be had for +150k. In LA, VC, NY, Tor, Lon….a dump can be had for 350k….a shack…a shanty hut…a closet…a “coffin” bed….$350,000
Great video. The only thing I will say about the uniqueness point is that if you go back in history cars were “unique” and were often procured in a method not too dissimilar to how we build houses now. First you bought an engine then you had a coach builder construct the body, then you had a machinist put the two together and build the drivetrain. Opportunities for personalisation were almost limitless. Over time we’ve become comfortable with less choice … mostly around the colour!
It's pretty simple - those, who spend more money on marketing, promising to save the world, and probably alter the orbit - instead of improving modular construction - will go bankrupt. Those who quietly produce and install them, just go on. I see a lot of propositions here in Poland, only problem is that banks are not always willing to loan money for them, because considered "unserious".
I'd like to add one more: transportation to the site. Modules need to be transported to the site and the width restriction on roads doesn't fit the open spaces people typically want. It is much easier to deliver the sub-systems and have them assembled on-site.
Good point. Some industrialized housebuilders in Sweden "overcome" this by restricting the maximum size of their volumetric modules (i.e., maximum width of 3,5 m, including packaging, which is the maximum width allowed before it is considered an oversized load). I know this is different in other countries, e.g., US, where the limit is 2,6 m, which makes it even more difficult. On a similar note, I would add the final assembly and installation at the construction site. In my research I have seen industrialized housebuilders that complete 80% of the value-adding work in the factory, but with the remaining 20% of value-adding taking approx. 80% of the project lead time (excluding engineering and configuring the building design). In these cases there almost seems to be an inverse relationship between value-adding (% complete of the building) and the lead time for on-site and off-site operations, respectively. In other words, 80% of the value-adding takes 20% of the project lead time, while the remianing 20% value-adding takes 80% of the project lead time. Many industrialized housebuilders are measured based on ROCE, so reducing the total project lead time (including off-site manufacturing and on-site installation) should be highly prioritized. Not to mention the overhead costs of running a construction site, which can have a great impact on profitability if the on-site lead time is reduced. As mentioned in the video, many industrialized housebuilders are inexperienced in "tradtional" on-site construction operations, but we can't ignore the construction site no matter how industrialized a building system is...
I agree with the problems you mentioned in your description for modular homes. I wonder what your thoughts are on RVs such as the L1 Lightship, Pebble Flow, Northern Lite truck campers, or Oliver travel trailers. It seems to me that these RVs have some of the benefits of modular homes but without the regulatory hurdles because they're classed as RVs. I predict future RVs will trend towards more full time live aboards by including batteries, solar, and composting toilets similar to what the Lightship and Pebble Flow offers (sans composting toilets as of yet). My problems with the Lightship and Pebble Flow are that they are new companies and haven't reached production yet so they're inexperienced and may have financing problems. Also, they don't have one piece fiber glass construction like Northern Lites or Olivers so they may not be structurally reliable. Northern Lite and Olivers are decades old companies that have experience but have not yet applied future technologies such as battery storage. There are other fiber glass RVs such as Lance and Casitas but Lance is not one piece and Casitas are not 4 season insulated and may have MDF floors that are susceptible to water damage that would essentially ruin the whole RV. But quality fiber glass RVs such as Northern Lite and Olivers retain their value for decades unlike other RVs that begin to fall apart the moment they drive off the line.
Your video provides a unique and smart take on modular construction that makes it sound interesting. The comment about putting the architectural touch on modular construction can make it more impressive and that modular contractors think that appeasing architects can be done with a change in lighting and paint was interesting.
I think the issue isn't so much the unit cost as it is the scale at which a "modular home factory" need to operate to be profitable. It's almost as though the need to churn out thousands of homes a year for the investment in all the automation to make sense. Lower numbers mean the factory is under producing and thus not profitable.
It's not cheaper. I've worked in Modular for over 16 years. Its NEVER been about being cheaper. It's literally impossible to be cheaper, there are additional transport costs and redundant materials due to transport (double walls, double floors/ceilings for multi-storey etc). The benefit of modular has always been FASTER because you are building the modules while the foundation is also being built, then assembly on site goes much quicker than site built. This, in my experience, only benefits a few types of buyers. The ones that are remote and getting materials and labour on site is a huge problem and the other is a buyer that has a very tight window of getting the building up and running. Which one of those is your average homeowner? Neither. Modular makes the most sense for denser multifamily construction and hotels where the developer wants "heads in beds" as fast as they can so they can get paid.
But I wonder if the issue of uniqueness is limited to a specific size or scope of projects? I would imagine an end user seeking affordable housing, for instance, may be less concerned about a large degree of customisation options and more concerned about price and the practicality of the home. Not to say they would have no opportunity to add their touch to it, but it just won't top their priority list.
All these companies forgot why Sears failed. They made a small amount on their homes but where they actually made money was being the bank that financed the loan. After banking law changes the most successful company in this area failed. 80 years ago. Ever since no one has been able to pull it off. We have 80 years of history of every business that tries doing this failing. Along with a massive case study of why. None of them address the fundamental problem of why Sears failed after being wildly successful so are destined to fail themselves.
Its on the more expensive than traditional buildings when you fabricate these in countries like USA or Australia. However, in New Zealand & Australia, there are developers start building those modulars in China, where the labour rate is almost 1/10th compare to the local wages, which can eventually halves the total construction cost. Regulations and standards will be on the headache side, but still manageable. But this could potentially hurt the construction industry and unions will most likely go against it.
Thanks for this video. Very informative. I was actually wondering about this recently. Every time I hear about the housing crisis, and it's been on my mind a lot lately, one of my first thoughts usually immediately goes back to 'well what about the modular industry?' this would seem to be the perfect answer to the currently runaway issue of constantly inflated stick-built housing prices. The promise of less costly but durable and attractive homes that can be produced on a faster timeline and adjusted to meet any budget seems like the perfect solution for millions. This leads me to wonder why they're not getting more public support from elected officials or why they don't seem to be more commonly used in my area (California, south of LA). Somebody suggested that organized lobbying from the construction trades might be one factor. I really hope that's not it but I wouldn't be surprised. Whatever the primary obstacles are whether they are social, political or indigenous to the modular industry, I really hope we can resolve them quickly bec I'm not sure I see a real solution in the immediate future to this and other countries' housing problems without this industry. Cheaper, durable but also livable and pleasant homes of all sizes and amenity levels is an option that everyone clearly needs and should have access to, so I truly hope whatever the primary obstacles are they can be successfully mitigated so this industry can be allowed to grow to meet the full demand. Also I've heard that in some or many cases banks will not give loans for modular homes? Well that really needs to be banned I believe. I would like to hear the rationale but I don't think it will convince me that that is the right thing to do. Every family or household no matter their income level has a human and civil rights to own a home of their own and I don't see why seeking a trailer, a mobile home, or a modular home should be seen as any different than someone who wants to buy a standard brick-and-mortar site built home. The only difference will be the dollar value. Banks will provide vehicle loans but they balk at loans for modular homes? That doesn't pass the smell test with me. Sounds selfish and elitist and discriminatory to me. Those in the bottom half of income brackets also have a right to seek homeownership and site-built standard homes should not be the only homes that are seen as legitimate.
