mshepherd@americanprogress. org
elofgren@americanprogress. org
The United States is in the midst of a serious housing affordability crisis, largely due to a shortage of resources that is difficult to solve in a timely manner with subsidies and classical structure methods. 1 Today, the housing structure housing is still mainly based on classic homes. -Site structure methods. built structure process. However, the on-site structures sector is developing productivity inefficiencies due to its significant fragmentation and a critical shortage of professional hard labor in the structures sector. 2 Additionally, construction prices have increased over time, making even harder for developers to upload new affordable sets to their project. the real estate market, specifically in spaces where prices are higher. 3 The higher price of new structured housing is due to several factors. 4 These can be grouped into 3 categories: 1) structural inputs, such as land, fabrics and labor hard; 2) land use regulations, which restrict the location and duration of new housing; and 3) financial complexity, including the timing and uncertainty of obtaining and layering various public subsidies to produce affordable housing.
Solving the housing affordability crisis will require policy reforms that address all three sources of housing cost escalation. This report focuses on how modular housing can reduce the first category of production costs: construction inputs.
Modular framing, along with the expansion of secondary housing units5, are among the projects announced during the Biden administration to reduce structure prices while rapidly expanding the supply of affordable housing. 6 This practice has also gained increasing attention from federal agencies, municipal governments and housing advocates. . Modular structure is a structural strategy whereby an entire structure is manufactured off-site in a factory. Their components, or modules, are then transported to the structure site, where they are assembled. 7 Modular homes should not be cellular homes. and manufactured homes, which are partially factory-built and assembled on a permanent trailer chassis and are subject to U. S. Department of Housing and Urban Development (HUD) design and production criteria and various financial requirements. 8 Modular homes are built off-site, however, unlike prefabricated homes, they are assembled on site and attached to a permanent foundation. Modular homes are therefore classified as real estate in the same way as classic home-built homes.
The modular structure has many potential benefits, adding load savings, shorter progression times, and a safer and more effective overall progression process. 9 Despite those advantages, the modular structure still represents a relatively small segment of the structure market in the United States, in contrast to other countries where this practice is well established. 10 A larger percentage of the market in the United States has been constrained by several factors, such as the addition of financing and payment schedules; shortage of manufacturers; inconsistency in structure codes, zoning regulations, and national transportation requirements; and labor shortages, among other challenges. In addition, the increased acceptance of modular structure in the U. S. UU. se has been delayed due to the usual combination of modular homes with cell homes and manufactured homes, which have a negative reputation due to old stereotypes, low quality materials, design flaws, and monetary issues. 11
After offering a review of the housing shortage in the United States, this report describes the modular structure, its benefits and prospects for alleviating the housing crisis, specifically in the multifamily housing sector, as well as the barriers that are to be overcome to bring Modular structure to scale.
This report proposes a series of recommendations that can bring the use of modular construction to life. The report makes the following recommendations, among others.
States and localities should be encouraged to explore and adopt funding mechanisms that promote innovations in the construction of affordable, resilient, and energy-efficient housing. Grants should be made available for modular affordable housing projects that meet specific climate and environmental sustainability criteria.
Federal agencies deserve to expand their methods for creating tax-exempt Private Activity Bonds (PABs) for affordable modular housing projects, especially for multifamily developments. Modular corporations struggle to offload the capital needed to build their production capacity. Access to PABs for affordable housing projects would reduce financing costs, which could help companies attract more capital for those types of projects. Government-sponsored enterprises (GSEs) deserve to continue exploring tactics to help fund modular and affordable multifamily housing, for example. encouraging the securitization of mortgages similar to homes built with modular techniques that meet express climate and environmental standards. In addition, structural financing models deserve to be restructured to provide developers with truly extensive funding during the initial phase of modular projects.
States facing serious housing affordability issues should work together to expand uniform structure code regulations governing modular construction. Each state has other code requirements that make each progression custom, which increases the costs of the modular structure. Standardized code requirements would allow brands to optimize their production. State point approval processes deserve to be standardized, as more consistent and standardized administrative regulations and structure codes would improve efficiency, reduce costs, and ultimately facilitate broader adoption of the modular structure. HUD can play a key role in standardizing approval processes at the state level by creating a modular structure code language that states can adopt. Local governments deserve to expedite plan approval and reform zoning to facilitate the adoption of modular structures for affordable structures, that is, multifamily housing in high-density transit-oriented progressions. National transport departments also need to be encouraged to harmonize rules regarding the shipping of modules, at least at a regional level.
Since the modular structure uses evolving technologies that increase the power and productivity of the structure, workforce progression and targeted hiring will need to be a priority. Modular module brands that receive government aid to build affordable modular housing deserve to be required to pay prevailing wages and create pathways to employment for staff from all walks of life. 12
Congress should authorize grant and tax credit programs to support the expansion of modular housing construction capacity. Local governments should provide business incentives for establishing modular factories—for example, by purchasing units built off-site; facilitating the use of public land, idle lots, and brownfields for creating modular business opportunities; and promoting public-private partnerships.
