Last Updated: Oct 26, 2022
The internet is talking about "prefab homes" 52% more this year compared to last year. What does this mean for the homebuilding industry? We created a report, "Off-Site Built Homes: An Online Media Analysis," to get to the bottom of things.
Prefab homes (also called "off-site built homes," "volumetric built homes," "factory-built homes," or "industrialized construction") are actually a simple concept. Instead of building all aspects of a home on-site, parts of it are constructed in an off-site facility then shipped and assembled on-site.
The touted benefits of this way of building are many:
Prefab has a bit of a reputation problem tracing back to the 1970s when the focus was building homes fast and cheap. Nowadays, prefab is one of the fastest-growing trends in residential construction.
In the age of digital, web traffic is something that the majority of companies pay attention to. For Rise, it's how we understand what is important to our audience. So you can imagine our surprise as we observed the ever-growing popularity of any article that mentions "prefab." We began to predict high web traffic days if we were planning to publish another prefab article. It's like clockwork!
As the voice of the homeowner, we set out to understand the consumer's perspective on this growing trend and produce a report with our findings. Namely, we wanted to know:
Our team used a media monitoring and social listening platform to analyze aggregated online media conversations. The sample size is 500K+, with English-language media mentions worldwide and all major online media sources.
The data was gathered by entering search queries containing keywords and instructions for relationships and exclusions with related keywords. For example, you might want to include mentions of "prefab" alongside "house" "home" or "housing" and exclude references to "gaming" or "PC." The platform provided many pre-made analyses, while others were done manually.
One of our burning questions was to uncover which aspects of prefab homes appeal most to consumers. We chose four features and created lengthy queries of related terms. In short, some of these associated keywords were:
With the data in hand, we were then able to compare, contrast, and extract the stories and trends that were the most interesting to Rise and our friends in the home building industry.
We highly recommend you read the full report for all of the results, but we can't help but share our favorite insights here.
When we queried the web for terms related to "prefab homes," "modular homes," "off-site built," etc. we got over 500,000 results over the past year (July 10, 2019 - July 10, 2020). What's even more interesting is that it's up over 50% from the previous period.
Prefab is more than just a trend here in North America - it might just be the new norm. This way of building is not a new development, and some nations have already widely adopted it. In Norway, Sweden, and Finland, 45% of current housing is built modularly.
What is driving this trend? According to McKinsey, this shift is driven by technological improvements, economic demands, and a change in the way we think. Widespread adoption of prefab home building practices can give the building industry a massive productivity boost. It can address our housing crisis through scalability and cost savings.
The pie chart shows the Share of Voice between the four attributes of off-site construction that we chose to compare. Durability (resiliency, high-performance) is neck and neck with build time. Sustainability (climate change, emissions, embodied energy) is neck and neck with affordability.
We were surprised by the prevalence of sustainability as a topic. But, it makes more sense when we understand that sustainability (as a general topic) has seen a massive 118% jump in the last year.
Affordability was a close second, with some home buyers believing that prefab is a more affordable option. It seems that this goes hand-in-hand with a preference for small square footage in bungalows, accessory dwelling units (ADUs, or laneway homes), and solutions for affordable housing (at the macro-level). There doesn't seem to be much "buzz" about medium-to-large prefab homes, perhaps because homebuyers don't understand (or care about) the ubiquity and flexibility of this building method. Download the full report to see the top stories from the past year.
This sustainability and affordability paradigm tells us that home buyers are seeking simplicity. A live stream Coffee Talk with the Housing Innovation Alliance (HIA) was quite informative. We learned, from Stantec's David Dixon, that "the attraction to cities and dense, walkable neighborhoods is here to stay." In 2019, the NAHB observed a shift toward a preference for smaller square footage. During the same HIA Coffee Talk, Nancy Keenan of Dahlin group discussed their Americans at Home report. It found that consumers are leaning toward flexible, multi-use spaces over additional square footage.
