Methods of Affordable Housing Construction: Modular Homes in Washington, D.C.

Expansion of modular housing construction can be effective in addressing the housing affordability crisis that affects both homeowners and renters in the U.S. Although modular housing has been heavily discussed as a solution to housing supply and affordability, it is not currently a heavily adopted method of housing construction. Financial and regulatory barriers limit the siting and development of factory-built housing, especially in urban and suburban communities in the U.S. (Dawkins et al., 2011; Dawkins and Koebel, 2010). In the nation's capital, residents face rising housing costs, and a shortage of affordable housing. However, relaxed zoning laws in D.C. regarding factory-built housing have allowed some modular housing projects to be successfully constructed. The design and impact of these modular housing projects can provide tangible evidence for the benefits of modular housing and set the tone for other cities looking to modular construction as a housing solution. 

Factory-Built Modular Housing

Per the U.S. Department of Housing and Urban Development (HUD) and the National Association of Home Builders (NAHB), a factory-built, modular home is one that is produced in a controlled factory setting and reaches its building site 70% - 95% complete. There are several benefits to modular construction, like reduced construction time, enhanced durability, design flexibility, and lower construction costs. 

Modular construction can reduce the time to build a new home by up to 50%, according to McKinsey’s 2019 Modular Construction report. These homes and their adjustable and interchangeable parts are almost entirelymanufactured and built in modern factories. Because such homes are built in these controlled environments, there are better quality control practices leading to higher-than-average quality outcomes (Lopez & Froese 2016). Furthermore, modular floor plans typically cost 10%-20% less than those for a stick-built home. The on-site work required is significantly lower for modular homes given that most of the modules arrive at the construction site 95% complete. Modular homes typically require only a few construction workers over a few days to finalize buildings, further reducing costs. 

How can modular housing address crises in U.S.? 

Modular construction can help to address several housing and social crises in the U.S. The U.S. faces a shortage of affordable housing; the lowest-income renters across the U.S. face a shortage of 7.1 million affordable and available rental homes. As a result of this shortage, three-quarters of renters with extremely low incomes are severely cost-burdened, spending more than half of their income on rent (Dean, 2024);  among older adults, many with fixed incomes, 16% are severely burdened by the cost of housing, including the costs of making disability and other accommodations or updates for a functional home. 

The cost savings associated with modular construction reduce the cost of housing to a level that can accommodate those in low- and moderate-income categories, helping forestall homelessness among this population. Flexibility in the design of modular homes before and after they reach their building sites, as well as their cost, provides greater and more affordable home modification options for those aging in place or facing other changing household needs. 

Barriers to Modular Housing 

The market share of factory-built homes overall in the U.S. is small (only 3%) although demand is increasing, given its potential to reduce housing costs. (McKinsey Global Institute). Contrast this minuscule share in the U.S. to 45% in three Scandinavian countries, Finland, Sweden, and Norway. The small market share of factory-built housing may be attributable to barriers to siting and placement of factory-built homes, including regulation, permitting and codes, negative perceptions, design requirements, delivery challenges, and financing (Dawkins et al., 2011). 

The measured benefits associated with factory-built housing have encouraged cities and states across the country to re-evaluate their existing zoning laws to see if more flexibility in allowances, like those for factory-built homes, could boost housing production and affordability. HUD has studied the potential benefits of factory-built housing expansion and provides funding through programs like Pathways to Removing Obstacles to Housing (PRO Housing) to help communities develop and implement housing policy plans that address restrictive zoning and other barriers. These efforts to standardize building codes, streamline regulatory processes, and addressing negative perceptions of factory-built homes can make factory-built construction more accessible in the U.S.

Housing in Washington D.C.

Across the District, homeowners and renters alike are paying a greater share of their income on housing costs. Currently, 40% percent of DC households pay% of their income on housing, and nearly 6,500 residents are experiencing homelessness. In D.C. The annual household income needed to afford a two-bedroom rental home at HUD's Fair Market Rent is $81,800. 

Factory built housing can help address the housing affordability crisis in D.C. Currently in the District of Columbia, manufactured homes are only generally prohibited within floodways or within 50 feet of any watercourse in flood hazard areas (SFHAs). Additionally, manufactured homes designed or built for multifamily use are not permitted. These minor restrictions have not significantly impeded modular housing construction in D.C.

Modular Housing Sites in D.C. 

In D.C., there were at least 5 modular housing projects completed between 1970-2020 in D.C. We discuss each development project and the associated cost savings for developers, owners, or renters. 