The United States has been experiencing a severe shortage of affordable housing since long before the COVID-19 pandemic.13 The crisis is particularly acute among renters, who make up 35 percent of U.S. households.14 Rising demand, shrinking availability and underproduction of affordable units, and the concentration of new construction at the high end of the market have contributed to a rise in rental costs for renters across different income brackets.15 In 2021, 21.7 million renters—nearly 50 percent of all renters—spent more than 30 percent of their income on housing costs, exceeding the standard threshold of housing cost burden.16 The number of cost-burdened renters, those who spend more than 30 percent of their income on rent, was the highest recorded since 2001.17 Furthermore, 11.7 million renters—27 percent of all renters—were severely cost burdened, meaning that they spent more than 50 percent of their income on housing. Renters’ housing costs have continued to outpace renters’ incomes as the rental market has become increasingly tighter. (see Figure 1)
Every year, America’s housing stock suffers losses due to deterioration, obsolescence, and increasingly severe natural disasters. On top of those losses, emerging housing costs are causing an additional loss of affordable housing at the back of the housing market. In other words, its costs are arising from the success of its former residents. 18 As hiring has outpaced household income sources, housing costs place a burden on renters at nearly all income source levels, primarily due to a shortage of housing that tenants from other income sources can afford. 19 Table 1 illustrates the gap in rental housing availability at other levels of rent and source of income.
In 2021, about 10 million working families lived on incredibly low incomes, or incomes at or below 30% of the region’s median income source. 20 There were approximately 6. 4 million rental units, totaling 325,000 vacant rental units. , at rents that can be affordable for families with incredibly low income streams. However, more than 50 percent of those TVs (the rented ones) were not available to renters with incredibly low income sources because they were occupied for a period consistent with families with income sources. As a result, 75% of tenants with incredibly low income sources lived in complexes with rents above the incredibly low hiring threshold. Similarly, really large amounts of affordable housing for families in other income source groups. explained through HUD (very low, low, and moderate source of income) were filled through contractors with an increase consistent with the source of income. 21
The production of affordable rental housing has not been sufficient to close the gap between source and demand, reflecting trends in the broader housing market, where several years of underbuilding relative to population expansion have contributed to the shortage of rental housing. 22 Census insights indicate that the expansion of housing inventory has not kept pace with the expansion in the number of families, which has led to a tight market and higher prices. From 2015 to 2022, the national gap between family formation and home finishing widened to 3. 1 million units. (see Figure 2) During this period, approximately thirteen million families were formed, while 10. 5 million housing complexes were started and 9. 6 million were completed. The latter included 4. 2 million devices for rent and 5. 3 million devices for sale. In 2022, there were 15 million unoccupied homes, thirteen percent less than in 2015. However, in 2022 only around 3. 5 million vacant homes could be rented or sold.
The Joint Housing Research Center’s most recent report on the state of housing in the country shows that as the source of low-income housing continues to decline, demand for rental housing has been strongest in high-cost urban centers, where additions to rental inventory have increased. They have continued to shift toward the higher end of the market, making the affordability crisis even more pronounced in those centers. 23 “Selection” is the procedure by which high-income families move away from older, less expensive housing and into larger housing. Released housing that is sold or rented to low-income families. 24 Research on screening indicates that the structure of luxury rental housing is not sufficient or fast enough to move housing inventory from high-income families to low-income families.
In short, the personal housing market has not been able to keep pace with the demand for housing, particularly in the rental sector and for low-income families. At the same time, the federal government in the form of subsidies to renters, which can provide fair assistance to make housing affordable for renters with the lowest source of income, remains insufficient. 25 The affordability crisis calls for an increase in the overall source of housing that can ease the burden of housing prices for families from other sources of income.
In May 2022, the Biden administration announced new measures to ease the burden of housing prices. 26 Modular structure is among the projects in the announcement aimed at reducing structure prices while expanding the source of affordable housing. 27 Modular structure is one of several different types of structure that comes with prefabricated single-family homes and advertising modular structure. 28 Like other advertising structures made through permanent modular structure, modular homes are manufactured absolutely off-site in a safe and controlled environment. 29 Its components, or modules, consist of -Volumetric elements, also called panels, such as walls and frames, or are prefabricated in volumetric form, that is, they are constructed as closed three-dimensional assemblies with interior surfaces and finished exteriors, as explained in more detail below. 30 Once completed, the modules are transported to the structure site, where they are assembled (stacked, lifted by crane, and placed on the foundation) to form residential structures indistinguishable from classic houses built on the site. Unlike in-situ framing, modular homes are built by first framing the frame and then adding internal, electrical, plumbing, mechanical, insulation, external cladding, and siding surfaces. 31 Modular homes are typically built with other materials, such as timber. (generally for low-rise single-family and multi-family structures); metal (for tall structures that require a physically more powerful structure); concrete; and, increasingly, wrought wood panels and structural insulation. 32
Modular homes, whether single-family or multi-family, are classified as real estate and depreciate in the same manner as homes built that comply with the International Building Code. 33 However, unlike manufactured homes built on a permanent frame that are subject to the Department of Housing and Urban Development Standards, Modular homes comply with existing building codes at the site where they are assembled. 34
Off-site construction is the process of planning, designing, fabricating, transporting, and assembling building elements in a factory setting—to a greater degree of finish than in traditional on-site construction—to allow rapid on-site assembly.35
Different types of external structures can be highlighted depending on the building’s finishing point:36
Modular building offers several benefits compared with traditional on-site construction. These include construction cost savings, workers’ safety, environmental benefits, and flexibility for solving short-term housing issues.