Whether they're looking to reduce their carbon footprint or shrink their financial burden, first time home buying Millennials are Googling "prefab" and "modular." Meanwhile, ADUs are experiencing a surge too. Homebuyers are leveraging these small dwellings as a way to add walkability and affordability to a neighborhood. Some homeowners are opting to add ADUs to their properties, instead of buying bigger homes. They are using them as offices, income properties, or aging-in-place retirement suites.
Download the full report to see the top keywords related to prefab affordability, durability, build time, and sustainability.
With over 5.5 billion searches per day, Google accounts for 91.54% of all online searches; that's why we looked to Google to get a pulse on how home buyers were researching off-site built homes. Download the full report to see what questions the public is asking about prefab and modular homes.
As the off-site residential construction industry grapples with choosing a label for themselves, it's clear that "modular home" is the choice term among consumers with "prefab home" following behind. That's a tough pill to swallow for those who know the terms are not interchangeable, and some believe "prefab" is arguably a more accurate umbrella term.
During his conversation with Dave Cooper, host of Dave Cooper LIVE, Ivan Rupnik, of MOD X, said this "identity crisis" of what to call the industry is one of the significant factors holding us back. "If we can't agree on terminology, the industry won't grow," he said. We think what he's pointing to is a nomenclature problem tied to our lack of clarity of who to include and exclude in our industry. Without a firm grasp on our identity, it is more difficult to develop standards, foster cooperation, and lobby for regulatory change.
Now that we understand what homebuyers have on their mind, how should the industry respond? "This data confirms what we have been experiencing for the last two years from an anecdotal perspective," says Dave Cooper. We looked to the experts in the industry to identify the next steps the industry should take.
Anyone in the off-site residential home building industry will tell you there is enough business to go around. Reduced build time of prefab and modular building already puts these builders ahead of their traditional-building counterparts, but improvements can be made.
Ivan Rupnik of MOD X argues that a lack of data and standardization is holding back the prefab homes industry. He looked at the housing shift in Japan and Sweden and noted that standardization (not customization) allowed them to be competitive and to scale to meet demand quickly. North America has a love affair with customization. Still, fewer options allow for a more industrialized approach that produces predictable, high-quality results.
Rupnik also suggested developing standards for designs and processes of homes, modules, and panels. Standards and best practices can be achieved through the sharing and collection of manufacturing data. This data collection will require extensive collaboration and trust amid builders in the off-site built homes industry. The result could be a robust data set that would help builders across the industry optimize their processes for wider margins.
As noted above, there is an increased demand for high-quality homes with smaller square footage and flexible spaces. Builders are hesitant to downsize since it comes with narrower margins. Meanwhile, their options for densifying neighborhoods are limited since planning regulations often limit the number of units built on each lot.
But this trend isn't going away. During our research, looking at the most popular social media stories about prefabs, it's evident that "prefab/modular" is nearly synonymous with "small, convenient, sustainable." According to David Dixon of Stantec, the trend toward dense, walkable suburbs "isn't going anywhere." Which builders will meet the demand, and which will be left behind?
The housing crisis conversation aside, we believe the recent surge in interest and trust for prefab/modular construction goes hand-in-hand with our dream for "front-porch culture." This dream says a denser, more walkable neighborhood is safer and more social. We would share more, walk more, drive less, and maybe support local businesses over the big box store that we need to drive to, 40 miles away.
These types of sustainable communities, like Serenbe in Georgia, require risk-taking from builders, architects, and city planners. New developments should be zoned for higher density and walkability while existing neighborhoods should be rezoned to allow for ADUs. Dave Cooper had a great conversation with Greg Ugalde, past Chairman of the NAHB, about the troublesome regulatory framework and what changes are needed.
Rise's report "Off-site Built Homes: Online Media Analysis" gives further insight into where prefabs are popular, what stories are trending, how home buyers are researching, and where the online conversations are happening.
Click here to download the full report.
Rise is the leading online content platform for homeowner know-how, expertise, and connections for a more sustainable home. Visitors can access expert articles, interactive photos, and energy rebates. Users and even connect with manufacturers and pros in their area to make their next home improvement project a sustainable one. Rise is partnering with like-minded manufacturers and building professionals who want to get in front of customers who are looking for products and services that benefit their health, wealth, and the planet.