Constrack360
The residential sector reeling under big challenges in2023
Affordable housing: The residential sector reeling under big challenges in 2023
Over the last two years, the demand for prefabricated houses has been on the surge among homebuyers in the United States. Several factors have aided the demand, including rising construction costs and supply chain delays during the pandemic outbreak. As buyers continue to avoid rising build costs, prefabricated homes are tipped to further grow in popularity in the United States over the next three to four years.
Currently, many players are operating in the prefabricated housing segment to meet the growing demand among Americans. Veev, Blokable, Plant Prefab, and Nexii are among the many that are seeking to tap into the growing prefabricated construction industry. According to ConsTrack360 estimates, the prefabricated construction market in the United States is projected to reach US$123.15 billion in 2023.
These players have invested significantly in expanding their manufacturing capabilities to deliver more units in the market. Plant Prefab, for instance, raised US$42 million for supporting its manufacturing capabilities in December 2022. The investment is aimed at increasing its annual output to 800 units. Veev, in 2022, also raised a significant US$400 million in funding to scale its operations and expand market share in the fast-growing prefabricated industry.
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More recently, in April 2023, Blokable announced that the firm had raised US$5.5 million to deliver more prefabricated units in the market. The firm aims to alleviate the affordable housing crisis in the United States. Since its inception, Blokable has spent upwards of US$30 million to build its modular development platform.
· According to the firm, its innovative solution can stack modular units up to 5 stories tall. As the modular units are 95% when leaving the Blokable factory, the prefabricated construction method is significantly reducing the construction time and costs in the United States.
Going forward, in 2023, ConsTrack360 expects more players in the prefabricated housing sector to raise venture capital and private equity funding, as the competitive landscape continues to grow in the North American market.
Vantem, another player in the segment, announced that the firm is planning to build 15 new factories to accelerate its growth and support the growing demand for prefab units among Americans. Scalability is one of the biggest issues faced by prefabricated home developers in the modular housing sector.
· Boxabl, another prefabricated housing developer in the United States, had amassed a large order for its modular housing solution. As of February 2023, more than 160,000 people are on the waitlist to receive prefabricated homes from the Las Vegas-based startup.
With a manufacturing capacity of 400 units annually, it would take several decades for the firm to deliver 160,000 units to people in the United States. Even though the firm is planning to expand its production capacity, it would still take several years for Boxabl to serve the growing list of orders.
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As the cost of traditional construction remains elevated, and project delays and supply chains affect the delivery timelines, the demand for prefabricated houses will continue to grow. This will create a further gap in demand and supply. Consequently, government assistance in the form of incentives and investment is urgently needed in the sector, which will not only enable these firms to scale their operations but will also help government organizations to deal with the growing housing shortage problem globally.