It’s be interesting here to compare what strongtowns says is needed to address the US housing crisis. Beyond this, modular housing is confronted by the real world. It cannot be standardized for economies of scale.
The main problem is that the SillyCon Valley mindset has entered the industry where most of these startups are only interested in raising funds through VC's. I spent time 4 years ago developing a build process using panelized construction that allowed us to build an ADU to code (not HUD) in 6 days. We were ready to go with a small test facility but the company told us they wanted more automation so they could 3d render it and raise funds. I left and the company wound up less than 6 months later The warning signs were there with them only looking for social media and animation staff.
Great video. Definitely learn from mistakes made by others so as to improve the process. It's often the case that when processes fail, the key factor may have been not learning how to properly work with all constraints, both internal and external processes. Smaller, more easily reversible experiments such as repurposing old Robots is likely a more practical approach to the systems used for our built environment. Keep up your great work that considers perspectives and events in this space.
All the still-running modular building firms I know of all have very small serving areas due to the reason you stated. Most of them believe about 200-300 miles radius is somewhat ideal for business plan in market, materials, shipping, delivery, and other logistics.
Of the things I know and understand, we need 100% uniform building codes and uniform construction methods that are the same all over the country rather than individaual cities, counties and states all approving their own methods and styles. Modular construction can work yet because of its channgles of building in so many areas its hard to keep things straight. I know of a project that happened less than 10 years ago in which a large chain came in a built a shell of a building only to have to tear it down and build another shell because of a requirement that the city required. The construction cost doubled for that project. Sad yet it happens all the time. If you can order a custom or standard building factory made then it would be super easy to construct anywhere. The other problem is pre fab homes/buildings made in a factory have transport problems due to width of the sections in which to build. Really if they would only build things no larger than 40x8x9 then you could ship standard shipping removing the hassle of special permits and everything else. The off set of the cost can go to the crane or tellahandler. I have considered ordering prefabbed houses, yet the problem is I want a stripped out version rather than their options. Meaning that I want them to build everything and I will install the cabinets, better fixtures and heat pump. Also doing this would limit what you can really do for the build as well.
Uniform building codes won't work or would end up over engineering every building across the country. Leading to added costs across every single geography. Think about it, do you need hurricane level structural tie downs in Kentucky? Do you need snow load level of design from Aspen for Texas? Uniform codes would require ridiculously built structures everywhere and could actually lead to more building performance issues than the benefit of uniformity.
@@Strychn1n3 You can zone out things like that. Yet I would like hurricane straps on my place even if it was not near hurricanes. The wind loads can be pretty high along with tornadoes about anywhere. The uniform code book could be divided in to zones. Meaning that coastal zones my require those things while other zones do not. Huricane straps are required blah blah in zones 9 and 8. There are ways around many things. Yet offering a lowest standard of building construction and then adding advance things is why some places have really nice places and shitty contractors build cardboard boxes. There should be no reason why electrial service should be changed from one location to the next along with plumbing and HVAC. These standards should be used everywhere rather than in their own local. There should be no reason why a dryer vent can cross a house 40 feet in one area and 20 feet in another. There should be no reason why you can not use this DWV layout yet can not do it one town over. Uniform codes would make training better and standards to be equal everywhere. No on should be allowed to half ass it in one place while the other place exceeds something.
Love this video, I think it was well balanced and inclusive. We are still big supporters of this technology but we see your critical thinking on this topic. Thank you 🙏
I'd be curious your thoughts on builders like Bensonwood and others who basically pre-build high efficiency homes and ship them panelized for construction.
Agree. Bensonwood has been successful because they grew organically for 30 or 40 years. I remember watching Ted Benson raise a barn on This Old House in the 1980s. He only grew and expanded overhead after the demand for his product was well established. Anecdotally, I’d argue Bensonwood may be one of the most successful offsite operations to date. I’d be curious to know how much outside capital he has used to expand or if it’s all been bootstrapped or traditional financing.
I'd be interested to see something like the lok n blok system used for modular construction. The vertical integration, lower complexity and material weight savings for transport seems like a no brainer.
It seems like many such companies are confusing legitimate technical issues and user preferences with excess bureaucracy, and that the latter will just collapse with the slightest breeze to clear the path for huge labor and time reduction.
How do US companies compare to Europe and the Middle East? Sometimes the vision isn't matched by consistent sales. Veev was purchased by Lennar, who was a stakeholder in the company. I'm assuming that they'd rather put it to work than see their investment die.
The only economical way to produce homes on mass scale is to build higher. Then, you could leave some personalisation to the customer if you leave walls exposed and open plans. That way you won't have to worry about codes as it would be homeowner's responsibility. The only drawback is infrastructure. Sudden increase in population density doesn't leave much time to local government to upgrade services capacity.
While modular and prefab absolutely are part of the solution - in the US at least it's pretty much moot until places allow for more building, streamline permitting and regulation, and city connections (water, electricity) also get streamlined and improved. Another huge hurdle is every state and often every municipality will have different building codes, often with arbitrary, ridiculous, and incompatible difference. Not to mention there's a ton of resistance from trade unions, and many publicly funded projects will require that use various trade unions. Finally, as far as I can tell, all the prefab companies are competing for incompatible standards. They're all inventing their own hardware, connection points, strucutural units etc. There's no motivation to standardize. Same issue as charging EVs.
I can't speak to business practices or how modular homes impact local construction trades where they are being built, but I can say that after literally years of watching videos and visiting company websites, I have NEVER seen a modular home whose pricing compared favorably with a nice, existing home in terms of sq. footage or lot size. What is the value of speeding up the construction process if it ends up costing more than a home that's already been built?
It sounds like a major issue with most of these companies is that they have to rely on startup loans and go big or go home. It would make much more sense to start smaller and see if it takes off. We used Enercept SIPs for our home, it's just foam sandwiched between two sheets OSB basically, been around for a long time, is that in the same prefab category as these? They seem reasonably successful, been around a while, and even have product in Antarctica. Also, trailer homes seem reasonably successful too, what's the disconnect with some of these recent gigantic failures?
Also I dunno if I would do SIPs again, mostly because of my inexperienced contractor though. We chose that based on energy efficiency and speed of construction, but as soon as it was freezing out our builder said the butyl caulk they put between everything could not freeze so they could really only work between cold spells. That basically means I lost a lot of the construction phase benefits due to his inexperience and delays. Also the ceiling drywall, mostly in one room, glued and screwed directly to SIPs, is cracked very badly from expansion and contraction. Lots of changes I'd make in retrospect, though we might also have been able to accomplish stick framing in less time during the winter months.