Prices for housing structures, specifically in multifamily complexes, are a primary barrier to addressing the existing housing shortage and have increased over time, even for housing that evolved with federal subsidies, especially in high-cost areas. 39 Through several factors, namely, significant prices such as land acquisition, the cost of labor and curtains of the structure. It is estimated that curtain prices account for 65-73% of the total progression prices of a typical apartment structure. Approximately 10 to 20% of this total is made up of land. Acquisition alone. 40
High structural costs are also due to a shortage of hard labor. 41 Research by Associated Builders and Contractors estimates that an additional 342,000 employees will be needed in 2024, above the general hiring rate, to meet the demand for hard work in the structure. 42 Labor shortages Contribute to higher prices and employee productivity by generating longer structure times and delays. Following the post-COVID-19 rebound in housing framing and renovation, framing hiring has slowed in recent months, down to 4. 6% in August 2023,43 and layoffs have increased. 44 According to the most recent Commercial Construction Index report, the structure Contractors are concerned about increasing difficulties in locating qualified employees. 45 The Commercial Construction Index report also implies that contractors are facing shortages and prices of curtains, specifically steel. 46 Additionally, The National Association of Home Builders and the National Multifamily Housing Council imply that regulations, such as a wide variety of rates, standards and other requirements imposed through government entities at the stages of the progression and structure process, i. e. the increase in general prices of multifamily progression. 47
Another reason housing advocates and policymakers are increasingly considering modular building to solve the national housing crisis, besides its nominal costs, is because the average construction timeline of a multifamily project built off-site is much shorter than traditional on-site construction. Figure 3 shows that the average time from authorization to completion of new residential buildings has increased in the past decade, most likely due to a shortage of construction labor. In 2022, for example, it took more than 20 months to complete a multifamily building with 20 or more units, compared with 16 months in 2015. It takes eight months from approval to occupancy to complete the average multifamily modular project.48 Modular building can accelerate project timelines by 30 to 50 percent for various reasons, including simultaneous site development and building construction; reduction of weather delays; automation; enhanced quality control; and greater efficiency in the supply of building materials.49 According to McKinsey research, projects that are most likely to result in significant construction cost savings are those that are easily repeatable and feature high proportions of labor-intensive activities.50
Compared to the classic on-site structure, the modular structure is sometimes safer for personnel. In a modular structure, maximum painting is consistent with that produced in a climate-controlled facility where personnel are not exposed to the elements, heavy machinery, heights, and hazardous materials. 51 According to the U. S. Bureau of Labor Statistics . ,52 approximately 62% of the structure’s personnel are exposed to heights and the threat of falls. In 2020, structures personnel experienced their highest annual number of fatal injuries (308) compared to the past five years and suffered approximately 12% of all fatal falls, slips or trips in the structures sector. structure and extraction. Additionally, the non-fatal injury rate was higher for structure staff (52. 5 per 10,000 full-time employees) than for general staff, with structure staff being more vulnerable than other staff. from suffering transportation-related injuries. Construction work also has no easy physical demands: 93 percent of construction workers have higher rates of overuse injuries and illnesses than other personnel. Additionally, structure personnel are more likely than other personnel to be exposed to hazardous contaminants that can harm their health and lead to fatal injuries. Finally, 81 percent of the structure’s staff work outdoors more than two-thirds of the time, where their hours and operating conditions depend on weather conditions. 53
Modular structure is not a new structure method. In fact, this practice has been carried out since the mid-19th century, when prefabricated homes were produced and sold to aid migration to the West, specifically during the California Gold Rush. 54 During the first decades of the 20th century, Sears , Roebuck and Co. . . . sold thousands of prefabricated houses, known as “catalog houses”, which cost two-thirds the price of conventionally built houses. 55 Demand for prefabricated houses increased during World War II to house personnel from army. This continued into the postwar years, when the United States, like postwar Europe and Japan, experienced severe housing shortages as infantrymen returned home. Later in 1969, HUD introduced a protest called Operation Breakthrough to help the external structure of suburban single-family homes. The demonstration task generated 2,794 sets at nine prototype sites, but failed to produce the expected gigantic volume of factory-built sets. 56 In the 1970s, modular structure techniques began to be increasingly implemented in schools, hotels, apartment buildings, healthcare facilities and other giant buildings. Since the 2000s, thanks to technological advances such as computer-aided design and three-dimensional printing, sustainability concerns, ease of assembly, and increasing industrial adoption57, modular structure has gained increasing attention. 58
According to data from the United States Environmental Protection Agency (EPA), the residential sector is responsible for 15% of total gross greenhouse fuel emissions in the United States and accounts for approximately 21% of intake. total energy consumption in the United States. 59 Buildings, which are commonly constructed on-site, are guilty of emitting a giant proportion of greenhouse fuels, contributing to climate change-related disruptions. 60 Modular homes They sometimes have a smaller structural footprint than those built on site. houses. 61 Existing life cycle studies on the environmental impact of residential structure indicate that modular structures provide greater functionality throughout the life cycle and that the average environmental impact of the modular structure is lower than that of houses. traditional. houses built on site, specifically with regard to the production and shipment of fabrics, energy consumption, dispatch of personnel and waste control. Array62 The modular structure favors fabrics that are less difficult to transport and have greater eco-credentials, such as metal and criss-cross. laminated wood, while in the traditional structure concrete and brick are the dominant fabrics. Furthermore, the external structure uses other tools, less numerous and shorter in duration than the traditional structure.
