Homeowners who want to expand and prospective buyers looking for a livable space they can afford are struggling in the current market, but there’s an option that could change the game, according to Eric Robb, president of Turn Key Fabrication.
Robb builds 400-square-foot homes in a Fort Worth factory and delivers them to the owners.
While they still have to deal with permitting and, in some cases, zoning, it’s a much faster and less expensive process than building or adding on to a single-family home.
“There’s a big market for this,” said Robb, who started his business earlier this year. “Everyone was saying there were one-year delays. If you’re buying your own custom home, the sales cycle is really long. We jumped in the market and that didn’t really turn out to be true for us.”
Some have ordered the prefabricated structures to use as backyard offices, gyms, or cigar rooms, because it’s cheaper than adding on to a home. Some use them as a primary structure.
“These technology guys get out of school and they don’t want to start a lawn mower,” Robb said. “Pretty much everything they own can fit in three small suitcases.”
Retirees, single individuals, and temporary workers in the oil fields also like the concept because it requires little maintenance — and the price of roughly $100,000 is tough to beat.
They also serve as good temporary housing in the event of a storm or wildfire, Robb added.
Housing Shortage
Higher interest rates “shocked demand and subdued sales” of manufactured homes, according to an August report from the Texas Real Estate Research Center.
“The slowdown spread through daily operations, prompting plant managers to shrink payrolls and reduce work weeks,” the report states.
“Input prices are declining as supply chains continue to improve,” said TRERC Research Economist Harold Hunt. “Lumber prices are a third of what they were six months ago, and shipping costs are falling. Many economists feel like inflation has peaked, but it’s still a long way back to the 2 percent target that the Federal Reserve is shooting for.”
The price received for finished homes is expected to fall more than input prices over the next six months, the report states.
“While everybody downshifted during August, a good share of manufacturers expects to keep running at their current production rates as we head into next year,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Retailers reached a point where they needed to lower their order volumes, but they’re still selling homes at historically high levels, just not with the same amount of year-over-year gains.”
Robb said his team of nine employees has been impacted by the higher prices of construction materials, but they pride themselves on quality. Their homes use high-performing, structurally-insulated, hurricane-proof panels. The split-system air conditioning system and vaulted roof keep the home cool in the summer. There’s no attic to trap heat, Robb explained.
“The off-site building is definitely more efficient,” he said. “It’s a solid structure, not a hollow structure. They’re glued, screwed, and compressed instead of typical nails and siding. It’s waterproof. They don’t get damaged in transit. We’ve come up with a superior process.”
You Can’t Fight City Hall
Turn Key Fabrication does not have any homes in Dallas; they’ve built about a dozen for homeowners in Fort Worth.
Robb is aware that if he ventures into Big D, he might have big problems.
Zoning districts for modular homes exist within the city, but it gets tricky when dropping one of the structures in the backyard of an existing home in a single-family residential area.
Accessory dwelling units (ADUs) are allowed in Dallas, but cannot be built by right in most cases, meaning city approval is required. A neighborhood can petition for an overlay district or a property owner can go through the Board of Adjustment.
“You’ve got to have a huge fight with the city” in some cases, Robb acknowledged. “Bigger cities tend to be more broken than smaller ones. What we tend to do is build the modular unit while that fight is happening. You can go ahead and do the site work, plumbing, and electrical. Then we deliver it on site.”
Homeowners adding on to an existing structure go through a similar lengthy, complicated process when adding a room to their home, but having a modular unit delivered to the backyard is less expensive and quicker, Robb reiterated.
“The big thing we want to push is that this is a high-performing building,” he said. “Everybody’s getting crushed by utilities, insurance rates, mortgage rates, and taxes. We’ve seen an uptick in mobile homes as people are getting squeezed down. RVs have been selling like crazy. Nobody’s building houses this insulated except on the super high-end. We’re trying to pull that level of efficiency down to simpler, smaller things. People are getting punished enough and they’re getting smarter about it. It’s going to save you more than $300 a month just on utilities.”
Turn Key is marketing its product to other builders, like Indigo River Tiny Homes.
“They’ve started using our product and have doubled their output,” Robb said. “We built a bunch of prototypes and started sending them out to shows. We’re finally starting to get repeat orders.”
So what’s the appeal of this niche market, and is it here to stay?
Robb says modular homes are nothing new, and as long as affordable housing is hard to come by, people will continue to look for alternatives.
“I was obsessed with Legos when I was a kid,” Robb said. “Why can’t you build a house like you did with Legos? When you’re going smaller, you can afford to use high-end materials. It’s easy to find a big, fancy, nice house. We try to create a small, fancy, nice house.”