How do they build modular homes cheaply? I built a home, The concrete slab with all the plumbing in it was a big deal. Framing was easy, but you have to run all the electrical and plumbing through all the walls. The hard parts (except the roof trusses) of home building would be difficult to make modular.
@@Rambleon444 Then why are you talking about all the problems you had with stick built. Factory built still costs more and they're dropping in a percentage of homes built. This is about people like you saying there must be a way to make money and as an outsider I'm going to prove it. Get out there and build a factory and show us how it's done.
The increases in efficiency in stick built construction haven't impacted the cost of housing. No reason to think that it should for modular housing. Without that effect, what is the selling point of modular construction?
Great investigation, thank you, as I am doing some modular/prefab development/construction currently. I’d love to know more about Boxable’s situation if you get to it.
How does modular construction do in Japan? AFAIK the national zoning policies there have kept housing from being an effective investment strategy, so cheaper construction should lead to cheaper housing, unlike in most countries.
Wow if we could get $200 / SF in our area, that's a deal! High end here is $600-$1000 and then there are the nicer homes which are expensive. You make this content interesting and understandable. Thank you!
Are you talking sale prices? The number in the video referred to cost of construction and unless you live on a remote island that imports all construction materials or people are building with all hardwood lumber instead of softwood, I don't see the cost of construction being $600+ per square foot. Sale price is going to include pricing in the lot of land which in some places can cost far more than actually building the house does.
Is sad to see that these modular manufactures aiming to create more affordable homes were not able to create sustainable business. One thing that appears common with the up-starts is they don't focus on building communities, or selling a minimum number of units to a given geography. This comes with added burden of permits and restrictions while adding to shipping costs. Traditional mobile home builders have offered the option of mobile home parks, which allow leasing of a smaller land area, thus lowering sighting costs. Even home builders focus on building communities, (20+ homes at time) vs. doing one-off construction on a dedicated site. Approvals, inspections, permit cost, and infrastructure cost are lower and can be spread across multiple customers.
This is an excellent report that could have been rewritten with very few changes to present what has been, & continues to hold back expansion of space industry.
I think you're missing two of the biggest problems with modular construction--transportation and "sustainability." None of these modular companies can reach an entire region much less every state/country whereas stick built companies are everywhere. Thus, the cost of transporting prefab components to the build site adds to the over all cost (not to mention the fact that you are also limited to what fits on the back of a truck). Also, they seem far too interested in current marketing buzz words of "sustainability" and "carbon neutral" than realistic words like "affordability." Do they really think the average person is willing to pay 50%-100% more for a smaller, modular home just because it recycles rainwater or has solar powered door knobs?
I looked at getting either a mobile/modular home for my sister. Honestly what killed all interest was land prices. There just are so little prepared lots for sale that would make getting these affordable. If I'm paying 250k for a lot, may as well just pay for a new house.
How is ONX at $200sf at the high end? I think they're building their own developments and selling aboutv$250 a foot. Depending on the development services that sounds like entry level homes.
Welcome back, Belinda, you've been missed here! The first thing I thought of regarding this video was comparing conventional construction processes vs modular. With conventional construction, builders use numerous standardized products. If there is a problem obtaining lumber from a supplier, or piping, or HVAC units, they should be able to quickly find alternate suppliers and maintain production. Modular construction, though, appears to be mostly proprietary - if there are issues with the raw materials for their components or their manufacturing processes they're dead in the water. It seems the best way to go about this would be for an established builder (monopoly?) to venture into the modular field, and profits from the conventional side of the business could be used to subsidize the modular portion until it became established enough to generate its own profits.
I have a suspicion that with a lot of new technologies, the MVP, or Minimum Viable Product, is fully expected to be more expensive due to initial rate costs. The companies are okay with that because they have expectations that wealthy first adopters will pay for it, and continued production will bring costs down. They think that because it worked so well for Tesla, why won't it work for them?
Successful residential building companies dont start out with multi million dollar factories, share holders and stock prices. They start off at ground level with a couple of tradesmen, who know what they're doing and how much its going to cost.
Hopefully as someone who has worked in IT and construction the concept is silly an best. The reason houses are to expevsive include but are not limited to: Cities refuisg new construction that isn't HoA. Builders charging more then is reasonable. But most of all it's "Capitals" fault, buying up the market in 2008 and converting homes into a luxury we can barely afford. This is the same capital that caused the 08 crisis and not only did we bail them out they ripped us all off.
Modular was supposed to be cheaper to build... Now all these companies have all built elaborate expensive techniques to produce those houses and are charging more for them than it costs to build it custom made on site. The only benefit is planed timing and time to built
Could the ankrupcty also be because of a global economic downturn in building new homes? Is the 'reset' real? I love your videos. Can you please do a video about concrete dome homes and possibly a dome home made from hempcrete? Thank you!
There is a huge missing element to this story, and that is legacy developers would rather invest in and destroy these disruptive companies vs allow them to shake up an industry so badly in need.. We are working with a less than 5 yr old modular group, and they've done things far differently than most of these groups in that there is no automation via robots.. standard building practices only, through highly standardized processes
I do not know if you have the time to investigate onx homes, but I hope you would keep this request for a investigative video under strong consideration
All those bankruptcies also happened during the government mandated partial shutdown of the economy under the excuse of Covid-19, 2020 & 2021. That created a lot of income insecurity, which depresses new major purchasing as long as the uncertainty remains unless they have no choice but to make major purchases.
I was wondering when the economy would be listed as a major cause of these companies going under. We'd be in a Recession if the government hadn't changed the definition. Unemployment would be very high if the government hadn't changed how they count and who they count. The housing crisis is not solely a lack of houses. It's also people holding on the homes they have because they can't afford the interest and insurance on a different home.
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10:32 I went through Boxabl's 2023 SEC filing and I'm VERY troubled by their numbers. Are they the headed down the same path as these failed modular companies? Let me know if you want a dedicated video on them!
please give us your take on Boxabl.
I have heard that very few banks will finance modular homes. So if I have a plot of land and put a modular home on it the next person that wants to buy it may not be able to get financing. How about a video on modular home financing.
They’re under investigation for fraud by the sec right now. It’s bad.
Yes please! Boxabl smells like Nikola meets Katerra
They rank high in investments from StartEngine. But that isn't saying much since it isn't huge capital. They may survive, but that depends on the dynamics of home building costs. In CA, the fees to build are high and there are often confusing requirements for modular homes from the HOA or city. Boxable is also an expensive option compared to building a similarly sized home on site. Then there are the Chinese clones that are starting to enter the market.
