How to unleash a trailer home boom

Eliminate the rules that deter small factory-building houses

Before we get to today’s post, I wanted to say an enormous thank you to everyone who’s donated money to GiveDirectly this past week. Since Giving Tuesday, you’ve helped us bring in more than $220,000. We are blown away by your generosity and so incredibly grateful. The fundraiser will be open until 7pm Eastern today if you’d still like to donate. Thank you again!

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The YIMBY movement has its origins in America’s most expensive central cities and overlaps to a great extent with urbanism as a lifestyle preference. But bad rules that curb housing supply exist in all kinds of places, and we’ve recently seen noteworthy YIMBY policy wins in the rural states of Montana and Maine, both of which faced huge surges in demand.

So it’s always worth trying to broaden the scope of what we think about as YIMBYism, and I think the regulatory barriers facing manufactured housing — or trailers, to use the common term — have in some ways become the big underrated housing policy issue of our time. One reason is that trailers are primarily regulated by the federal government through the HUD Code and the congressional legislation that creates it. That means that even though trailers are only a slice of the overall national housing pie, it’s a distinctly national slice, and a couple of federal actions could make a big difference. Another reason is that while I believe regulatory issues — rather than other sources of construction costs like shortages of materials and labor — are the primary obstacle to increasing housing supply in the United States, these issues obviously overlap. If every northeastern state simultaneously enacted an ambitious YIMBY bill, the actual supply response would likely disappoint, because the people simply don’t exist to undertake huge new construction booms in multiple states simultaneously.

I didn’t worry so much about that kind of thing when I started writing about this issue. There was an incredible amount of labor market slack, so the fact that a building boom would put upward pressure on construction wages seemed like a win-win — it would increase housing supply and increase jobs for blue collar workers.

In today’s more constrained environment, though, it’s more important to think about both land use and construction productivity issues. And the upside to manufactured housing here is threefold:

• Building homes in factories is inherently less labor-intensive than building them on-site.

• Historically, we have seen productivity gains for all kinds of manufacturing processes, as long as demand for the product is increasing and there’s a competitive market of suppliers.

• Last but by no means least, the holy grail of construction productivity enthusiasts has long been “modular homes” —  homes that are built in factories but aren’t small, low-end trailers.

Despite many rounds of hype, modular homes have repeatedly eluded us. But efforts have failed, largely, for regulatory reasons, and one of the key regulatory impediments to a new round of modular innovation is also a key impediment to wider deployment of standard trailers.