When working in a centralized build location, workers may be able reduce fuel and parking costs as well as time spent in their commute to and from the workplace.63 By minimizing workers’ travel to the construction site and limiting the amount of construction vehicles on-site, modular building can reduce carbon emissions from transportation.64 Furthermore, off-site construction can address environmental risks, as modular homes are typically built in more sustainable ways than those built with conventional methods. For example, copious material waste is usually generated in conventional construction and needs to be removed from project sites to landfills. According to the EPA, 144 million tons of construction and demolition debris were disposed into landfills in 2018.65 Modular building produces less waste on the assembling site and reduces strain, such as noise, air pollution from construction vehicles, and water contamination, on the surrounding neighborhoods. In modular construction, building materials are kept in more controlled environments, are processed with precision cutting, and yield a tighter building envelope which, in turn, reduces energy consumption over the life of the building.66 Fewer risks of spills and damage occur during the transportation of completed modules, and recycling and repurposing of wasted material can be done in the same facility.67 In modular construction, factories are protected from the weather and module envelopes are typically tighter than those of conventionally built homes. These features can reduce leaks and moisture, thereby preventing the development of mold and mildew that can cause health problems for home occupants.68
Modular homes are generally designed and evolved with energy output in mind. 69 The structure of modular buildings typically requires 67% less energy than the traditional structure of equivalent products. 70 The environmental impact of modular structure is sometimes further reduced due to the increasing use of select fabrics and renewable energy sources through module manufacturers. 71 The existing relief The amount of wood used for the structure of a modular home promotes insulation, and the average use of cool roofs (primarily reflective fabrics that absorb less). heat from the sun – is helping to mitigate the heat. 72 The modular structure is also relatively more energy efficient due to its increasing use of high-quality, sustainable fabrics, LED lighting or Energy Star appliances, increased insulation, and thermally effective windows. 73 The energy power of modular homes can lead to great advantages for those who can least afford their energy bills. 74
Compared to classic framing methods, modular framing provides more flexibility to deal with short-term issues such as affordable housing shortages. For example, modular homes are being used as transitional responses to meet the short-term housing desires of certain populations, such as the homeless,75 students, the elderly, immigrants, and asylum seekers,76 and can be dismantled and relocated elsewhere. 77
However, the flexibility perspective of the modular structure is limited only to short-term housing source responses. The modular structure is very suitable for the flexible housing model, as it can integrate flexibility, adding a universal design, to the design of the houses from the beginning. Flexible housing refers to homes that can adapt to the changing physical desires of their residents, accommodate other family sizes, or incorporate new technologies. 78 It provides the ability to replace the room configuration of a home with minimal effort and expense. by allowing, for example, load-bearing interior walls and movable partitions. 79
When purposedly planned and designed, modular construction offers the possibility of future spatial or structural modifications of homes to meet the changing needs of their occupants. As demographics and populations change, household sizes, family structure, and user-group needs change as well. The current affordability crisis, coupled with demographic changes such as an aging population,80 shifting household composition and patterns in living arrangements—particularly, the growth of single-person and extended households81—and changes in the activities performed in living spaces, makes housing flexibility more relevant than ever. As the recent pandemic crisis underscores, the existing housing stock was not designed to accommodate lockdown-related school and business closures. During the COVID-19 lockdown, the ability of isolating in one’s dwelling was critical to minimize exposure to the virus, but not all homes—especially small and overcrowded homes—could offer the possibility for infected household members to have their own separate bedrooms and bathrooms. Published research demonstrates a relationship between COVID-19 case rates and area-level measures of overcrowded and multigenerational housing.82
Despite the benefits of modular structure, several challenges, such as the addition of financing and payment schedules, manufacturer shortages, overlapping regulations, zoning, state transportation requirements, and wage issues, as discussed below, have prevented this structure technique from being widely followed enough to allow for an effect in the United States. 83
The Modular Building Institute reports that in 2022, the multifamily sector was the largest market for the modular industry in North America. 84 However, in 2022, only 1% of multifamily buildings were built with modular or panel structure strategies. That same year, the percentage in the market of single-family homes built with modular strategies was only 2%, down from 6% in 2000 (see Figure 4). The Midwest is home to the highest percentage of home complexes built with volumetric and panel structure strategies – 10 percent of the region’s home complexes completed in 2022. 85
The U. S. has not kept pace with other countries where the external structure is widely used to address housing and hard labor shortages and where modular framing represents a much larger market position than in the U. S. 86 In Finland, Norway, and Sweden, forty-five percent of all housing production is done off-site. In Japan, off-site structure accounts for 15% of homes built per year. And in Germany, 10% of housing is built off-site. 87 Off-site structure is also built off-site. in China, Singapore, Australia and the United Kingdom. 88
Increasing the number of homes is a monumental task, which raises the question of whether modular structure is a realistic option to temporarily solve the affordability crisis, given the small scale on which this technique is being followed lately in the United States.
Estimates of the shortfall between demand and source of available demand vary depending on the data, methods, and assumptions used to make those calculations. 89 Estimates also vary depending on whether they are calculated at the national level or at more granular points. . The Center for American Progress estimated the ho deficit in 2021 at the geographic point of the Public Use Microdata Area (PUMA), the method used through the nonprofit organization Up for Growth. 90 According to CAP estimates, which took into account the formation rates of old families and with an unemployment rate of 5%, the U. S. is 3. 8 million units short, either for rent or for sale. Underproduction is especially pronounced in the West and South, where the population has grown to the maximum and where the renters facing the burden of rates are higher. largely concentrated91 (see Figure 5).