I don’t comment often on videos but having been at one of the companies you mentioned that failed and having seen the failure or the others, to me it’s clear they all invested in automation and scale (both vertically and geographically) before understanding building fundamentals and experiencing success in their approach at a local level.
My opinion is that most “tech” in the construction space is really not solving an inherent problem in the space and just adding cost/complexity.
Exactly.
Solution In search of a problem
As a construction worker I agree with your opinion. The only tech updates we need are to make construction physically easier so that more people will want to do it for longer careers.
Disagree vehemently. There are HUGR problems in construction industry when you look at at ration of costly to quality. Vast vast majority of houses built today are crap, the work force is crap, and methods are crap. There is NO reason houses cant last 100 years WITHOUT major renovations. That said modular isnt going to work until us customers accept SMALLER houses. Modular doens NOT lend in itself to huge spans tall ceilings weird unbox like shapes, and construction IS very complex. And customers wnat TOO many choices as in duty works hard to provide excessive choices and interior designers etc.
Great subject and real insight Belinda-you go girl. One thing you missed ?if codes WERE enforced, modular might make more inroads as they can consistently hit cod quality. Spec small builders get away with numerous code violations.
Why didnt soemone come in a purchaser Katerina assets and restart it up debt free ?
US prefab and modular producers have a rich history of delivering disappointment to buyers and investors. Be it bad timing, wrong people, intentional fraudsters, inexperience, or whatever. Best to avoid all of these operations anytime near their startup phase.
Humble manufactured home builders (AKA mobile home factories), seem to have made the smoothest transitions from HUD homes to so-called BOCA modular construction.
Probably a healthy dose of idealism over practicality as well. Which is a shame, because if a Elon Musk figure tried to do modular homes, I imagine there's a workable product in there.
@@skaterdudeabides To me the main issues of modern prefab homes are lack of square footage, and under-emphasizing cost/hassle of placement.
@@skaterdudeabidesThat's interesting since Elon was involved with Boxable which seems to be a family con.
H Belinda, I live in an area of Arizona that experiences huge development during every real estate cycle. Here many homes are modular. A huge problems are material quality (OSB with poor binder) and workmanship (unskilled people carelessly slamming things together.) Just like the recreational vehicle industry, residential real estate developers have become generally disreputable. All of the factors you noted are very valid, but disreputation is huge.
Do you follow Cy’s channel?
Yes, do a dedicated video on boxabl please
The founders Galiano and Paolo dumped a ton of shares and pay themselves like crazy for a company with barely any revenue and losing so much investor money. I foresee class action
I visited Boxabl site in LV many years back thinking it was a good investment opportunity, but at the time most of the machines were idle and not too many workers were actually working there so I ended up didn’t invest. Please do a video on them, I would like to know if my decision was correct!
@@katema1833it was
Dear Tech Bros / MBA Grads, the global housing crisis is not caused by the speed and complexity of construction. It's caused by social policies and economics. You can't automate your way out of the problem.
Exactly!
Preach
I agree. Additionally, when big corporates are allow to buy and hold thousands of homes, the problem won't go away anytime soon.
The fundamental problem is that housing can either be affordable, or it can be an investment. Not both. Boomers benefited from affordable housing, and then set about making it an investment.
@@gregvanpaassen Actually they set about making it a home.
Thanks for interesting video. I fun a small cabinet shop in Toronto, but also had the pleasure of doing graduate research under Rom Harre at Oxford, one the 20 century's preeminent philosophers of science. I have had lots of arguments about modularity over the years. The problem with the idea of modularity in construction is that it is based on a modern, Newtonian/ Cartesian myth about the predictability of the world: the myth is that with modern science, with enough data anything is predictable and consequently completely controllable, even people. In the 1950s the famous psychologist B.F. Skinner, even suggested science would make freedom and democracy obsolete. This view of science is now completely discredited by modern scientific research into complexity, such as chaos mathematics. Complex environments are inherently uncontrollable. And construction is inherently complex. The only way to cope with complexity is through continuous feedback loops and adjustments to changing conditions. This is what a good framer, drywaller, trim carpenter, or painter, or cabinet installer does with every movement. They just do it so fast that to the untrained eye it is not even visible.
Glad you mentioned BOXABL at the end. Actually inspected your thumbnail first to see if they were on the list because with how much attention they attracted and how much demand there was, I was surprised with how little they’ve actually built. Not surprised they might be struggling as well.
We are finally nearing the end of the process of having a modular 1200 sq ft ADU built on our property. One of the economic issues which is rarely talked about is the cost of moving these huge units and setting them in place. Our's required a crane which ended up costing over $25,000 just for that one step in the process. I don't know what the cost was to move the two giant boxes to our place. Another issue is that the foundation, septic system, water hookups and so on all needed to be done on site. Honestly I don't see how for single house construction modular is going to actually save the maker or user money.
Yup turns out it’s actually quite a bit cheaper to bring wood in on a truck and have some guys put it together, instead of shipping enormous empty rooms.
You will probably find virtually all resistance at state, county, and city levels is from carpenters and associated trades.
While prefabricated and modular construction have multiple benefits they don't provide communities and businesses the the sales and local business profits and local economic growth
Most of the resources are from a remote area far away from there final location.
You get resistance or at least you have to prove every innovation to the building officials. Also realty perceptions will downgrade "modular"--I am not sure about banks.
Also, general contractors think they deserve to make 30-40% on every home they build. The day will come when everyone will need to be their own contractor if they want a house. The modular companies also think they deserve 30-40% profit and when the economy softens or material prices increase construction stops.
In the Netherlands, using prefab concrete and prefab brick facades is the standard way of building houses.
I love Botbuild's approach. Practical and cost effective.
I'm a third generation independent builder. The extra regulations, zoning restrictions, and red tape that have been introduced in the last 10 years have been the biggest factor driving cost increases. Modular homes don't fix that. Once the foundation is in, our shell, mechanical, and trim out costs are not significantly different than 10 years ago. It used to be that getting shovel ready (ready for footings) was maybe 10% of the cost, now it's 50% or more of the cost. Virtually every septic needs engineering, every lot needs a wetlands survey, zoning is so restrictive in some areas almost every project requires a variance. Our average time to develop an empty lot and get it ready to build is about 2-3 years because of all the hearings and permitting. When I was learning the trade with my dad 20 years ago it was 2-3 months.
Of all of those additional delays, which do you find the most restrictive or which would you like to see the change the most? Or which you see the least need for? My gut feeling tells me it's zoning but I don't know if that's correct is I don't work in the industry. If there is a way to safely streamline the building process for both residential and commercial needs without compromising on environmental impact then that's definitely what I feel we should be doing.
