The starter home disappeared not because of one bad decision. It resulted from a thousand logical decisions that, over time, led to one unintended outcome. We priced the first-time buyer right out of the system.

Bigger Became Better… and More Profitable

Over the past few decades, new homes kept getting bigger, not because buyers initially demanded it. Builders responded to rising land costs, worsening labor shortages, and a growing list of regulations that added expense to every build. Faced with shrinking margins, they made a rational decision—build larger homes where the profit could absorb those costs. What started as a survival strategy slowly became the standard, and the smaller home quietly lost its place in the lineup.

Zoning Didn’t Ban Small Homes… It Just Made Them Impossible

Zoning didn’t ban starter homes, but it didn’t need to. Requirements for large minimum lot sizes, generous setbacks, and multiple parking spaces made it nearly impossible to fit a modest home onto a piece of land in a financially viable way. A 1,000 to 1,200 square foot home might physically fit, but once those requirements are applied, the land cost alone pushes it far beyond what a first-time buyer can afford. The result is predictable—the home never gets built.

Financing Followed the Money

As the economics shifted, so did the financing. Lenders didn’t abandon housing; they simply gravitated toward safer investments. Larger homes, higher-income buyers, and multifamily developments offered more predictable returns and less perceived risk. The first-time buyer, once the backbone of the housing market, became its most uncertain part. When financing avoids a segment of the market, that segment doesn’t just struggle—it disappears.

Labor and Materials Changed the Game

Anyone in construction has lived through this shift firsthand. Skilled labor has become harder to find, material costs have become more volatile, and construction timelines have stretched in ways that make every project riskier. Under those conditions, building entry-level homes becomes difficult to justify. Instead, builders focus on fewer projects with higher margins, ensuring each one can withstand today’s unpredictable building environment. The starter home simply doesn’t fit into that equation anymore.

And Then… Expectations Changed

At the same time, buyer expectations evolved, and not always in ways that helped affordability. What was once considered a perfectly acceptable starter home is now often viewed as lacking. Many buyers today expect open floor plans, upgraded finishes, multiple bathrooms, energy-efficient systems, and smart home features right from the start. The idea of buying a home to improve over time has faded. In its place is the expectation that everything should be finished and ready on day one, which naturally drives prices higher and pushes the true starter home further out of reach.

Will the Starter Home Ever Come Back?

Yes—but not in the form we remember.

The next version of the starter home won’t replicate the past. It will be something new, shaped by today’s realities and tomorrow’s opportunities. And in many ways, it will challenge our traditional ideas of what homeownership looks like.

What the Next Starter Home Could Look Like

This is where the conversation shifts from what went wrong to what might actually work—and where offsite construction can step up.

Smaller Homes… Designed to Work Harder

The future starter home won’t be smaller simply to cut costs. It will be smarter. Designers are already rethinking how space is used, creating homes where rooms serve multiple purposes, storage is built in more effectively, and every square foot carries more weight. Instead of adding space, the focus is shifting toward making better use of the space that exists. The result is a home that feels livable without needing to be large.

ADUs Becoming the First Step to Ownership

In many areas, accessory dwelling units are quietly becoming the new entry point into homeownership. Young families are choosing to build smaller homes in the backyards of parents or relatives, allowing them to avoid the high cost of land while still gaining a foothold in ownership. Over time, this approach provides a path to equity and independence, even if it doesn’t follow the traditional route of buying a standalone home first.

Factory-Built Housing Finally Has Its Moment

Offsite construction has long promised efficiency, speed, and cost control, and the starter home market needs exactly those advantages. Factory-built housing can reduce waste, shorten timelines, and bring a level of predictability that site-built construction often lacks. But the opportunity comes with a challenge. Factories must focus on smaller, more affordable homes rather than chasing the same high-margin projects as traditional builders. If that shift happens, offsite construction could play a leading role in bringing the starter home back.

Starter Home Communities, Not Subdivisions

The large-lot subdivision may no longer support affordability. In its place, smaller, more thoughtfully designed communities are beginning to emerge. These developments use smaller lots, shared green spaces, and a stronger sense of community to reduce land costs while maintaining quality of life. By rethinking neighborhood design, developers can create environments where starter homes are not only possible but desirable.

