Jack Truong

Jack Truong: Prefabrication Provides Millennials a Pathway Through the Housing Shortage 

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With the U.S. housing shortage driving the median home price up by 40% since 2019, millennials and Generation Z continue to feel excluded from the housing market despite the Federal Reserve recently lowering mortgage rates. “Just that gap between renting and then owning, not even a big house, just kind of a starter house, it’s like it’s not even possible for us. Not now or probably not any time soon,” 29-year-old prospective homeowner Dylan Rose told ABC News

As over half of millennials and Generation Z believe that homeownership is currently unattainable, there’s clearly a fatal flaw in the U.S. housing market, but what’s the solution? Veteran C-suite exec Jack Truong — known for transforming industries during his tenures at 3M, Electrolux, and James Hardie — says the fix starts with slashing the cost of buying a new home, which will only be achieved when housing construction meets demands. 

“We need to inject new homes built in America, at a much faster rate and at a lower cost. And there’s a way to do that: We have to make sure that it’s the building methods that we change. To me, that’s really most important, because if you think about it, new home construction today is only at about 1 million homes a year, and there’s about 86 million owner-occupied homes in America today,” says Truong.

The Short on the Housing Shortage

Today, a disparity in housing supply and demand is evident, as only 42% of millennials aged 30 own a home, compared to 48% of Generation Xers and 51% of baby boomers when at the same age.

Investors like Airbnb continue to purchase nearly 25% of all single-family homes, often outcompeting first-time buyers on a limited budget. Meanwhile, Americans are moving less than ever before, and the prospective market remains saturated by both younger generations and homeowners looking to upgrade their starter homes purchased under the low interest rates of the 2010s.

The current competition is unprecedented, with estimates that the U.S. faces a shortage of 5 million to 7 million homes — a number too insurmountable to be tackled with current listings and construction.

Despite single-family home production recently reaching a high unseen since the 2007 housing crisis, the insatiable demand, unattainable cost, and average U.S. home taking seven to 14 months to construct has caused the American housing market to leave behind Gen Z members and millennials in ways that other developed nations like Germany, Sweden, and China — where homes take as few as six to eight weeks to build because as much as 45% of construction is prefabricated — have not.

“So the issue in this country, right now and in the long term, is how to make sure that we can build homes a lot faster so that we can deliver multiple types of new homes to the market,” Jack Truong explains. “Right now, about 1 million homes are built a year. That number should be around 2, 3, or 4 million homes if need be. And that can all be done through prefabs, where you produce most of everything in a factory that you assemble on site.” 

Prefabricated Solutions Overseas

Prefabricated homes are industrially manufactured for off-site assembly, uniquely addressing a variety of concerns with housing construction, from the cost of materials to labor shortages and time restraints.

During the aftermath of World War II, looking to swiftly and cheaply overcome a major housing crisis, Sweden embraced prefabricated construction elements to build housing communities throughout the country with its government-led Million Programme. 

“The shortage of human resources was a serious obstacle to increased construction volumes and rising wages were instrumental in causing higher building costs. Standardization and prefabrication were favored by state support, prepared through a series of government inquiries,” Thomas Hall and Sonja Videns wrote in an article published in the Planning Perspectives academic journal. 

Today, nearly 85% of Swedish homes have some element of prefabrication, with the technique preferred for its ease, efficiency, high quality, and customizability. 

In addition to costing up to 25% less than traditional building methods, prefabricated homes have also been shown to have 45% less embodied emissions — meaning that they’re more sustainable all the way through construction to maintenance and eventual demolition. This makes them particularly beneficial for the rapid creation of large-scale communities, which almost always results in the output of high levels of waste and local pollution. 

“​​For a starter home and a move-up home, for most people, prefab is their sweet spot for good quality, very good price, and most importantly, throughput. You can construct a lot more homes [with prefab] than the traditional method today,” Truong notes. 

Jack Truong on Expanding American Prefabrication Production

A recent survey from Fannie Mae finding that 68% of millennials would consider purchasing a manufactured home — and even more share positive sentiments toward them — now more than ever, Jack Truong sees the solution to meeting housing demand right in front of us, rooted in good ol’ American manufacturing. 

“The key is to be able to produce significantly more homes — two to three times more — each year, especially in starter home and move-up home categories,” he explained.

“It is really about prefab. At least start with using prefab to build a starter home — the big choice of home today — because a big issue in this country is that young professionals, Gen Z and millennials, cannot afford to buy a home. The big national news that the younger generations cannot keep up with and are not better off compared to previous generations, that’s because they miss out on the housing market. The fastest way to really help the first-time buyer and the housing market is to really get the prefab going, the revolution going. That is what this country needs.”

As shown by other nations, Truong doesn’t expect any major push toward prefabrication without government intervention. While this will take robust legislation — from zoning reforms to increased factory capacity and incentives — with younger generations continuing to be pushed out of the housing market, Truong believes innovative and drastic measures like prefab may be the only way forward. 

“This technology had been proven, and it’s really been accelerated. But, here in this country, we have not been adopting to it,” he says. 

“You see a lot of these small prefab builders crop up around the country, but they need to be supported. They need to be invested. And this is if the government wants to help new home buyers — this is where they should really put the attention on.”

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