There's supposedly a homeless building project to go up in my area which on paper is fantastic, we need many more of those but so far it has experienced constant delays for all the reasons you mention. Some I'm sure are necessary but I'm wondering which ones are just their to pad the bottom line for someone or because of ineptitude. The funding for the program was approved about 2 years ago from what I hear but so far nothing has yet been laid on the ground they say they're still in the preparatory stages. I'm hoping it's not too much longer before they start actually building.
Of course we don't want shoddy or unsafe construction but like you I'm wondering how much of today's red tape is actually necessary.
One major problem in many jurisdictions is that "considerate" agencies have now given neighbors the governing say into exactly what can be built. Nothing can be started until all the neighbors approve, which leads to endless expensive redesign to please everyone except the new developer. Of course this puts additional costs that effectively stop new projects.
Too much red tape and bureaucracy at planning stages.
This drives the cost of land because it takes too long to get land build ready.
In the US it’s zoning, in the UK its decentralised and “personalised” planning application.
Watch NZ Builder and see the flexibility and enabling planning approach they appear to have in NZ.
You could never have such readily approved applications in UK.
In my opinion, “innovative builders” they try solve a planning problem with a design or methodology solution.
In the end no matter how or what solution modular builders attempt to introduce, the approach is not economical.
I would welcome a comparison with European models e.g German /Polish/Scandi modular SIPS systems.
I don’t have information or planning processes in those countries so cannot make a straight forward comparison.
However, the common “modular” SIPS construction method seems to work very well there.
There are MANY, MANY, successful and long running companies offering modular customisable homes on the continent.
Here in the UK, even with our obsolete but tried n true brick homes, forget asking any big home builder to vary anything on the “approved plans “.
The answer is always ‘No, can’t deviate from the plan.”
Therefore, the conservative and restrictive planning and zoning laws make building innovations in USA and UK unprofitable.
In Europe there's a strong cluster of prefab houses in Poland: Dom3E and Sendom Smart (this one is impressive, they deploy the turnkey house in just 8 hours).
Thanks! I'll look into them
@@BelindaCarr It is also about marketing. Too commercial looking, design issues limitations. Warranties, Local bureaucracy and so on. But speedy construction and quality manufactured is a plus.
@@BelindaCarr it would be interesting what would be your say on System 3 E from Poland. It's blocks made out of perlite, with no extra insulation required.
Yeah, lots of them in Poland, but banks don't like to loan money for them, so you have to buy one from savings. It's very affordable, though.
Great video Belinda!!, I have to say theres one more crucial point for the analysis. Financing is extremely hard when prefabricating modular homes. Banks are not friendly with this mode of construction. I had a modular factory and failed (but not for any of the reasons stated)
My takeaway? They're making them way to complex. Strangely enough, this would work in a Third World nation. Just make rectangular boxes with Vee shaped roofs.
Look at the cliches of American low cost housing for the last two centuries. Shotgun shacks, balloon houses, Levittown houses. The houses that were actually built by the million. They have one thing in common. They have extremely simple construction.
I live in a wood framed rectangle. Love it. Built in the 70s and still standing. I put a minisplit on opposite ends of the house so now I'm ready for climate change. Only problem is the bank charged me half a million American dollars for this stucture that was built and paid for the first time 50 years ago.
@@zhonguocha Exactly. Which proves my point. The reason for high prices is not that "they're" not building houses for low income people. The reason for high prices is scarcity of supply.
Ask these people to define who "they" is and they give you a blank stare.
No it won't work in third world nations. In my country we wouldn't even by a house made out of wood. That's considered crap here. We use bricks. Labour and materials here sre different from the US, also the culture. Things like that won't work
If I was consulted by these companies, would had told them “you may actually need to be the community developer as well as manufacturer”
Buy offering an option does NOT mean the general contractor will use YOU and your product. Why should a developer use your product when all they know is General Contractor and SubCon?
People are NOT interested in save money for YOU. There is a lot of wiggle room or mark up when using GA and SubCon. The final cost of a home can be a nice 30% profit, “so screw saving your budget”.
If I were one of these manufacturers, I would buy land and build a dozen to sell and lease.
Remember, in the Midwest (Ohio, not Chicago), a modest AND nice home can be had for +150k. In LA, VC, NY, Tor, Lon….a dump can be had for 350k….a shack…a shanty hut…a closet…a “coffin” bed….$350,000
Great video. The only thing I will say about the uniqueness point is that if you go back in history cars were “unique” and were often procured in a method not too dissimilar to how we build houses now. First you bought an engine then you had a coach builder construct the body, then you had a machinist put the two together and build the drivetrain. Opportunities for personalisation were almost limitless. Over time we’ve become comfortable with less choice … mostly around the colour!
Modular homes are used in the housing sector in Jamaica. The builders are making huge profits. They need to look at those models
Fine report! I was a modular home builder many years. Always challenges.
It's pretty simple - those, who spend more money on marketing, promising to save the world, and probably alter the orbit - instead of improving modular construction - will go bankrupt. Those who quietly produce and install them, just go on. I see a lot of propositions here in Poland, only problem is that banks are not always willing to loan money for them, because considered "unserious".
Absolutely want a video reviewing the Boxabl filing
I've lost track of how many times I've seen SoftBank associated with failed startups. The world of Venture Capital funding is wild to me
Its a scam
Tax breaks.🤔
I'd like to add one more: transportation to the site.
Modules need to be transported to the site and the width restriction on roads doesn't fit the open spaces people typically want. It is much easier to deliver the sub-systems and have them assembled on-site.
Good point. Some industrialized housebuilders in Sweden "overcome" this by restricting the maximum size of their volumetric modules (i.e., maximum width of 3,5 m, including packaging, which is the maximum width allowed before it is considered an oversized load). I know this is different in other countries, e.g., US, where the limit is 2,6 m, which makes it even more difficult.
On a similar note, I would add the final assembly and installation at the construction site. In my research I have seen industrialized housebuilders that complete 80% of the value-adding work in the factory, but with the remaining 20% of value-adding taking approx. 80% of the project lead time (excluding engineering and configuring the building design). In these cases there almost seems to be an inverse relationship between value-adding (% complete of the building) and the lead time for on-site and off-site operations, respectively. In other words, 80% of the value-adding takes 20% of the project lead time, while the remianing 20% value-adding takes 80% of the project lead time. Many industrialized housebuilders are measured based on ROCE, so reducing the total project lead time (including off-site manufacturing and on-site installation) should be highly prioritized. Not to mention the overhead costs of running a construction site, which can have a great impact on profitability if the on-site lead time is reduced. As mentioned in the video, many industrialized housebuilders are inexperienced in "tradtional" on-site construction operations, but we can't ignore the construction site no matter how industrialized a building system is...
