Why Industrialized Construction Could Help Solve the Housing Crisis

Housing affordability continues to challenge communities across the United States. While many debates focus on financing, zoning, or policy, another issue sits quietly underneath the entire problem: housing supply.

In this episode of the Activating Curiosity Podcast, Ryan Ware sits down with architecture professor and industrialized construction researcher Ryan Smith to explore how industrialized housing could play a critical role in addressing the housing shortage.

Smith has spent nearly two decades researching offsite construction, prefabrication, and housing production systems. His perspective reframes the housing crisis not simply as a policy issue—but as a production challenge.

As he explains:

“Industrialized housing is again one solution amongst the myriad of opportunities available to us to realize housing affordability.”

While industrialized construction is not a silver bullet, it may help the industry build housing faster, more consistently, and at greater scale.

The Housing Crisis Is Ultimately a Supply Problem

At its core, the housing challenge is about supply meeting demand.

Smith believes increasing supply is essential to stabilizing prices and expanding access to housing.

“I still do think that the way to housing affordability is through supply. And if you can have more supply in the market, that's going to stabilize pricing.”

Industrialized housing provides one potential pathway to increase supply by shifting parts of construction into factory environments where productivity, repeatability, and quality control can improve.

However, the solution is not simply building factories or producing modular units. Instead, Smith emphasizes that solving the problem requires understanding the entire housing delivery system.

The Three Internal Barriers to Scaling Industrialized Housing

Through years of research and advisory work at ModX, Smith and his partners identified three internal challenges facing the industrialized housing sector.

He calls them the “three C’s.”

1. Competency

Factories and construction teams must develop the right expertise to deliver more complex housing products.

“One is competency, the industry itself… as it becomes right, enters into new markets like multifamily housing, that becomes quite a challenge.”

2. Capacity

Factories need consistent demand to operate efficiently and scale production.

“Factories want to scale, they want to grow, but they have to always temper that with the realities of supply and demand.”

3. Capability

When competency and capacity align, the industry gains the capability to deliver housing at scale.

Together, these internal factors shape whether industrialized housing systems can realistically expand their market share.

External Barriers Slowing Housing Innovation

Beyond internal industry challenges, Smith points to several external barriers that limit growth.

These include:

• Building regulations

• Zoning and local policy frameworks

• Project financing models

• Workforce ecosystem constraints

• Project delivery contracts

These institutional systems were largely designed for traditional construction methods. As a result, they often struggle to accommodate factory-based housing delivery.

Rethinking How Housing Is Designed and Delivered

One of the most important insights Smith shares involves the “nesting layers” of industrialized construction.

Too often, teams start with the factory or the product. However, successful industrialized housing projects actually begin with a broader context.

Smith explains:

“Oftentimes when we talk about industrialized construction, our thought immediately goes to the product… which I would call the technology. In many ways, that is the last step of a thought process.”

Instead, teams must think through multiple layers:

1. Market context and housing demand

2. Business model

3. Product platform

4. Technology and factory production

This systems thinking approach changes how architects, developers, and manufacturers collaborate throughout the design and construction process.

Why Industrialized Housing Requires a Mindset Shift

Industrialized construction does not simply change how buildings are assembled. It also requires a different way of thinking about design itself.

Traditional construction often treats each project as a unique one-off solution. Manufacturing-based construction, however, focuses on platforms and repeatable systems.

Smith describes it this way:

“That takes a manufacturing mindset… a product that could be continuously improved over time.”

With this approach, each project becomes an opportunity to refine and improve the housing platform rather than starting from scratch every time.

The Role of Regional Collaboration in Housing Innovation

Because construction happens locally, Smith believes solutions must emerge through regional collaboration and knowledge sharing.

Through work with the U.S. Department of Housing and Urban Development and the National Institute of Building Sciences, his team is helping regions develop action plans for scaling industrialized housing.

One key outcome has been the creation of regional knowledge hubs.

These hubs bring together:

• architects

• developers

• manufacturers

• policymakers

• construction professionals

Instead of creating another industry association, these communities function as learning networks where teams share knowledge and improve practices together.

Why Performance-Based Building Codes Matter

Another critical barrier involves how building codes are structured.

Current codes often rely on prescriptive requirements that dictate how buildings must be constructed. However, Smith argues the industry would benefit from shifting toward performance-based codes.

These codes focus on outcomes rather than specific methods.

As Smith explains, performance-based approaches allow innovation to flourish while still maintaining safety and quality.

The Human Reason Behind Solving Housing

Despite the complexity of construction systems, Smith ultimately frames housing as a deeply human challenge.

“In the first instance, we are after creating more housing for people… to have a place to live in a safe and dignified way.”

The stakes are particularly clear when considering younger generations.

Smith shared that many young adults no longer see homeownership as a realistic future—something that could fundamentally reshape the economic landscape.

What Success Could Look Like

Currently, industrialized housing represents only a small portion of the U.S. housing market.

Smith estimates the share sits around 2–3% today.

However, even modest growth could make a meaningful difference.

“Wouldn't it be great to even just be at seven or ten or fifteen percent?”

Reaching those levels would significantly expand housing supply while encouraging innovation across the broader construction industry.

How Industry Leaders Can Start Today

For construction professionals interested in industrialized housing, Smith suggests a few practical steps:

1. Build regional learning communities
Share knowledge across architects, developers, and manufacturers.

2. Visit factories and observe production systems
Understanding manufacturing processes changes how teams design buildings.

3. Commit to learning across multiple projects
Early projects may be challenging, but improvement compounds over time.

4. Focus on systems thinking
Industrialized construction succeeds when teams align business models, product platforms, and supply chains.

Final Thoughts

Industrialized housing will not solve the housing crisis alone. However, it offers a powerful opportunity to rethink how housing is produced.

By combining manufacturing efficiency, collaborative delivery models, and regulatory innovation, the construction industry may be able to significantly expand housing supply.

And ultimately, that means something simple but essential:

More people having a safe place to call home.