Pre-Approved Plans and Faster Approvals

Another quiet but powerful shift is underway as municipalities introduce pre-approved home designs. By reducing the time and cost associated with architectural plans and permitting, these programs remove one of the biggest barriers to building smaller homes. The process becomes faster, more predictable, and more affordable, which benefits both builders and buyers.

Rethinking Ownership Itself

Perhaps the biggest change is how we think about ownership. Traditional models that require full ownership from day one may no longer be the only option. Shared equity arrangements, lease-to-own structures, and public-private partnerships are offering alternative paths. These models allow buyers to enter the market more gradually, reducing the initial financial burden while still building long-term value.

Gary’s Observation

We didn’t lose the starter home because we forgot how to build it. We lost it because, over time, every part of the system—builders, developers, lenders, municipalities, and even buyers—moved away from the idea that starting small was acceptable.

Somewhere along the way, “starter home” stopped meaning a beginning and started meaning not enough. Now the pressure is building in the opposite direction. Affordability is forcing innovation, and a new generation is looking less for perfection and more for possibility.

The companies, factories, and communities that understand this shift—and are willing to rethink size, design, process, and expectations—will quietly rebuild the first rung of the housing ladder. And when that rung returns, the path to homeownership will follow.

For years, the offsite construction industry has talked about automation as though every factory would eventually resemble an automobile plant. Robots would frame walls, install windows, apply adhesives, move materials, and complete repetitive tasks while a smaller number of highly trained employees monitored the production line.

That vision has proven far more difficult to achieve in homebuilding than many technology companies expected. Houses contain flexible materials, constantly changing components, tight spaces, and dozens of tasks requiring people to see, feel, and adjust what they are working with. Traditional industrial robots perform extremely well when every component arrives in precisely the same position, but construction materials do not always cooperate.

Bigwave Robotics believes humanoid robots may close some of that gap.

The robotics company has announced an agreement with Space Manufacturing Lab, described as the country’s largest modular housing producer, to begin introducing humanoid robots into factory production and onsite installation. The first assignment will not be framing walls, hanging drywall or carrying modules. The robots will begin with one of the least pleasant jobs in residential construction: installing fiberglass insulation.

Beginning With a Job People Do Not Want

Insulation installation may seem like a modest starting point for a humanoid robot, but it makes a lot of sense. Fiberglass can irritate workers’ skin, eyes, and respiratory systems, especially when they don’t follow proper protective equipment and ventilation procedures.

Many factories also find this task difficult to staff consistently. Employees must lift, position, cut and fit insulation into cavities while working around wiring, plumbing, framing irregularities and other obstructions. The work is repetitive, physically uncomfortable, and not the type of job most employees hope to perform for the rest of their careers.

Unfortunately, it is also difficult to automate with conventional industrial equipment. Fiberglass insulation is flexible, compressible, and irregular. It bends, folds, and changes shape when handled, making it very different from the metal parts and rigid components that robots have traditionally moved through manufacturing plants.

A fixed industrial robot performs best when the material, workstation and required movement remain virtually identical during every cycle. Insulation does not always provide that level of predictability. A humanoid robot equipped with vision systems, sensors and artificial intelligence may be able to recognize the cavity, adjust its movements and manipulate the material in ways that more closely resemble a human worker.

That is the theory. Space Manufacturing Lab and Bigwave Robotics now have to prove it works under real production conditions.

Adding Humanoids to an Existing Automated Factory

Space Manufacturing Lab already uses factory prefabrication and standardized production methods to manufacture wood modular housing. Rather than replacing its entire production system, the company plans to introduce humanoids gradually alongside its existing automated equipment and human workforce.

That approach may matter more than the robots themselves.

Factories often make the mistake of treating automation as an all-or-nothing decision. Management becomes attracted to the idea of building a highly automated plant and begins purchasing expensive equipment before determining whether the product, production volume, and processes justify the investment.

A more practical strategy is to identify a specific task that is dangerous, repetitive, difficult to staff or responsible for a production bottleneck. The factory can introduce automation at that point, measure the results, and expand only after the technology proves it can improve safety, quality, output, or cost.

Insulation gives the companies a clearly defined place to begin. Bigwave Robotics says it will use what it learns from that application to identify other factory and installation tasks that humanoids may eventually perform.