I agree with the problems you mentioned in your description for modular homes. I wonder what your thoughts are on RVs such as the L1 Lightship, Pebble Flow, Northern Lite truck campers, or Oliver travel trailers. It seems to me that these RVs have some of the benefits of modular homes but without the regulatory hurdles because they're classed as RVs. I predict future RVs will trend towards more full time live aboards by including batteries, solar, and composting toilets similar to what the Lightship and Pebble Flow offers (sans composting toilets as of yet). My problems with the Lightship and Pebble Flow are that they are new companies and haven't reached production yet so they're inexperienced and may have financing problems. Also, they don't have one piece fiber glass construction like Northern Lites or Olivers so they may not be structurally reliable. Northern Lite and Olivers are decades old companies that have experience but have not yet applied future technologies such as battery storage. There are other fiber glass RVs such as Lance and Casitas but Lance is not one piece and Casitas are not 4 season insulated and may have MDF floors that are susceptible to water damage that would essentially ruin the whole RV. But quality fiber glass RVs such as Northern Lite and Olivers retain their value for decades unlike other RVs that begin to fall apart the moment they drive off the line.
Good video. Well spoken and objective discussion. I would love to see a dedicated video on Boxabl
Your video provides a unique and smart take on modular construction that makes it sound interesting. The comment about putting the architectural touch on modular construction can make it more impressive and that modular contractors think that appeasing architects can be done with a change in lighting and paint was interesting.
If modular buildings were actually cheaper to build (from the consumer's POV), they wouldn't have an issue with profitability.
This is the biggest problem. Great concept, but most people cannot afford them. If factory assembly line isn't bringing down cost, something is wrong.
I think the issue isn't so much the unit cost as it is the scale at which a "modular home factory" need to operate to be profitable. It's almost as though the need to churn out thousands of homes a year for the investment in all the automation to make sense. Lower numbers mean the factory is under producing and thus not profitable.
It's not cheaper. I've worked in Modular for over 16 years. Its NEVER been about being cheaper. It's literally impossible to be cheaper, there are additional transport costs and redundant materials due to transport (double walls, double floors/ceilings for multi-storey etc). The benefit of modular has always been FASTER because you are building the modules while the foundation is also being built, then assembly on site goes much quicker than site built. This, in my experience, only benefits a few types of buyers. The ones that are remote and getting materials and labour on site is a huge problem and the other is a buyer that has a very tight window of getting the building up and running. Which one of those is your average homeowner? Neither. Modular makes the most sense for denser multifamily construction and hotels where the developer wants "heads in beds" as fast as they can so they can get paid.
@@Strychn1n3 Yeah, good points. Thanks for the info. 👍
But I wonder if the issue of uniqueness is limited to a specific size or scope of projects? I would imagine an end user seeking affordable housing, for instance, may be less concerned about a large degree of customisation options and more concerned about price and the practicality of the home. Not to say they would have no opportunity to add their touch to it, but it just won't top their priority list.
As a builder I can tell you 50% of people count bedrooms, square footage and garage spaces and that's all they care about.
thanks for the insight. i always thought modular home construction companies are best to invest in. good thing i saw this video.
All these companies forgot why Sears failed. They made a small amount on their homes but where they actually made money was being the bank that financed the loan. After banking law changes the most successful company in this area failed. 80 years ago. Ever since no one has been able to pull it off. We have 80 years of history of every business that tries doing this failing. Along with a massive case study of why. None of them address the fundamental problem of why Sears failed after being wildly successful so are destined to fail themselves.
These bankruptcies are sign of an absence of innovation. There is still a lot of human labor involved. There is almost no automation
Great video Belinda. I always loved the idea of prefab homes. Please do vidoes on ONX and Boxable.
Its on the more expensive than traditional buildings when you fabricate these in countries like USA or Australia. However, in New Zealand & Australia, there are developers start building those modulars in China, where the labour rate is almost 1/10th compare to the local wages, which can eventually halves the total construction cost. Regulations and standards will be on the headache side, but still manageable. But this could potentially hurt the construction industry and unions will most likely go against it.
Woo! Missed you Belinda!
Very clear & insightful presentation.
Thank you!
100 million dollar factory versus one guy with a hammer. who wins? the factory is only competitive at scale.
Thanks for this video. Very informative. I was actually wondering about this recently. Every time I hear about the housing crisis, and it's been on my mind a lot lately, one of my first thoughts usually immediately goes back to 'well what about the modular industry?' this would seem to be the perfect answer to the currently runaway issue of constantly inflated stick-built housing prices. The promise of less costly but durable and attractive homes that can be produced on a faster timeline and adjusted to meet any budget seems like the perfect solution for millions. This leads me to wonder why they're not getting more public support from elected officials or why they don't seem to be more commonly used in my area (California, south of LA). Somebody suggested that organized lobbying from the construction trades might be one factor. I really hope that's not it but I wouldn't be surprised.
Whatever the primary obstacles are whether they are social, political or indigenous to the modular industry, I really hope we can resolve them quickly bec I'm not sure I see a real solution in the immediate future to this and other countries' housing problems without this industry.
Cheaper, durable but also livable and pleasant homes of all sizes and amenity levels is an option that everyone clearly needs and should have access to, so I truly hope whatever the primary obstacles are they can be successfully mitigated so this industry can be allowed to grow to meet the full demand.
Also I've heard that in some or many cases banks will not give loans for modular homes? Well that really needs to be banned I believe. I would like to hear the rationale but I don't think it will convince me that that is the right thing to do. Every family or household no matter their income level has a human and civil rights to own a home of their own and I don't see why seeking a trailer, a mobile home, or a modular home should be seen as any different than someone who wants to buy a standard brick-and-mortar site built home. The only difference will be the dollar value.
Banks will provide vehicle loans but they balk at loans for modular homes? That doesn't pass the smell test with me. Sounds selfish and elitist and discriminatory to me. Those in the bottom half of income brackets also have a right to seek homeownership and site-built standard homes should not be the only homes that are seen as legitimate.
It’s be interesting here to compare what strongtowns says is needed to address the US housing crisis. Beyond this, modular housing is confronted by the real world. It cannot be standardized for economies of scale.
The main problem is that the SillyCon Valley mindset has entered the industry where most of these startups are only interested in raising funds through VC's. I spent time 4 years ago developing a build process using panelized construction that allowed us to build an ADU to code (not HUD) in 6 days. We were ready to go with a small test facility but the company told us they wanted more automation so they could 3d render it and raise funds. I left and the company wound up less than 6 months later
The warning signs were there with them only looking for social media and animation staff.
Well done video. I'd love to get your thoughts on Boxabl.
Great video. Definitely learn from mistakes made by others so as to improve the process. It's often the case that when processes fail, the key factor may have been not learning how to properly work with all constraints, both internal and external processes. Smaller, more easily reversible experiments such as repurposing old Robots is likely a more practical approach to the systems used for our built environment. Keep up your great work that considers perspectives and events in this space.