However, numerical estimates of the overall housing deficit do not provide data on the types and quality of housing needed not only to close the current rental affordability gap, but also to promote long-term affordability, resilience and sustainability. term, while addressing other housing desires based on To illustrate this point, Table 2 presents some characteristics of the intersection between housing affordability and family composition and living conditions. In 2021, 52 percent of renter families facing a housing burden were single people, compared to 32 percent of those who pay rent. Households with more than one user under the rental burden were more concentrated in smaller dwellings than all other unmarried renters. Sixty-nine percent of non-single renters with hires did not reside in one- or two-bedroom homes, compared to 54% of the rest of non-single renters.
This disparity is reflected in the share of underhoused renters and the types of units they occupied. Underhoused renters would have to move to a different unit to meet the occupancy standard of two people per bedroom.92 In 2021, 14 percent of non-single renters with a housing cost burden were underhoused, compared with 9 percent of all other non-single households. Meanwhile, 57 percent of renters with a cost burden lived in multifamily housing units, compared with 40 percent of all other renters.
A shortage of adequate housing could partly explain the increase in the percentage of extended families among renters who can hire (19 percent), compared to 11 percent among families burdened with rent burdens. 93 Subfamilies, occasionally referred to as “duplicate families,” have similar characteristics.
Several demanding situations, coupled with the negative stigma associated with off-site structure,96 have prevented modular structure in the U. S. from being used as a tool for off-site construction. UU. se adapted to a popular industry and achieve the scale needed to specifically build the source of housing. 97 Critical and demanding situations are discussed below.
Unlike classic on-site structures, where the budget is generally allocated based on finishing criteria,98 the payment schedule for modular structures requires significant upfront capital to cover procurement and curtain prices. Lenders view the modular structure as the main threat compared to the classic structure due to its relatively immature market and poor track record of success. 99 Financial institutions sometimes worry about the inability to identify collateral or “obtain real estate in a context where fabrics can be Used for various modules, which only become real estate once delivered and assembled on site. Construction lenders, who commonly evaluate amortizations based on finished paintings, take upfront costs into consideration too high and are willing to offer loans only when the modules arrive on site. 100 Lenders are also concerned about the need to complete the project in case the manufacturer becomes insolvent. 101 Construction lenders often require developers to modules that provide non-performance insurance to the subcontractor or a functionality bond to guarantee that they will complete the task. This means that modular companies will have to provide more operating capital, which ultimately increases their overall prices.
There are situations specifically demanding publicly funded allocations, such as local procurement needs that sometimes span the entire state. 102 Financing availability is a challenge for affordable modular housing developers because public financing is still primarily structured around classic structure. Affordable housing developers will typically need to consolidate multiple funding sources. 103 This can increase allocation prices and cause significant delays in construction. For example, affordable housing developers rely heavily on the Low Income Housing Tax Credit (LIHTC) program, the largest budget source for new affordable rental housing structures for low-income households. 104 The LIHTC provides developers with tax credits to subsidize the structure and rehabilitation of affordable housing developments. The IRS assigns tax credits to public governments guilty of financing housing. These, in turn, identify their rules for allocating credits, based on affordability criteria established through the Ministry of Housing and Urban Development. The program is characterized by critical financing complexity that influences direct and indirect allocation prices and affects the effectiveness of the program in providing affordable housing. 105 LIHTC arrives at the stratification of multiple investment resources, adding that the average number has been accrued over time. 106 The complexity of funding LIHTC allocations lengthens their progression times. 107 In general, the program rewards higher prices because tax credits are based proportionately on overall progression prices. 108
However, the LIHTC program has come under increased scrutiny due to reports of elevated or fraudulent progression prices for some LIHTC projects. 109 The program expands to qualify an expansion payment to expand properties. 110 As the Government Accountability Office explains:
Allocation agencies use measures such as fee and payment limits to monitor LIHTC progression pricing, but few agencies have the need to protect themselves against false claims about contractor pricing (a known fraud threat). The policies of the LIHTC program, while requiring a high level of certifications from developers, do not directly address this threat because certifications aggregate contractor pricing. Some contracting agencies require detailed charge statements from contractors, but many do not. Since the Internal Revenue Service (IRS) does not require such certifications for LIHTC projects, the vulnerability of the LIHTC program to this fraud threat increases. 111
In addition, since the various intermediaries involved in financing LIHTC projects will have to be compensated, the federal tax subsidy consistent with the new structure unit is sometimes more consistent than it deserves to be and does not directly affect the creation of new rental housing. . 112 LIHTC practices and regulations need to be updated to better comply with Biden’s housing plan and incorporate modular housing.
The modular structure faces several demanding situations similar to transporting modules from the factory to the structure site. Most modular home companies are located in the regions they serve. 113 Companies that produce multifamily modular buildings are concentrated on the East Coast and on the West. (see Figure 5) Due to the structural footprint, modules typically require large, heavy automobiles to transport and assemble. In addition, lifting and hammering assemblies of modular structures damages individual components. 114 Each state publishes its own set of transportation regulations for heavy, oversized, and obese people. Allowable shipping and travel times. 115 Some states also account for overweight and obese car rentals that can cause delays in delivery times. Therefore, if modules are built in a condition other than that of the structure site, the transport of the modules will have to comply with other codes. 116 Standardization and higher weight limits can lead to higher infrastructure prices and greater protection of roads and environmental risks.