The important word is “eventually.” Introducing a humanoid robot into a promotional video is relatively easy. Teaching it to work safely and productively during an eight-hour shift, alongside employees and under changing factory conditions, is an entirely different challenge.

The Factory Must Be Ready for the Robot

Humanoid robots are sometimes presented as the answer to construction’s labor shortage because they are designed to operate in environments originally built for people. They may be able to walk through a factory, use tools, and perform tasks without redesigning every workstation.

That does not mean a humanoid can solve an undisciplined production process.

If drawings change after production begins, materials arrive late, components are stored in the wrong location, or every house differs significantly from the last, the robot will face many of the same problems that frustrate human workers. Artificial intelligence may help a machine adjust to variations, but it cannot turn a poorly organized factory into a dependable manufacturing operation.

Space Manufacturing Lab appears to understand the importance of standardization. Its modular system is based on completing much of the house in a controlled factory environment, and the company recently introduced the Samsung AI Modular Home in cooperation with Samsung Electronics. That concept combines modular construction with artificial intelligence and Internet-connected home technology.

Adding humanoid robots to the production process represents another step toward connecting the factory, the product, and the technology inside the finished home. Whether customers ultimately care who—or what—installed the insulation will depend upon the results. The finished work must still meet code, perform properly, and be completed at a cost that supports the selling price.

North America Is Clearly Part of the Plan

Bigwave Robotics intends to use the information collected at Space Manufacturing Lab’s facilities to develop construction-focused “physical AI” systems. Unlike AI programs that generate reports, drawings, or schedules, physical AI allows machines to perceive their surroundings, make decisions, and perform work in the real world.

The company has also made it clear that its ambitions extend beyond its domestic market. Bigwave Robotics plans to pursue modular housing opportunities in other countries, including North America.

That should catch the attention of U.S. and Canadian modular, manufactured and panelized housing producers. Many North American factories are struggling to recruit and retain production employees, especially for jobs involving repetitive motion, uncomfortable working conditions or physically demanding tasks.

The industry is not likely to replace entire production crews with humanoids anytime soon. The first useful applications will probably involve individual jobs that workers dislike, that contribute to injuries or that repeatedly interrupt production because people cannot be found to perform them.

Insulation, sanding, material handling, fastening, inspection and certain finishing tasks could all become candidates. Onsite work may be harder because weather, uneven terrain, changing conditions, and unpredictable obstacles make construction sites far less controlled than factories.

Automation Must Produce a Measurable Return

The robot’s cost is only part of the equation. A factory must also consider programming, integration, maintenance, safety systems, employee training, production interruptions, and the technical personnel required to keep the equipment operating.

Management must measure more than whether the robot can perform the task. It must determine whether the machine can complete the work at the required speed, maintain consistent quality, and operate often enough to justify the total investment.

If a humanoid robot installs insulation twice as slowly as an experienced employee and requires frequent human assistance, it may be an impressive technical demonstration without being a sound manufacturing investment. If it can work consistently, reduce employee exposure, improve installation quality and relieve a chronic labor shortage, it could become extremely valuable.

The factory should know the difference before ordering a fleet.

Gary’s Observation

Humanoid robots will almost certainly become part of offsite construction, but their arrival will not eliminate the need for good factory management. In fact, they may expose weak management more quickly because automation depends upon standardized products, reliable material flow, complete information, and repeatable processes.

Space Manufacturing Lab and Bigwave Robotics are beginning in the right place. They have selected a specific task that is unpleasant for employees and difficult for conventional robots. If the humanoid can install insulation safely, accurately, and economically, the companies will have demonstrated something far more useful than a robot walking across a factory floor for the cameras.

The real opportunity is not replacing every employee. It is allowing people to move away from the dirtiest, most dangerous, and least desirable jobs while machines perform the work that factories consistently struggle to staff.

Humanoid robots may be coming to modular housing, but the winners will not be the factories that purchase them first. They will be the factories that know exactly why they need them, where they should use them, and how the investment will improve the home coming off the line.

Yesterday, I wrote about creating a daily resilience plan to help an offsite factory spot financial and operational problems before they become a crisis. That plan depends on monitoring cash, backlog, receivables, margins, labor efficiency, and other internal warning signs.