All the still-running modular building firms I know of all have very small serving areas due to the reason you stated. Most of them believe about 200-300 miles radius is somewhat ideal for business plan in market, materials, shipping, delivery, and other logistics.
Please do a deep dive into BOXABL!😊
Try to get the box able ceo for a podcast, would be dope
Yes, a Boxable video please. I am troubled by their negative gross margin and significant accumulated deficit.
Of the things I know and understand, we need 100% uniform building codes and uniform construction methods that are the same all over the country rather than individaual cities, counties and states all approving their own methods and styles.
Modular construction can work yet because of its channgles of building in so many areas its hard to keep things straight. I know of a project that happened less than 10 years ago in which a large chain came in a built a shell of a building only to have to tear it down and build another shell because of a requirement that the city required. The construction cost doubled for that project. Sad yet it happens all the time.
If you can order a custom or standard building factory made then it would be super easy to construct anywhere. The other problem is pre fab homes/buildings made in a factory have transport problems due to width of the sections in which to build. Really if they would only build things no larger than 40x8x9 then you could ship standard shipping removing the hassle of special permits and everything else. The off set of the cost can go to the crane or tellahandler.
I have considered ordering prefabbed houses, yet the problem is I want a stripped out version rather than their options. Meaning that I want them to build everything and I will install the cabinets, better fixtures and heat pump. Also doing this would limit what you can really do for the build as well.
There's just that pesky Constitution in the way...
Uniform building codes won't work or would end up over engineering every building across the country. Leading to added costs across every single geography. Think about it, do you need hurricane level structural tie downs in Kentucky? Do you need snow load level of design from Aspen for Texas? Uniform codes would require ridiculously built structures everywhere and could actually lead to more building performance issues than the benefit of uniformity.
@@Strychn1n3 You can zone out things like that. Yet I would like hurricane straps on my place even if it was not near hurricanes. The wind loads can be pretty high along with tornadoes about anywhere.
The uniform code book could be divided in to zones. Meaning that coastal zones my require those things while other zones do not.
Huricane straps are required blah blah in zones 9 and 8. There are ways around many things. Yet offering a lowest standard of building construction and then adding advance things is why some places have really nice places and shitty contractors build cardboard boxes.
There should be no reason why electrial service should be changed from one location to the next along with plumbing and HVAC. These standards should be used everywhere rather than in their own local. There should be no reason why a dryer vent can cross a house 40 feet in one area and 20 feet in another. There should be no reason why you can not use this DWV layout yet can not do it one town over.
Uniform codes would make training better and standards to be equal everywhere. No on should be allowed to half ass it in one place while the other place exceeds something.
Love this video, I think it was well balanced and inclusive. We are still big supporters of this technology but we see your critical thinking on this topic. Thank you 🙏
I'd be curious your thoughts on builders like Bensonwood and others who basically pre-build high efficiency homes and ship them panelized for construction.
Agree. Bensonwood has been successful because they grew organically for 30 or 40 years. I remember watching Ted Benson raise a barn on This Old House in the 1980s. He only grew and expanded overhead after the demand for his product was well established. Anecdotally, I’d argue Bensonwood may be one of the most successful offsite operations to date. I’d be curious to know how much outside capital he has used to expand or if it’s all been bootstrapped or traditional financing.
Yes, do take on Boxable, and if you know anything about Zennihome, that would great too.
I'd be interested to see something like the lok n blok system used for modular construction. The vertical integration, lower complexity and material weight savings for transport seems like a no brainer.
It seems like many such companies are confusing legitimate technical issues and user preferences with excess bureaucracy, and that the latter will just collapse with the slightest breeze to clear the path for huge labor and time reduction.
Love your content. Keep up the great work.
How do US companies compare to Europe and the Middle East? Sometimes the vision isn't matched by consistent sales. Veev was purchased by Lennar, who was a stakeholder in the company. I'm assuming that they'd rather put it to work than see their investment die.
The only economical way to produce homes on mass scale is to build higher. Then, you could leave some personalisation to the customer if you leave walls exposed and open plans. That way you won't have to worry about codes as it would be homeowner's responsibility.
The only drawback is infrastructure. Sudden increase in population density doesn't leave much time to local government to upgrade services capacity.
While modular and prefab absolutely are part of the solution - in the US at least it's pretty much moot until places allow for more building, streamline permitting and regulation, and city connections (water, electricity) also get streamlined and improved. Another huge hurdle is every state and often every municipality will have different building codes, often with arbitrary, ridiculous, and incompatible difference. Not to mention there's a ton of resistance from trade unions, and many publicly funded projects will require that use various trade unions. Finally, as far as I can tell, all the prefab companies are competing for incompatible standards. They're all inventing their own hardware, connection points, strucutural units etc. There's no motivation to standardize. Same issue as charging EVs.
I can't speak to business practices or how modular homes impact local construction trades where they are being built, but I can say that after literally years of watching videos and visiting company websites, I have NEVER seen a modular home whose pricing compared favorably with a nice, existing home in terms of sq. footage or lot size. What is the value of speeding up the construction process if it ends up costing more than a home that's already been built?
It sounds like a major issue with most of these companies is that they have to rely on startup loans and go big or go home. It would make much more sense to start smaller and see if it takes off. We used Enercept SIPs for our home, it's just foam sandwiched between two sheets OSB basically, been around for a long time, is that in the same prefab category as these? They seem reasonably successful, been around a while, and even have product in Antarctica. Also, trailer homes seem reasonably successful too, what's the disconnect with some of these recent gigantic failures?
Also I dunno if I would do SIPs again, mostly because of my inexperienced contractor though. We chose that based on energy efficiency and speed of construction, but as soon as it was freezing out our builder said the butyl caulk they put between everything could not freeze so they could really only work between cold spells. That basically means I lost a lot of the construction phase benefits due to his inexperience and delays. Also the ceiling drywall, mostly in one room, glued and screwed directly to SIPs, is cracked very badly from expansion and contraction. Lots of changes I'd make in retrospect, though we might also have been able to accomplish stick framing in less time during the winter months.
How do they build modular homes cheaply?
I built a home, The concrete slab with all the plumbing in it was a big deal.
Framing was easy, but you have to run all the electrical and plumbing through all the walls.
The hard parts (except the roof trusses) of home building would be difficult to make modular.
Honestly you don't know anything about construction. There are so many offsite options it's an endless list
@@sparksmcgee6641 Maybe, but this video is all the failures.
@@Rambleon444 Then why are you talking about all the problems you had with stick built.
Factory built still costs more and they're dropping in a percentage of homes built. This is about people like you saying there must be a way to make money and as an outsider I'm going to prove it.
Get out there and build a factory and show us how it's done.
The increases in efficiency in stick built construction haven't impacted the cost of housing. No reason to think that it should for modular housing. Without that effect, what is the selling point of modular construction?
