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Modular homes get second look as Colorado faces lack of affordable homes

In mountain towns, where construction is already pricey, savings can reach 40%
Fading West Development’s 110,000-square-foot home construction factory is nestled in the Arkansas River Valley in Buena Vista. The facility aims to build at least 700 modular homes a year to address affordable housing shortages in communities across the nation. (Hugh Carey/The Colorado Sun)

BUENA VISTA – Charlie Chupp deflects the perceived perfection of his timing.

As housing and construction costs skyrocket in Colorado, creating a labor crisis that threatens tourism and building industries in mountain communities, Chupp is six months from opening a modular housing production facility capable of churning out two fully built, ready-to-assemble homes a day.

The five-story, 110,000-square-foot facility next to the Central Colorado Regional Airport began as a way to build affordable housing in the Upper Arkansas River Valley. It has grown into a statewide model that is drawing interest from all corners of Colorado.

“You think this would have been some strategic, brilliant move that we mapped out but, really, we just stumbled into this,” he said as a swarm of workers erects Chaffee County’s largest building, where crews will produce 1.2 million square feet of homes a year. “We just saw affordable housing as a problem in Buena Vista and wanted to do something about it. Now, we see that problem everywhere and just about every place is worse than BV. So this is one way to help solve the problem.”

Fading West Development CEO Charlie Chupp looks across the Arkansas River Valley from inside the 110,000-square-foot home construction factory in Buena Vista. (Hugh Carey, The Colorado Sun)

Modular housing has not traditionally been favored in the United States. Prosperous Americans have long had space to build, an abundance of resources and an independent streak that led them to design and build their own homes. That is changing as the cost of land and resources – especially in Colorado – soars and computerized efficiencies elevate the appeal of factory-built homes.

Chupp’s timing with a more efficient home-building strategy is on point. Housing prices are exploding on Colorado’s Western Slope, as an influx of city-fleeing buyers spike demand and prices. A housing crisis in the high country is forcing locals out and stressing employers who are struggling to find staff members for restaurants, construction sites and tourist-dependent businesses. The need for affordable housing has never been greater in Colorado.

“Colorado is the third most expensive state to build in in the country behind New York and California,” said Chupp, who spent 20 years with the company that built Starbucks kiosks in airports, supermarkets and university halls before he began developing Buena Vista’s The Farm community of modular, affordable homes.

Municipal leaders from across Colorado regularly visit The Farm, where the first 90 homes are occupied and construction is underway on another 50 houses and 107 apartments. They want Chupp to do the same in their communities: offer housing that works for workers earning 80% or less of the region’s median income. He’s already booked to build new communities in Leadville, Poncha Springs and Gunnison.

Production at his yet-to-open factory is booked solid for the next two years. So Chupp’s Fading West Development is already planning a second home-building facility next door. Then there are plans for a 400,000-square-foot house foundry on the Front Range.

Chupp points to places like the Netherlands, where 80% of the homes are built in factories and assembled on dirt. Japan has an equally high percentage of modular homes. Building off-site for speedy, less-expensive assembly in Colorado’s snowy high-country “is the only option going forward,” Chupp said.

“It’s not whether you like modular or don’t like modular. There is no other option. We are not going to have a resurgence of people coming into the workforce who want to be in construction. People coming out of college right now are not looking at labor and a trade as something they want to do,” he said. “These mega-trends are not going to change. People are always going to want to live in the Rockies. We are not ever going to have a resurgence of skilled trades. And it will always be more efficient to build in a factory.”

Construction workers piece together the drain pipes for a home building facility in the Arkansas River Valley on May 12 in Buena Vista. (Hugh Carey/The Colorado Sun)

Chupp’s Fading West Development has a multi-pronged business plan.

First, he wants to build more communities like The Farm. He will buy land, secure entitlements, install infrastructure, set the houses, finish them and sell them. Fading West Building Systems will build homes in the Buena Vista production facility. And then the company has a construction arm and development services subsidiary.

Building in a factory is about 40% faster and at least 20% less expensive than building on location, even when hauling the homes from the Buena Vista factory, Chupp said. In mountain towns where construction is already pricey – like downtown Aspen or Vail – the savings can reach 40%. That can lead to more affordability in communities where attainable housing is increasingly difficulty to find, Chupp said,

Chupp is building the second production facility in Buena Vista on land owned by Colorado Mountain College. The school worked out a deal with Fading West that includes Chupp and his team employing – and teaching – construction industry students in the factory.

It’s an offshoot of a program in Salida, where college and high school students earn college credits while working with the school’s partners in the construction trades. A similar program is launching at CMC’s Leadville campus this summer.

Rachel Pokrandt, vice president and dean of CMC’s Leadville and Chaffee County campuses, said the partnership does more than support students with new construction and design skills. It also benefits both the Upper Arkansas River Valley economy with innovative jobs, she said.

“Where Fading West sort of uniquely fits in, they are a very different type of builder than our other partners, because they are basically a manufacturing facility,” Pokrandt said. “Our students will be getting this really unique experience in the home construction industry and a window into the future of what home building may be like.”

Housing built off-site is growing more appealing as the price of construction labor and materials reach record highs. (The National Association of Home Builders said last month that the recent 200% spike in lumber prices has increased the price of a new single-family home by more than $35,000.)

Producing modular-type housing materials that can be assembled at homesites has been challenging because of the cost of hauling premade walls, roofs and trusses across the state. Nebraska has several modular housing factories, but shipping on a truck can run $10 a mile and a single house typically requires two semitrailers.

The attraction of modular is growing, said Scout Walton, a real estate broker who grew up in Crested Butte when his family owned the Crested Butte Mountain Resort ski area. Walton thinks communities will need to be increasingly creative when building affordable housing programs like the ones in Summit County and the Yampa Valley.

“I think that modular will come back around and people are going to experiment with that a little more,” Walton said. “But it’s not just for affordable projects. I think market-priced projects will see the value in modular as well.”

Mount Princeton seen from the 110,000-square-foot home construction factory nestled in the Arkansas River Valley on May 12 in Buena Vista. (Hugh Carey/The Colorado Sun)

Jeff Post, the owner of First Colorado Land Office in Salida and chairman of the Chaffee County Economic Development Corp., sees demand for homes in the high country continuing to outstrip the supply.

“Any chance to increase our supply will help us find that balance again, but it’s going to take a lot,” Post said. “There isn’t one silver bullet to fix this, but Charlie is creating one of the bullets with job creation and the type of product he is building. Now, we just need 20 more.”

Chupp already has begun hiring the estimated 75 to 80 workers he will need in the home-building factory by November. He estimates about half his workers will be locals and half will come from outside the county. There is not enough housing for 40 new residents in Buena Vista, so the first thing those workers will be building will be the 107 apartments at The Farm.

“They will be building their own homes,” he said. “Thriving communities need the diversity of their population. The workforce needs to be represented. It’s not right that police officers, teachers and service workers are being forced out of these communities. This is one way we can help.”

The Colorado Sun is a reader-supported, nonpartisan news organization dedicated to covering Colorado issues. To learn more, go to coloradosun.com.

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