How are modular homes addressing the multifamily supply problem?
The U.S. is facing a critical housing shortage, as the shortage surged from 4.3 million homes in 2021 to 4.5 million in 2022. For multifamily property managers and landlords, this growing demand is paired with the challenges of high construction costs and long project timelines. Modular multifamily homes, an innovative and rapidly advancing construction method, are emerging as a powerful solution to these issues.
In this guide, we’ll explore how modular homes are reshaping multifamily housing. We’ll go over their key benefits, the challenges of adoption, and their environmental impact. This guide will help you understand the role modular multifamily housing plays in solving the supply crisis.
What are modular homes and how do they differ from traditional homes?
Modular multifamily homes are like the pre-assembled furniture of the housing world—they’re built in a factory, shipped to the site, and pieced together to form a fully functioning home. Unlike traditional homes, modular construction takes place in a controlled environment, reducing errors and weather delays. The end result meets the same building codes and standards as homes built entirely on-site, ensuring quality.
Think of it this way: with modular homes, most of the work happens before the structure even reaches the construction site. Once delivered, the pieces—known as modules—are assembled into a finished building, cutting down on time and labor. This makes modular homes a game-changer for multifamily property managers juggling tight deadlines and budgets.
What are the key benefits of modular homes for multifamily housing?
Modular homes offer significant advantages, particularly for multifamily projects. They provide faster construction timelines, reduced costs, and consistent quality through factory precision. These benefits make modular multifamily homes an increasingly attractive solution for property managers seeking efficiency and affordability. Here’s some detail on the biggest benefits:
- Faster Construction: Modular projects can often be completed in half the time of traditional builds, helping property managers get units leased sooner.
- Customization: Developers can personalize designs to include unique layouts or amenities while still reaping the efficiencies of factory construction.
- Consistent Quality: Factory settings ensure precision, reducing mistakes and rework compared to building on-site.
How can modular homes help solve the affordable housing crisis?
The affordability crisis has left millions searching for homes they can actually afford. Modular multifamily homes help by lowering costs through faster builds and better resource use. When developers spend less on construction, they can pass those savings on to tenants in the form of lower rents.
Imagine this scenario: a modular apartment building in Minnesota offers studio and one-bedroom units for $200-$300 below market rates. By completing the project faster and reducing carrying costs, developers are able to make the units more affordable. For property managers, this approach helps fill vacancies quickly while addressing the broader need for affordable housing.
Are modular homes more cost-effective than traditional construction?
The answer depends on the specific project, but modular construction has some clear cost-saving advantages. It’s important to note that it’s not all savings as transportation and setup can add costs. Still, when done right, the speed and efficiency of modular construction can create significant financial benefits for developers.
Key cost advantages of modular multifamily homes:
- Reduced Waste: Factory construction generates up to 80% less waste compared to on-site builds.
- Lower Labor Costs: Streamlined assembly requires fewer workers on-site.
- Faster Timelines: Shorter construction times mean fewer delays and lower interest or holding costs.
What are the challenges of using modular homes for multifamily development?
Even with its advantages, modular multifamily housing isn’t without its hurdles. One of the major multifamily challenges is transportation—modules are large and often require special permits and logistics to move them safely. These added costs can quickly eat into a project’s budget.
Another issue is ensuring that factory-built modules fit perfectly with site-prepped foundations, plumbing, and electrical work. Mismatches or errors can delay projects and increase costs, especially if teams on-site aren’t familiar with modular construction workflows. This makes collaboration and planning crucial for success.
How do local zoning laws and regulations impact modular home development?
Zoning laws and building codes can sometimes slow down modular projects. Some local regulations don’t yet account for the unique aspects of modular construction, forcing developers to navigate outdated rules. This can create delays or add unexpected costs to the project.
Financing is another challenge. Many banks are hesitant to lend for modular multifamily developments, often because of misconceptions about quality or durability. Educating lenders and city officials about the benefits of modular housing is key to overcoming these barriers.
What are the environmental benefits of modular homes in multifamily projects?
Modular multifamily housing is not just fast, it’s also sustainable. Building in a factory setting uses fewer materials, generates less waste, and minimizes the environmental impact of construction. For instance, modular methods can reduce embodied carbon emissions by 45%, helping developers meet sustainability goals.
Here are a few other environmental perks:
- Energy-Efficient Designs: Modular multifamily homes often meet stricter energy codes, saving residents money on utility bills.
- Fewer Deliveries: Modules reduce the need for constant site deliveries, cutting emissions from transportation.
- Recyclable Materials: Many modular factories use recycled or sustainable materials in their builds.
How does MRI Software help manage modular home projects in multifamily developments?
Managing modular multifamily projects can feel overwhelming without the right tools. With features like lease management, online applications, and renters insurance integration, MRI Software ensures a seamless experience for both property managers and tenants. Whether you’re overseeing a modular multifamily project or a traditional development, we provide the multifamily property management software to keep operations running smoothly.
Multifamily software used by the top ten NMHC managers
Take full control of the lead-to-lease process

Trendspotter: Multifamily 2024 Year in Review
In 2024, the multifamily sector witnessed a record number of new deliveries — nearly 30% more than 2023. This new supply, while welcome in a supply-constrained industry, drove some short-term pricing pressure for new leases. Most other metrics …