But an offsite company can be financially stable today and still be quietly falling behind.

The threats may not appear on its daily dashboard. They may be developing somewhere outside the factory—in a competitor’s sales strategy, a new building system, a developer’s changing expectations, an emerging technology or a management decision made by a company in another part of the country.

That raises another important question: Who is responsible for keeping the company abreast of what is happening beyond its own walls?

For years, I have written about modular and offsite construction, factory management, marketing, sales, innovation, startups, automation, and the decisions that can either strengthen or weaken a company. The more I observe, the more convinced I become that many factories do not suffer from a lack of available information.

They lack time, curiosity, and a process for deciding which information deserves attention.

Being Busy Is Not the Same as Being Informed

Most factory owners and managers are extremely busy. Their days are consumed by production schedules, engineering questions, customer changes, employee problems, material shortages, inspections, transportation and cash flow.

They may begin the morning intending to read an industry article, study a competitor’s website or learn about a new manufacturing process. By noon, that intention has disappeared beneath a stack of more immediate problems.

This is understandable. A module sitting unfinished on the production line demands more attention than an article about artificial intelligence, a new panelized system or a factory opening three states away.

The problem is that urgent work can gradually crowd out important learning.

Management may know exactly what happened inside the factory yesterday while remaining almost completely unaware of what is changing in the surrounding industry. When that continues for several years, the company may become very efficient at operating a business model that the market is slowly leaving behind.

The Industry Is Larger Than the Factory Floor

Keeping informed means more than knowing which factories opened, expanded, closed or filed for bankruptcy. Those developments matter, but they are only part of the picture.

An owner should also watch how other companies manage people, sell projects, develop dealer networks, communicate with developers, and present themselves online.

Management should be asking:

• Are developers changing what they expect from modular manufacturers?
• Are builders looking for components instead of complete modules?
• Are customers responding differently to traditional sales methods?
• Are competitors explaining their value more clearly?
• Are new factories entering the market with lower overhead?
• Are automation companies solving real production problems or simply selling impressive demonstrations?
• Are lenders and investors becoming more cautious about offsite construction?
• Are factories hiring different types of managers?
• Are building-code, insurance or transportation changes creating new risks?
• Are panelized, hybrid and mass-timber systems entering markets once dominated by volumetric modular construction?

You can’t answer any of these questions by watching production totals alone.

Management Lessons Often Come from Other Companies

Some of the most valuable business lessons come from observing decisions other companies make.

A factory does not need to experience every mistake personally.

When another manufacturer expands too quickly, becomes dependent on one customer or purchases automation before preparing its workforce, there is something to learn. When a startup spends heavily on promotion but cannot create a dependable path from prototype to profitable production, established factories should pay attention.

The same is true when a company succeeds.

What did management do differently? Did it enter a carefully selected market rather than attempt to serve everyone? Did it improve engineering before expanding production? Did it build a strong dealer network? Did it hire experienced factory leadership instead of assuming technology could replace management?

The lesson is not necessarily to copy what another company did. Conditions vary too much for that. The value comes from examining the decision, understanding why it was made and asking whether something similar could affect your own business.

Marketing Has Become an Operating Issue

Factory owners sometimes treat marketing as something separate from operations. Production builds the product, while marketing makes the brochures, places advertisements and posts on social media.

That separation no longer makes sense.

Marketing influences what kinds of inquiries reach the factory, what customers expect, how the sales team explains the product, and whether the company attracts projects it can build profitably.

A factory website filled with attractive homes may generate attention but fail to answer the questions asked by builders, developers and investors. A company may promote customization without explaining that excessive customization disrupts engineering and production. Another may advertise speed without describing what must be completed before production begins.

Poor marketing can create poor prospects, unrealistic expectations and projects that do not fit the factory.

Keeping abreast of marketing means studying how the market is changing, what customers are asking and how competitors are presenting their capabilities. It also means being willing to look honestly at your own message.

If the factory has changed but its website has not, customers may be evaluating a company that no longer exists. If the company’s marketing promises more than its production system can deliver, the sales team may be filling the backlog with future problems.