In the 1970’s and 80’s Forest City Enterprises, a real estate company based in Clevland, Ohio constructed 1,000 modular housing units on 5 different sites in D.C. The first sites, Fort Lincoln Village and Petersburg Towers were both completed in 1976, and both located in the Fort Lincoln neighborhood of Northeast Washington, D.C. The remaining sites, Campbell Heights was completed in 1978, Delta Towers in 1980, and Wah Luck House in 1982. Located on notable, U street, H street, and Chinatown neighborhoods in D.C., respectively.

For all units in the 5 sites, the builder used a system of precast concrete panelized components and a kitchen-bathroom module. All the sites aimed to provide housing for the elderly under a HUD financing program. Today, Fort Lincoln Village and Petersburg Towers are still erect and still provide subsidies for senior residents. Fort Lincoln Village has 120 set aside for seniors and the disabled, while all units in Petersburg Towers are subsidized under section 8. Delta Towers, after providing subsidized housing to seniors for over 2 decades, has since been demolished and replaced with a new building that provides 30 additional affordable units for seniors under the same ownership. However, the new structure is not factory built. Wah Luck House and Campbell Heights still provide affordable housing for seniors. Wah Luck house being the last affordable housing community remaining in Chinatown. 

Exhibit 1: Delta Towers (1980-2020) 

Exhibit 2: Wah Luck House 

In the late 1990’s the Anacostia and East of the River Community Development Corp with developer Melvin Mitchell constructed the Knox Hill development, located in SE D.C. The development is made of 114 modular townhomes and was completed in 2002. Government funding and modular design made multi-family dwellings in Knox Hill affordable to low- and moderate-income purchasers. Since 2001, home values in Knox Hill Village have risen 165%, providing significant financial benefits to original purchasers.

Exhibit 3: Knox Hill community development plans

An apartment building constructed entirely from shipping containers is in Catholic University's Brookland neighborhood. It was a privately funded project that began in 2012 and took 7 months from design to completion. eighteen repurposed shipping containers were used to create this four-story structure that is currently serving as student housing for catholic university students. Owners found it was cheaper and faster to erect a building out of 8x40 foot boxes than to build a brand-new house. 

Exhibit 4:

In 2022, two Pennsylvania-based modular home companies collaborated to construct MODO Apartments on New Hampshire Ave. in D.C.’s Petworth neighborhood. The factory-built modules for the MODO Apartments arrived onsite 80 percent finished and in just eight days, were assembled to create 17 three-bedroom apartments. The project was initially conceived and designed for conventional on-site construction but to save costs the developers decided to go modular.

Exhibit 5:

Conclusion

These modular projects expanded the stock of factory-built housing in D.C. which has helped affordable housing survive over decades in high-cost neighborhoods in the city, helped low to moderate income (mostly Black) residents of D.C. become homeowners and helped save land owners and developers on construction costs that they transferred to renters, with many modular apartment units in D.C. being priced at 50% below local market rents. These sites offer great benefits to city residents, but with only 650 modular units in a city with over 300,000 households, the benefits are limited. Modular/factory-built housing and the scale of their construction should be expanded to maximize its benefits to residents in D.C. and around the country. This year Mayor Muriel Bowser announced a $100 million investment into the Housing Production Trust Fund (HPTF) to improve and create affordable housing in the city. Some of these funds can be set aside and used to invest in modular construction in D.C. and set the tone for other local governments looking to address housing affordability for their residents. 

Modular homes offer a compelling alternative to traditional construction, but success hinges on understanding and complying with state-specific regulations. Modular construction must meet all requirements set by the state building code, including any amendments, to receive a certificate of occupancy. However, state building codes often do not explicitly mention guidelines for modular construction and in general are difficult to decode because of dense technical language and complex regulations. Modular homes constructed in DC must comply with DC Construction codes, a state-adopted version of the International Building Code (IBC), which make the requirements for modular construction in DC similar tostick-built homes. However, for most states the requirements are not as straight forward. Given the number of state programs and the variances in them, the ICC and MBI are currently developing a new ANSI Standard (ANSI 1205) for how modular projects will be reviewed and approved. The new standard can streamline the modular construction review process. Some regulatory streamlining has already happened between North Dakota and Wisconsin. Both states participate in the Interstate Industrialized Buildings Commission (IIBC), which provides a streamlined certification process recognized across state lines. This reciprocity helps reduce duplicative reviews and facilitates easier movement of modular units between states, both can help improve flexibility and efficiency, two major benefits of modular construction.

Modular housing construction aligns with local building codes and is beneficial to D.C residents and communities. D.C. can be at the forefront of modular urban design if they invest in more modular projects.