The modular structure industry will have to comply with the same structure codes as those of traditional on-site structure. The modular structure is regulated mainly at the state and local level depending on the final location of the modules. Some states, such as California and Florida, have changed their codes to meet the desires of their climate and geography. 117 Only 39 states have national modular systems that ensure certain modular homes comply with structural codes and state amendments. ‘State. 118
The remaining states rely predominantly on local jurisdictions’ officials for approvals and to determine compliance and safety. In the case of states with modular administrative programs, such programs are not consistent from state to state, especially regarding approvals. While some states allow the use of third-party inspection agencies, others do not and instead rely on in-house staff, which can result in slower turnarounds.119 Once delivered to the final site, modular building units are subject to the same local land use regulations and zoning as housing units conventionally built on-site.120 Local zoning regulations, which determine development eligibility for construction sites, represent a critical barrier to constructing multifamily affordable housing in many jurisdictions across the United States.121
Even when multifamily projects are allowed, other structural constraints, such as the height of the structure’s ceilings, can make it difficult to adopt a modular multifamily structure. It is feared that height limits may diminish the monetary viability of projects that do not involve enough units. 122
Due to the scarcity of hard work and the emerging prices of hard work in the structure industry, the expansion of modular structure can encourage a cost-effective and predictable use of production hard labor. 123 This is mainly due to the point of industrialization of modular structure, as well as the controlled environment of modular structure factories, especially when it comes to reducing disruptions to schedules due to weather conditions, and reducing the need for subcontractors, as modular structure companies typically hire their own factory workers. 124 In general, wages in the modular structure industry are lower than in the traditional sector structure. such as plumbers, electricians, and carpenters, among others. 126
The U. S. Department of Labor (DOL) is contemplating regulations to explain that wages under the Davis-Bacon Act and similar legislation will have to be paid to personnel in off-site modular plants where significant numbers of federally assisted projects are being built. 127 Under the proposed regulations, those off-site facilities, which are currently excluded from coverage, They would be considered painting sites under a federally funded project.
Still, the modular structure industry opposed the proposed regulations, arguing that expansion would structure the cost of modular structure allocations, that prevailing wages would make modular businesses less competitive in the marketplace, and that modular affordable housing developers would be deterred from seeking federal funding. 128 The DOL contends, however, that such potential fee structure increases would be minimal and would not be applicable to the modular structure sector, as the final rule applies only to sites committed exclusively or almost exclusively to a single federally assisted contract and will not come with modular facilities dedicated to more than one task or area.
According to the Department of Labor:
Most modular structure services are dedicated to more than one assignment at a time and therefore will not be considered “workplaces” under this rule. Conversely, in secondary sites devoted exclusively or almost exclusively to a single assignment covered through the DBRA [Davis-Bacon and similar statutes] at a given time, the application of the appropriate wage determination to staff at the site at that time does not deserve to be considerably more complicated or onerous than the application of a wage determination at a site created especially for the functionality of the contract. as required by applicable regulations. 129
With the right coordination and plans, modular framing has the potential to reduce framing costs and increase the predictability of framing costs, helping to solve the housing affordability crisis. 130 It is estimated that at present, the external framing of a low-rise multifamily building allocation can save 20% of the total cost of the structure compared to the classic on-site framing by reducing prices by achieving economies of scale in the use of structure materials. 131 Reducing hard prices makes the structure of new homes more varied, especially in cities facing a severe housing shortage and where rents continue to rise. It also allows nonprofit housing developers to produce more complexes with limited public investment opportunities and incorporate sustainability elements into their allocations. 132
It is vital to find temporary housing to help Americans and families facing higher costs who would otherwise be displaced or homeless. Development and operating expenses are sometimes not covered by rents paid through very low-income space properties. Even when the nominal prices of the modular structure are comparable to those of the traditional structure, the shorter structure times generate profits more quickly and potentially compensate for disparities in initial investment prices. 133 Earlier occupations and cash flows can be in which more complexes must be had to lower income for tenants and potentially reduce the need to rely on federal tax subsidies, the complexity of which often lengthens allocation progression times. An immediate buildup of housing sources can have a dampening effect on rents, particularly in the high-end segment of the market, thus relieving pressure on the rest of the market. 134 At the same time, the power gains related to the modular structure They may just be horny with investors. The public housing government is looking for tactics to build more housing with limited funds. 135
The potential for modular homes to improve energy output is vital to making housing more capable by reducing heating and cooling prices and reducing electricity bills. 136 In addition, by incorporating flexibility, the modular structure has the potential to offer a greater diversity of homes and meet the desires of more people. segment of society, especially in groups facing housing prices. 137 Finally, moving the structure to factories outside of expensive cities can generate advantages for staff who cannot live where they work. 138
In order for the benefits of modular structure to be fully harnessed and expanded, it is necessary to promote the expansion of the modular structure sector through the structure of its capacity and skills and to address the critical and demanding situations that modular structure still faces today. CAP gives the following recommendations.
