COVID-19 and the resulting economic crisis has impacted residential and commercial building even while states—with the exception of Michigan, New York, and New Jersey—have declared construction an essential business. In addition, construction projects in many parts of the U.S. were slowed as states adopted work rules—such as social distancing—that added to the time needed to complete jobs. The pandemic has also played a key role in causing construction-grade lumber to increase in price. A number of lumber producers have temporarily or permanently ceased operations, reducing lumber supplies as fewer homes were completed and renovation activity fell off.
Building materials suppliers and distributors did see solid sales growth in April due to seasonality and construction professionals stockpiling materials for future use, but primarily sales were supported by homeowners engaging in DIY (do-it-yourself) projects, such as building decks and fences, renovating rooms, and installing shelving.
Another reaction to the pandemic has been an increased interest in modular housing. Modular or system-built housing hasn’t been as popular with the market as site-built homes, but the COVID-19 pandemic might be changing that. According to Freedonia Group, demand for modular housing is forecast to rise 5.2% annually to 23,700 units in 2024.
Homeowner interest in modular housing is increasing due to its image as an alternative to manufactured housing, and the fact that modular homes are built to local building codes – not the HUD Code –and frequently includes modern features such as enhanced energy efficiency. Modular homes, unlike traditional manufactured housing, are installed on foundations or slabs and are not designed to be moved after installation. No more “trailer park” image.
Modular houses tend to be larger than manufactured units and more closely resemble site-built residences while costing less than site-built homes. On the other hand, there is an increasing interest in small modular homes—known as ADUs (accessory dwelling units) or “tiny homes” – that can be used to alleviate local housing shortages or provide multigenerational living options. Tiny home production will see the fastest growth—albeit from a low base—due to their small size, which speeds up the production. There is also an increasing use of modular units in multifamily housing where units can be stacked to create apartment complexes with similar designs to facilitate maintenance and the connection of utilities.
The trend isn’t limited to the U.S., either. In Canada, Horizon North Logistics. has signed a non-binding letter of intent with CreateTO relating to the design, delivery, and installation of 110 modular units of permanent supportive housing in Toronto. The first group of units should be ready for occupancy late in the third quarter and a second group in Q4 of 2020. Manufacturing will be undertaken in Horizon North’s NRB Modular Solutions’ center of excellence in Grimsby, Ontario. Horizon North constructed 664 supportive housing units in the City of Vancouver and 797 more units across the province of British Columbia.
The 110 modular homes in Toronto will provide affordable homes to individuals experiencing homelessness, while also reducing pressure on the city’s shelters, particularly during the COVID-19 pandemic, a time when there is urgency to implement housing approaches in a cost-effective manner.
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