Amid the United States’ housing shortage, policymakers have begun to seek innovative solutions such as low-rise factory-built housing (FBH), including manufactured and modular housing. Often thought of as a rural strategy, FBH has been tested extensively in the nation’s densest metropolis: New York City.
In the 1980s and 1990s, New York City used FBH in neighborhoods devastated by depopulation, building more than 3,000 units. Most of—if not all—the housing was heavily subsidized and built to New York City and state standards, using factories with union agreements that were, in some cases, located several states away.
New York City’s experience showed that FBH can be appropriate for urban areas, are durable, and can contribute to a neighborhood’s stability and value. But the question remains: Can cities grappling with housing challenges today replicate New York City’s FBH experience?
Why did New York City turn to factory-built housing?
Forty years ago, New York City committed to redeveloping vacant and blighted sites, hoping new single-family homes would lure working families back to the inner-city neighborhoods decimated by depopulation in the 1960s and 1970s. The South Bronx Development Corporation used FBH to rebuild Charlotte Street into a new development called Charlotte Gardens following a visit by Jimmy Carter.
Soon, the city expanded its use of FBH and site-built housing through what became its New Homes Program. One early estimate described more than 1,300 FBH units completed or in the pipeline as early as 1985. Today, we estimate more than 3,000 FBH units have been built in New York City, many between 1985 and 1999, although the exact number and location are unknown because the units are not identified as such in city records.
Proponents of FBH believed that the method could save time and decrease costs, although site conditions and other factors sometimes caused those savings to evaporate. City officials also felt they could more easily attract laborers by completing a house in the factory than by building on site in the then-high-crime neighborhoods. FBH also minimized the time that an unfinished home sat on the lot, reducing risk of materials theft and security costs.
What benefits did factory-built housing offer New York City?
Although much about the FBH units built under the New Homes Program remains undocumented, recent interviews with key actors and administrative data provide anecdotal yet revealing evidence about the promise and challenges of FBH.
For one, FBH could fit on small, infill lots. Most of the development sites held clusters of 40 to several hundred houses. Yet, even on sites fewer than 60 feet wide, it was feasible to place as few as three FBH units. Several examples of these smaller lots are in Coney Island and Brownsville, Brooklyn.
The houses—and the neighborhoods—also appear to have aged quite nicely. Current New York City Department of Finance photos of homes placed 25 years ago show properties that appear to be improved and well maintained. A cursory look at the Charlotte Street homes, placed in 1986, reveals only one additional building permit from the past 10 years, for a solar installation. Additional research could survey the owners for satisfaction with their homes and review New York City Department of Buildings records for major repairs or replacements.
The homes have not only outlasted the original mortgages—they’ve also contributed to neighborhood stability. Department of Finance records of a sample of factory-built homes placed more than 25 years ago show these homes are occupied by the original owners or by their heirs, despite owner-occupancy restrictions that expired long ago. The homes appear to be a generational asset valued by the families. Again, additional research could quantify the tenure and occupancy of the homes today.
In keeping with the vision for the New Homes Program, FBH units have anchored their neighborhoods and appear to contribute to a strong sense of community. Although original designs were simple, recent sales of known FBH units show impressive appreciation. A Charlotte Street home sold in fall 2023 for $640,000, slightly above the median sales price of $600,000 for a single-family home in the Bronx. A home in Coney Island, still under original ownership, has a 2023 valuation for tax purposes of $691,000. Further research can compare FBH units and nearby site-built homes developed under the same city programs to see if the homes had comparable appreciation.
FBH units were also adapted for neighborhoods with exacting design requirements. The homes placed in the Longwood Historic District in the South Bronx received approval from the city’s and state’s landmarks commissions.
Can other cities replicate the New York model today?
Despite the positive outcomes of New York’s FBH experience, interviews with developers, factory owners, former city officials, and nonprofits have raised the following challenges to FBH development today:
- The architect needs to commit to using FBH at the beginning of the project, meaning end-to-end expertise in FBH is essential.
- Permits and codes need to accommodate the unique attributes of FBH without sacrificing quality and safety, such as the local buildings department inspecting homes in the factory before they are brought on site.
- The developer must find a factory with financing or a lender willing to secure a construction loan using a lien on the materials rather than a traditional work-in-progress construction mortgage.
- The factory should have sufficient demand to keep a skilled crew employed, but not so much demand that the volume of housing placed on the site exceeds the speed of sales.
- The developer must secure and store homes that are completed but not yet sold.
- The general contractor and site crew should be experienced and familiar with site preparation, transportation costs, and other unique requirements (such as additional fireproofing and egress) that come with finishing FBH on site.
Still, these barriers may be surmountable. Some cities and developers today are successfully proceeding with urban FBH. New York City professionals experienced with FBH in the 1980s and 1990s point to several factors that made their projects successful:
- the vision, determination, and will of key players from public, private, and nonprofit sectors
- public subsidies that addressed factory economics challenges and permitted a sales price affordable to low- and middle-income families
- negotiated agreements with unions and city officials that allowed the new technology to proceed
For cities interested in alternatives to increasing housing supply, a cross-industry coalition of city and state governments, nonprofits, and the building and real estate sectors is crucial. Key stakeholders must commit to this work and commit to work together. The lessons of New York City can inform this coalition and offer urban areas another much-needed tool in their housing supply arsenal.
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