Why Not Offsite?

I’m often asked why offsite home construction practices, which have been available for half a century or longer, should be expected to gain traction now. Granted, offsite solutions are not right for every project or every builder, but the industry environment seems to be evolving to favor many of these — primarily in light of the current labor and materials supply issues. Additionally, the predominant Millennial homebuying market attaches less negative stigma to factory-built or engineered housing solutions. In fact, Millennials tend to see factory-produced housing as “smarter” and more technologically advanced than traditional methods. So what’s continuing to keep builders from adopting offsite practices? We asked participants in a July 2021 builder survey the following question:

“What are the top three reasons your company does not adopt, or more fully adopt offsite construction methods such as wall panels or modular homes?” 

Source: Home Innovation Research Labs July 2021 survey of builders

About half the builders surveyed said there is no compelling reason to adopt offsite practices/products because site building works fine for them. However, I suspect that since July, the number of builders believing that “site building works fine” has fallen and may continue to fall as labor and materials supply issues continue to grow throughout the industry. 

In the #2 spot, nearly half the respondents said that the inability to make last-minute homeowner changes in layout or design keeps them from “going offsite.” Changes always become more costly after construction is completed, but builders tell us that last-minute changes in houses built using offsite techniques can negate any gains in efficiency that they provide. 

About a third of respondents said their biggest barrier is not having a reliable local supplier — a situation that can only be addressed by increased investment in capacity in this sector. Another quarter said they didn’t think their buyers would accept offsite practices – probably due to “traditional” buyer opinions that prefab equaled low quality; but, as mentioned earlier, today’s younger buyers are less likely to subscribe to that notion. 

Nearly a quarter of respondents hesitate to adopt offsite because they “don’t want to become dependent upon a single supplier.” A builder’s conversion to an offsite method of building requires fundamental changes in how they operate; some don’t yet trust a single supplier for an offsite solution, particularly as lead times for many suppliers have lengthened dramatically since the beginning of the pandemic. Site building using many varied materials and labor inputs is a risk mitigation strategy for many builders – if any single input cannot be supplied in a timely fashion, a substitute can be located relatively quickly.  

This is just a snapshot of the input provided by the builders we surveyed. We have deeper analysis of this survey, as well as comparisons of it to the similar ones we fielded the previous two years. Want to find out more about how this might impact your market strategy? Get in touch. 

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