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Revolutionizing Home Construction: The Rise of Prefabricated Homes in the United States

The United States housing industry is grappling with a critical shortage of both housing supply and skilled labor. This crisis extends from bustling coastal cities to quiet heartland towns, where homebuilders have struggled for years to keep up with surging demand. The consequences have been soaring housing prices and delays in homeownership for many Americans. In a 2022 report by the nonprofit research group Up for Growth, it was estimated that the nation faces a staggering shortage of approximately 3.8 million housing units, nearly double the number from a decade earlier in 2012.

The potential solution to this housing dilemma lies in the realm of prefabricated housing. This innovative building method involves the construction of housing components in an offsite factory, which are then transported to the building site for assembly, akin to assembling LEGO blocks. Currently, prefabricated homes constitute just 3% of the newly constructed single-family homes in the United States.

However, this percentage could see a significant increase in the near future. The global prefabricated buildings industry is projected to grow from $106.1 billion in 2020 to a substantial $153.7 billion by 2026. This growth suggests that the home construction sector may increasingly turn to prefabrication, enticed by shorter construction times, more efficient building methods, and improved working conditions for laborers.

Leor Kouser, an installation supervisor at Cover, a Los Angeles-based prefabricated home company, is convinced that this shift towards prefabrication is inevitable. He asserts, "The future of construction will definitely be more automated, more robotic, and more mechanized; it's just a matter of time."

The Evolution of Prefabricated Homes

Prefabricated homes may sound like a concept from the future, but their roots in the United States date back centuries. The earliest example harks back to 1624 when a colonial American fisherman commissioned an English construction company to fabricate building components, shipping them overseas to the fishing village of Cape Anne. Later, in the 19th century, prefabricated homes played a role in housing the throngs of prospectors who flocked to California during the Gold Rush.

However, it was Sears that truly popularized prefabricated homes in the United States. Between 1908 and 1940, the company sold approximately 70,000 "kit homes" starting at a mere $160 (though buyers had to assemble them themselves). Post-World War II, with millions of veterans seeking affordable housing, prefabricated homes experienced a brief surge in popularity. Models like the enameled-steel Lustron house, costing between $7,000 and $10,000 and promising resilience against weather and time, gained attention. Nonetheless, prefabricated homes never fully caught on in the United States, despite finding relative success in countries like Sweden and Japan.

Advancements in the Industry

The tide may finally be turning for prefabricated homes in the United States. A 2019 report from McKinsey & Company highlighted a "new wave of attention and investment" in the industry, thanks to the maturation of digital tools optimizing the construction and delivery processes. Additionally, American consumers are growing more receptive to prefabricated homes, particularly as new material choices enhance the visual appeal of these homes.

Cover, a Los Angeles-based prefabricated home company, stands as one of the frontrunners in driving the prefabricated industry closer to mainstream acceptance. Comprised of experts in architecture, software, automotive, aerospace, and construction, Cover employs software and robotics to craft nearly all housing components within its Los Angeles facility.

Each Cover home is custom-designed according to the customer's needs and the specific site where it will be constructed. The process commences with the creation of a detailed 3D model, down to the minutest detail. Once the design is finalized, construction of components and foundation laying occur concurrently, saving valuable time and reducing disturbances at the property.

This approach is also cost-effective. Traditional construction projects often encounter unforeseen overruns due to miscommunications between contractors or administrative errors. With Cover producing all components off-site, such unexpected costs are significantly minimized.

The key to Cover's success lies in its wall-paneling system, which arrives at the construction site pre-configured for insulation, structure, waterproofing, and electrical requirements, allowing for swift assembly. This streamlined process ensures that buyers know precisely what they are getting and when they will get it, eliminating last-minute changes that often occur with conventional construction.

Improving Working Conditions

Furthermore, the ease of assembly means that workers do not require extensive training as conventional construction workers do. According to Leor Kouser, an installation supervisor at Cover, "Somebody with zero construction experience can get trained up in a matter of weeks."

Working on a prefabricated home site also offers a better working environment with reduced physical strain compared to conventional construction. This is a significant improvement, considering the challenging working conditions faced by construction workers in the traditional sector. The United States currently experiences a shortage of construction workers, with between 300,000 and 400,000 unfilled positions, according to a recent report from the Home Builders Institute. Additionally, fewer young people are entering the construction industry, and the median age of a construction worker is 41 years old, indicating a potential retirement wave in the near future.

While the prefabrication industry may not single-handedly resolve the labor shortage, it represents a positive step towards attracting a new generation of construction workers. By offering healthier conditions and a better work-life balance, prefabrication aligns with the growing housing demand in the nation.

Cover, at present, focuses on constructing relatively small prefabricated homes (approximately 1,200 square feet) in the Los Angeles area. However, if companies like Cover can successfully scale up their operations, larger and more intricate prefabricated homes may soon become a common sight in neighborhoods across the United States, offering a quieter and quicker alternative to traditional construction.

Leor Kouser aptly summarizes the prevailing sentiment: "Changing an industry is probably the most difficult thing anyone can take on, but technology is starting to recognize that there's a market [in prefabricated homes] that really hasn't been tapped into, and there's just far too much potential to ignore."


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