States and localities are invited to explore and adopt financing mechanisms that incentivize inventions in affordable, resilient, and energy-efficient housing structures. Some states and local governments are encouraging innovation in new framing methods, adding modular structures, to make housing affordable and reduce cost. carbon footprint. Cities like San Francisco and New York, for example, have invested in modular structures to boost the production of much-needed affordable housing. 139 In 2019 and 2020, the Washington State Department of Commerce, which administers the State Housing Trust Fund, issued Notices of Funding Availability for Affordable Projects Using Modular Construction. 140
However, more initiatives are needed at the national level to bring modular building to scale. Federal agencies should expand strategies to make tax-exempt bonds widely available to modular manufacturers of multifamily affordable housing, who generally need to secure large upfront capital. Private activity tax-exempt bonds, which are often used in conjunction with the low-income housing tax credit, play a crucial role in developing affordable housing. Their affordability requirements should be enhanced, and more bonds should be available for new construction of multifamily affordable housing, including buildings constructed with modular techniques, especially in states experiencing severe affordable housing shortages. Existing volume caps should be expanded, and unused PAB volume caps should be reallocated to a national pool that can assist states that need additional resources to develop affordable housing, including affordable and energy-efficient housing produced by modular manufacturers.
In addition, federal agencies at all levels (HUD, EPA, and the Department of Energy, among others) align the scope of federal grants for blank energy investments to come with affordable modular housing, especially in spaces most at risk of natural disasters, as long as the modular projects meet energy power standards. Affordable modular structure projects, for example, will be eligible for the Greenhouse Gas Reduction Fund, recently announced through the Biden administration. 141
Government-sponsored businesses deserve to continue exploring investment tactics for affordable modular multifamily housing, specifically in conjunction with their projects to promote sustainable communities and develop the source of affordable housing options. CSGs deserve to inspire the securitization of mortgages related to homes built with modular techniques and assembly express climatic and environmental standards. For example, modular multifamily homes deserve to be eligible for products like Freddie Mac’s Green Advantage, given the focus on energy efficiency. 142
Construction financing models deserve to be restructured to offer module expanders truly extensive financing in the initial phase of modular projects. Some monetary institutions are working with modular corporations to expand new methods, such as a phased collateral approach. 143 Another way lenders are facilitating the financing of modular structures is by selling a virtual tracking formula to identify fabrics for rapid modular projects, as recommended by the Terner Center for Housing Innovation. 144 Financial establishments can then take on promises or security interests in those documents. Tracking the progress of the use of gaskets and curtains in modular structures would alleviate monetary establishments’ concerns about the lack of safeguards and skills to oversee the framing process, especially in factories with more than one modular product line. 145 In March 2023, Fannie Mae announced that it would do so. improve collateral threat management. 146 Modernizing valuation can make the modular commercial lending procedure more efficient.
State point approval processes deserve to be standardized with more consistent administrative regulations and structure codes that would improve efficiency, reduce costs, and ultimately facilitate broader adoption of the modular structure. 147 The Plan The Action Plan for The Biden administration’s Housing Supply includes investments across several federal agencies to promote structural codes and reform zoning and land use regulations that can aid the adoption of modular structures. 148 The National Institute of Standards and Technology and HUD deserve to continue providing states with evidence-based criteria and the most productive practices for structures and structures. structure codes. HUD can play a very important role in standardizing approval processes at the state level by creating a modular structure code language that states can simply adopt. The Modular Building Institute is currently collaborating with the International Code Council to create new industry criteria that, once adopted, will determine how modular structures are approved, specifically for regional brands that ship products to other states. 149 State shipping departments They also deserve to be motivated. harmonize regulations regarding the shipping of modules, at least at the regional level.
At the local level, governments should streamline planning approvals and reform zoning to facilitate modular construction adoption for developing affordable construction, particularly multifamily housing in high-density, transit-oriented developments.150 Local government regulations often increase the soft costs of construction, such as impact fees, and add time to the development process.151 Local governments should reduce regulatory barriers to multifamily development and adopt zoning allowing multifamily housing to be approved and built as-of-right, including affordable multifamily projects built with modular techniques.152 Reforming local zoning could also optimize available space in cities where the scarcity and cost of available land represent major barriers to the development of affordable housing. Government officials should encourage modular buildings for infill development, especially in sites that are difficult to access for traditional on-site construction and brownfield sites that need environmental remediation.153 Modular housing construction is consistent with the EPA’s Brownfields and Land Revitalization Program goals.154
While recruitment, skills education, and broadening the pool of professional labor are key to achieving better productivity in the structures sector, the external structure, if expanded, can continue to increase productivity. Given the current shortage of professional labour in the structures sector, which is contributing to emerging housing costs, the adoption of modular framing is increasingly seen as a mandatory step in addressing the shortage of available professional labour. However, more can be done for the quality of jobs and employment in the modular structure. sector.