Sales Information Must Travel in Both Directions

Salespeople hear things that may never appear in a formal industry report.

They hear developers complain about financing. They learn which competitors are bidding aggressively, which projects are being delayed and which customers are beginning to consider panelization, pods or hybrid construction.

That information is valuable only if someone collects it and brings it into management discussions.

Communication must also flow in the other direction. Salespeople need to know what is happening in purchasing, engineering and production. They should understand which project types are profitable, which options cause disruption and how much production-ready capacity is actually available.

A company cannot keep abreast of the market if sales and production operate with different versions of reality.

Assign Someone to Watch the Horizon

Factories assign people to production, safety, quality control, estimating, engineering and purchasing. Yet many never assign anyone to monitor what is changing outside the company.

That responsibility does not require a full-time industry analyst. The owner, general manager, sales manager, or another employee with the curiosity and judgment to recognize meaningful developments could share it.

The assignment should be specific.

That person might review selected industry publications, newsletters, company announcements, conference reports, LinkedIn discussions and public financial information. He or she could follow a limited number of competitors, suppliers, technology companies, developers and industry organizations.

The objective is not to collect everything. It is to identify what might affect the company.

Once a week, that person could provide management with a short report containing:

• What happened
• Why it may matter
• Whether it creates a risk or opportunity
• Who should examine it further
• What, if anything, the company should do next

A five-minute discussion during a management meeting may be enough to prevent an important development from going unnoticed.

Build a Reliable Information Diet

The amount of available information can become overwhelming. An owner who tries to follow every article, podcast, webinar, press release and social-media post will eventually stop following any of them.

A better approach is to build a manageable information diet.

Choose a small number of credible sources covering offsite construction, housing, manufacturing, finance, technology, sales and management. Include sources from outside the modular industry because some of the most useful ideas may be emerging elsewhere.

Then separate information into three categories:

• Immediate: Something that could affect a current customer, project, supplier or financial decision
• Developing: A trend that deserves continued monitoring
• Interesting: Worth knowing, but not important enough to require action

This distinction matters because every new idea can appear urgent when presented enthusiastically.

Most are not.

Artificial intelligence, robotics, mass timber, advanced panelization and new software platforms may influence the industry’s future. However, a factory should not chase every innovation it reads about. Management must decide whether the development addresses a real business problem and whether the company is prepared to use it.

Keeping informed should improve judgment, not replace it.

Make Curiosity Part of Management

The greatest obstacle may not be a lack of information. It may be a management culture that no longer asks questions.

A company can become comfortable doing things the way they have always been done, especially when those methods produced success in the past. Employees learn that suggesting a different approach creates more trouble than remaining silent.

Over time, curiosity disappears.

A healthy management team should regularly ask what has changed, what customers are saying and what assumptions may no longer be valid. It should be willing to examine an unfamiliar idea without immediately embracing or dismissing it.

Curiosity does not mean abandoning experience. It means using experience to evaluate what comes next.

The experienced factory manager who understands why a proposed innovation will not work under real production conditions is providing valuable judgment. But the manager who rejects it simply because “we tried something like that 20 years ago” may be protecting the past rather than the company.

Information Must Eventually Lead to a Decision

Reading more articles will not save a factory. Neither will attending every conference or subscribing to another newsletter.

Information becomes valuable only when it influences a decision.

That decision may be to investigate a market, revise a sales message, update the website, call a customer, train an employee, postpone an equipment purchase or begin preparing for a threat that has not yet reached the factory.

Sometimes the right decision is to do nothing.

But “we studied it and decided not to act” is very different from “we never saw it coming.”

Gary’s Observation

An offsite factory should know what happened on its production line yesterday. It should also have some idea of what may be coming toward that line tomorrow.

I have spent years reading, listening, asking questions, and writing about this industry. That has not given me every answer. If anything, it has shown me how quickly yesterday’s certainty can become tomorrow’s outdated assumption.

Factory owners do not need to become industry reporters. They do need to develop the habit of looking beyond the problems immediately in front of them.

The companies most likely to endure will not necessarily be the ones with the newest factories, the largest backlogs or the most impressive technology. They may be the ones whose managers remain curious enough to notice change, disciplined enough to examine it and confident enough to act before everyone else recognizes that the industry has moved.