Great investigation, thank you, as I am doing some modular/prefab development/construction currently. I’d love to know more about Boxable’s situation if you get to it.
How does modular construction do in Japan? AFAIK the national zoning policies there have kept housing from being an effective investment strategy, so cheaper construction should lead to cheaper housing, unlike in most countries.
Wow if we could get $200 / SF in our area, that's a deal! High end here is $600-$1000 and then there are the nicer homes which are expensive. You make this content interesting and understandable. Thank you!
Are you talking sale prices? The number in the video referred to cost of construction and unless you live on a remote island that imports all construction materials or people are building with all hardwood lumber instead of softwood, I don't see the cost of construction being $600+ per square foot. Sale price is going to include pricing in the lot of land which in some places can cost far more than actually building the house does.
Is sad to see that these modular manufactures aiming to create more affordable homes were not able to create sustainable business.
One thing that appears common with the up-starts is they don't focus on building communities, or selling a minimum number of units to a given geography. This comes with added burden of permits and restrictions while adding to shipping costs.
Traditional mobile home builders have offered the option of mobile home parks, which allow leasing of a smaller land area, thus lowering sighting costs. Even home builders focus on building communities, (20+ homes at time) vs. doing one-off construction on a dedicated site. Approvals, inspections, permit cost, and infrastructure cost are lower and can be spread across multiple customers.
have you done any Videos on contacting lawyers on these houses? we are in a situation now where we are getting no where
This is an excellent report that could have been rewritten with very few changes to present what has been, & continues to hold back expansion of space industry.
I think you're missing two of the biggest problems with modular construction--transportation and "sustainability." None of these modular companies can reach an entire region much less every state/country whereas stick built companies are everywhere. Thus, the cost of transporting prefab components to the build site adds to the over all cost (not to mention the fact that you are also limited to what fits on the back of a truck). Also, they seem far too interested in current marketing buzz words of "sustainability" and "carbon neutral" than realistic words like "affordability." Do they really think the average person is willing to pay 50%-100% more for a smaller, modular home just because it recycles rainwater or has solar powered door knobs?
Yes pls do a boxable video
Excellent video you Rock
I looked at getting either a mobile/modular home for my sister.
Honestly what killed all interest was land prices. There just are so little prepared lots for sale that would make getting these affordable. If I'm paying 250k for a lot, may as well just pay for a new house.
Yep. Move out until land is cheap.
You are going to find you can't build for what you think you can so go back to looking at bringing something in.
How is ONX at $200sf at the high end?
I think they're building their own developments and selling aboutv$250 a foot. Depending on the development services that sounds like entry level homes.
Prefabricated housing foundations?
Welcome back, Belinda, you've been missed here!
The first thing I thought of regarding this video was comparing conventional construction processes vs modular. With conventional construction, builders use numerous standardized products. If there is a problem obtaining lumber from a supplier, or piping, or HVAC units, they should be able to quickly find alternate suppliers and maintain production. Modular construction, though, appears to be mostly proprietary - if there are issues with the raw materials for their components or their manufacturing processes they're dead in the water.
It seems the best way to go about this would be for an established builder (monopoly?) to venture into the modular field, and profits from the conventional side of the business could be used to subsidize the modular portion until it became established enough to generate its own profits.
What’s up with Boxble?
Belinda is back!
*happy construction noises*
I have a suspicion that with a lot of new technologies, the MVP, or Minimum Viable Product, is fully expected to be more expensive due to initial rate costs. The companies are okay with that because they have expectations that wealthy first adopters will pay for it, and continued production will bring costs down. They think that because it worked so well for Tesla, why won't it work for them?
Successful residential building companies dont start out with multi million dollar factories, share holders and stock prices. They start off at ground level with a couple of tradesmen, who know what they're doing and how much its going to cost.
Boxable and onyx videos pls
Would be a shame to see Boxable go under before offering product to the public.
The founders would probably get reamed with lawsuits from retail investors.
Hopefully as someone who has worked in IT and construction the concept is silly an best.
The reason houses are to expevsive include but are not limited to:
Cities refuisg new construction that isn't HoA.
Builders charging more then is reasonable.
But most of all it's "Capitals" fault, buying up the market in 2008 and converting homes into a luxury we can barely afford. This is the same capital that caused the 08 crisis and not only did we bail them out they ripped us all off.
Would to see you do a video of those Chinese 'Hello boss' pod houses.
50 years ago trailer homes (AKA "mobile" homes) were the affordable option for poor people. What happened to the branding and price tag?
Your the best Belinda
Love your vids
Still think fbr have it 100.% correct . They are getting in with the builders and providing wall of a service will work very well
I would like to see a deep dive in to vocable thank you
Modular was supposed to be cheaper to build...
Now all these companies have all built elaborate expensive techniques to produce those houses and are charging more for them than it costs to build it custom made on site.
The only benefit is planed timing and time to built
Could the ankrupcty also be because of a global economic downturn in building new homes? Is the 'reset' real?
I love your videos. Can you please do a video about concrete dome homes and possibly a dome home made from hempcrete?
Thank you!
There is a vast housing and building surplus in america. The problem is we have marginalized many regions and slummed up most of our cities.
Just as long as their design systems enters the public domain, when they fail. Yes?
It's Boxabl, Boxabl is next.
Hi Belinda, please keep digging into this subject. I share your healthy skepticism when looking at new tech in construction :)
There is a huge missing element to this story, and that is legacy developers would rather invest in and destroy these disruptive companies vs allow them to shake up an industry so badly in need..
We are working with a less than 5 yr old modular group, and they've done things far differently than most of these groups in that there is no automation via robots.. standard building practices only, through highly standardized processes
Do the deep dive!
We need a fusion of IKEA and home depot, with Ebay like bidding for individualized sections of a home construction. May be its a pipe dream.🤞
Hey what happened to your Discord server
Debt rollover is going to be killer. The common denom of these startups is that they're inexperienced with capex.
I do not know if you have the time to investigate onx homes, but I hope you would keep this request for a investigative video under strong consideration
All those bankruptcies also happened during the government mandated partial shutdown of the economy under the excuse of Covid-19, 2020 & 2021.
That created a lot of income insecurity, which depresses new major purchasing as long as the uncertainty remains unless they have no choice but to make major purchases.
I was wondering when the economy would be listed as a major cause of these companies going under.
We'd be in a Recession if the government hadn't changed the definition. Unemployment would be very high if the government hadn't changed how they count and who they count.
The housing crisis is not solely a lack of houses. It's also people holding on the homes they have because they can't afford the interest and insurance on a different home.
@@freethebirds3578 By no measurement of any kind are we in a recession. 🙄
Thanks Belinda. We love your channel! (Like others, we'd love your thoughts on boxabl too.)
Great video!