Workforce progression and targeted hiring, especially among women, young staff, and staff of color, are two of the most sensible priorities. The average age of the workforce of the professional structure has increased as the number of staff in the elderly structure between the ages of 25 and 54 has decreased, and it is complicated for employers to update the retired workforce with younger, more professional staff. 155 Since the modular structure uses evolving technologies that increase the efficiency of the structure, A new workforce wants to be trained. In the modular structure, vocational education projects—such as expanding registered learning needs and using apprenticeships in state-supported projects—can attract a new generation of staff. 156
In addition, the diversification of the modular structures sector has the potential to make the gender composition of the structures workforce more diverse. Women make up about 10% of the structural workforce. 157 Job opportunities in the modular industry may be more attractive and available to women. 158 In the modular structure, automation and the controlled environment allow staff to carry out multiple responsibilities without the physical stress and risks of the job. Typical structure site. 159
Another very important step is to ensure prevailing wages for modular structure personnel in federally funded projects. Raising modular criteria for staff salaries and benefits, possibly expanding the prevailing wage needs for publicly funded paintings and strengthening bargaining rights for all staff, is a mandatory step in attracting more staff and productivity. 160 Research on existing wage legislation consistently indicates that such criteria help blue-collar workers earn class incomes increasing the productivity of painters and encouraging the training of apprentices. 161
Additionally, modular workers who want to form a union deserve to be allowed to unionize, as the Protecting the Right to Organize (PRO) Act would help them. Some unions have agreements with companies with a modular structure. The agreement implemented through the Northern California Regional Council of Carpenters (NCCRC) is a smart example of what can be done to achieve collaboration between modular corporations and unions. The NCCRC created a “wall-to-wall contract” with two modular plants in California for the purpose of educating staff. in all facets of the job, so that the carpenters union can simply cover all the paints in the plant. 162
If the modular structure is brought to scale, the costs incurred by modular corporations to pay for the hard work would be offset by others in the reduction of prices and time related to the modular structure.
Modular production capacity deserves to be expanded through the creation of new factories or the consolidation of existing ones. Expanding modular production capacity would provide an opportunity to create more jobs and address the cyclical nature of residential construction. Currently, the modular home industry in the United States lags far behind that of other countries, and it is necessary to decide whether the existing modular amenities are sufficient and large enough to ensure the effects needed to achieve economies of scale. 163
To this end, local governments may simply be offering advertising incentives for the status quo of modular factories, for example by purchasing modular units,164 facilitating the use of public land or unused land to create modular business opportunities, or selling public-private partnerships. In July 2021, Milwaukee issued an updated Request for Information to identify a public-private partnership to build an external structural plant to create jobs and provide workforce training. 165 Other allocations supporting the expansion of modular factories come with Fannie Mae’s Sustainable Communities Innovation Challenge. Among the five winners of the national festival announced in January 2023 is Module, a Pittsburgh-based modular company that will partner with Enterprise Community Partners to demonstrate the viability of locally-owned modular structure microfactories to realize affordable, energy-efficient housing in urban communities. 166 The assignment of Module’s Last Mile Network aims to expand the concept of modular microfactory to Prince County George, Maryland, and Richmond, Virginia, to gain advantages from black landlords and tenants. 167
The creation of new modular factories has the potential to address the mismatch between employment and housing. 168 In addition to expanding the potential of affordable housing development, the creation of modular factories in spaces characterized by high housing prices would provide advantages to structure painters, who face long commutes to reach paintings due to the shortage of affordable housing. 169
In addition to creating more modular factories, diversifying your products is key to achieving more reliable pipelines. 170 More studies are needed to explore more methods to expand the modular structure to address the pressing housing shortage.
The Affordable Housing Crisis in the U. S. it is undermining the ability of Americans and their families to achieve economic skills and demands new methods to develop the source of affordable, sustainable, and resilient housing in a timely manner. 171 Modular structure, if expanded, has the potential to lower the prices of structures and make it more affordable to build new homes, especially in spaces with a severe shortage of affordable housing. Most importantly, modular structures can temporarily provide housing to meet the desires of Americans and families suffering with prices that would otherwise be displaced or homeless. Through projects coordinated across governments at all levels, the adoption of modular structures can also help make housing inventory more resilient and sustainable in the face of the demanding situations posed by climate change.
The statistical research presented in Table 2 was conducted from the Public Use Microknowledge (PUMS) sample of the American Community Survey (ACS). The ACS PUMS files provide estimates of socioeconomic and housing characteristics at the household and individual levels. Knowledge is published annually through the U. S. Census Bureau. It must be obtained in one-, three-, and five-year files. This research is based on household-level data on occupancy, income, and housing prices from the 2021 ACS. PUMS knowledge set of the year. The research focuses on housing that is occupied for rent, unoccupied and available for rent, or rented but unoccupied.
Rental families were classified into five income source groups based on knowledge of the county’s point income source limits from the Gay Employment and Urban Development Decomposition. 172 Because PUMS data does not provide data to through the county, but rather through Public Use Micro-Awareness Areas (PUMAs) 173, the information needed to be reshaped to map the correct county HUD area median household income (AMI) data to each record of a family member. PUMAs were matched to counties through the Missouri Census Data Center’s MABLE/Geocorr 14 online cross-match. 174 The author derived 2021 family circle AMI thresholds at the PUMA point for a family circle of four using two methods: 1) the component of the counties corresponding to PUMA based on the weight of an employment unit; and 2) HUD family circle AMI knowledge weighting based on the number of families living in each PUMA. After adjusting family thresholds based on the number of people in each relative, the study classified families based on their source of income relative to the AMI-adjusted family threshold. The thresholds were the following:
The author determined the affordability threshold for a given unit based on the minimum number of AMI family members that a family member would have to earn in order to spend no more than 30% of their source of income on the rent of a residential unit, adjusted for the number of bedrooms in that unit. . . 175 The sets were classified as incredibly low, very low, low, moderate, and superior based on their cost relative to affordability thresholds. 176
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