Maine report points to Modular to save on Housing Costs
Maine's ambitious goal to construct over 80,000 housing units by 2030 necessitates innovative approaches to enhance affordability. A recent analysis commissioned by the Maine Affordable Housing Coalition and written by Sarah J. Sturtevant, titled "Field Notes II: Can Construction Technology Improve Affordability?" interviewed over twenty people representing developers, suppliers, manufacturers, contractors, designers, and regulatory groups, and asked, “Might greater adoption of new(er) construction technology bridge the gap between construction costs and what most Maine households can afford?” The answer is a qualified “yes”. Newer methods can reduce costs, and there are barriers to address.
The Advantages of Modular
Sturdivant investigated the potential of three technologies: uninsulated exterior wall panels, insulated panels, and modular construction, to reduce the cost of housing in Maine. She concluded “Modular components have the most promise and the most barriers. Depending on whether the state is able to reach a higher level of standardization, Maine could see cost savings of 10-35% of total costs from the greater utilization of modular.” Benefits of modular include:
Quality and performance from building in a controlled environment
Better utilization of Maine’s workforce
Less seasonality
Faster
More ergonomic construction for workers
Less waste going to landfills
She adds, “Barriers are extensive, including the same code-enforcement issues as insulated-panel construction; double sales tax is charged on modular units and the licensing requirements have not coordinated with training programs resulting in lack of human capacity. Overall, there is a lack of industry knowledge about the opportunity of factory-built components … New(er) technology is an important tool in the tool kit and it is worth addressing the remaining barriers to broaden adoption.”
“Root Causes” Why is it so hard to build lower-cost (aka affordable) new homes?
In the “Root Causes” section of the report, the writer points out that:
There are dozens of organizations (public and private) that impact the construction of a single home, each with a different funding source and business model.
Each new development is virtually its own company, which is inefficient
On average 24 subcontractors touch each new single-family home over the year it takes to build, and it’s expensive to coordinate so many people.
Multi-family has an even higher number of “subs” and takes closer to 2 years of construction, and over 3-5 years of permiƫting & approvals.
Coordination also includes surveying and engineering, title work, legal and accounting, distributors, transportation, earthwork, and repairing heavy equipment.
There are shortages in the number of contractors and subcontractors, and shortages of workers, and the educational system tends to focus on training employees, not on creating new companies.
By some measures, over 40% of total development costs are from increased regulatory burdens over time
Maine overall has a high percentage (about 30%) of 1 person households, and it’s challenging financially to build for one person households.
Recommendations for Maine
Here are some of the solutions the author suggests; for a full list see the link to the document below.
Establish a repeatable floorplan that could be the basis of a state-wide modular contracted garnering volume pricing and expedited reviews.
Ask the Real Estate board of appraisers to study valuation methodologies for small homes
Suspend the finished goods sales tax on modular manufacturing, so that materials aren’t taxed twice.
Clarify and train for interaction between code enforcement, factories, and third-party inspectors (TPIs)
Shift the Manufactured Housing Board to the Maine Office of Community Affairs
Increase the threshold size of projects that require no additional review
Shorten approval times
Train more students who want to enter the trades
Create business development programming for tradespeople who want to start their own companies.
For additional reading and more information the full article can be found at: https://mainehousingcoalition.org/wp-content/uploads/2025/01/Field-Notes-II_Can-construction-technology-improve-affordability-1.7.25.pdf