Housing in America is expensive, and a surprising share of that expense comes down to one thing: the cost of construction itself. A recent report from the JPMorganChase PolicyCenter, Unlocking housing affordability through innovative construction, puts the number at roughly 64% — that is, about two-thirds of what a buyer pays for a home is tied to the cost of building it.

The report goes on to make a case that Villa has been built around since 2019: that moving construction off the job site and into a factory is one of the most practical ways to help bring that cost down.

That case is worth a close read for owners or operators of multifamily property in California. Under SB 1211, multifamily owners can add up to eight detached ADUs to an existing multifamily lot - one of the more direct value-add opportunities available right now. But whether it pencils out depends heavily on how efficiently those units get built. Here's what the report found, and why it points toward building offsite.

First, what “offsite construction” actually means

“Offsite construction,” or what the report refers to as “innovative construction,” can sound complicated. In practice, it means the major parts of a home are built inside a facility rather than assembled on the project site, piece by piece.

This is exactly how Villa builds. Rather than framing and finishing the home onsite or in our customer’s backyard or multifamily property over many months, we work with established manufacturing partners who build the home's components in a controlled factory environment. In parallel to building the home in the factory, Villa completes onsite work (such as foundations), and then Villa delivers and installs the home on the prepared site.

The report highlights three benefits of this process: repeatability, because builders are refining a known process rather than starting from scratch each time; quality control, because the work happens indoors under consistent conditions and subject to several inspections; and schedule certainty, because a controlled build is easier to plan around than one exposed to weather and shifting trade availability.

Why homebuilding has been slow to change

To understand why this matters, it helps to see how unusual it is. Most industries have gotten steadily more efficient over the decades. Homebuilding, by and large, has not.

As the report puts it, “homebuilding techniques in the U.S. have remained largely static... predominantly site-built and with productivity gains well below gains in the overall American economy and far below sectors that have adopted trends in automation, digitization, and advanced manufacturing” (page 4).

In other words, while manufacturing, logistics, and other fields have embraced automation and standardization, most homes are still built much the way they were decades ago - outdoors, one at a time, with all the delays and cost variability that come with it. Offsite construction is one of the clear paths the report identifies for closing that gap, and it's a large part of why Villa builds the way we do.

The cost and speed case

For an owner or operator weighing a multifamily ADU project, the practical question is whether any of this actually saves money or time. The report's answer is measured but encouraging.

The report finds that “for certain projects, these efficiencies can lower construction costs by an estimated 20–30% and shorten timelines by an estimated 30–50%, translating to greater housing affordability.”

A shorter timeline can not only save time, but cost. Because much of the build happens in a facility, steps that would normally run one after another can run in parallel - a foundation can be poured on-site while the home itself is under construction elsewhere, which can meaningfully reduce total build time. Every month shaved off a project is a month of lower carrying costs and earlier rental income. And when adding units to an occupied property, keeping the longest phases of construction off-site also means less disruption to the residents.

The report is careful to say these savings depend on the project, and so is the Villa team. The point isn't that offsite construction is automatically cheaper in every case - it's that, when done well, it can remove a lot of the cost and schedule risk that traditional building carries.

A benefit for the people who build homes, too

The report also highlights offsite construction's positive effect on timelines and cost by changing who is available to build. The construction industry is short on skilled labor - the report cites a shortfall of roughly 439,000 additional workers needed to meet demand.

As the report explains, “for many workers, off-site construction can offer more predictable schedules, reduced exposure to weather-related disruptions, and a more controlled environment. These conditions can broaden the construction workforce by attracting workers who may have been less likely to pursue conventional construction roles.”

A steady indoor job with regular hours is a different proposition than seasonal, weather-dependent site work. That's good for the people doing the building, and it matters for owners too. A deeper, more stable workforce is part of what makes faster and more reliable delivery possible, especially in a market where local trade labor is stretched thin.

Why California is a leading adopter of offsite construction

The report singles out California for putting offsite construction to work at scale: “California stands out as an example of how public-private partnerships can deploy innovative construction as part of a broader housing delivery and affordability strategy.”

Villa calls California home and the state’s efforts are part of why Villa has already delivered hundreds of homes across the state.

The report points to real California developments already using these methods - affordable senior housing in Santa Barbara County, a 186-unit community in Napa County, and manufactured homes in Southern California that the report says were built for roughly 30% less than site-built equivalents, with the savings passed on to buyers. Between the state's housing shortage, its ADU-friendly laws, including SB 1211's expansion of detached ADUs on multifamily lots, and its openness to new approaches, California has become an ideal market for the kind of building Villa does every day.

What this means

This report highlights the potential of offsite construction and suggests it's one of the more promising answers to a housing-cost problem that conventional construction hasn't managed to solve on its own.

For owners or operators of multifamily property looking at value-add strategies - including adding detached ADUs under SB 1211 - the case for building them offsite is worth a look. Our team can help model what a property supports and walk through what it might look like, including a realistic cost range and timeline.

Learn more at here.

The information provided here is for general informational purposes only and does not constitute legal, financial, or construction advice. Cost and timeline figures cited in this article are drawn from the JPMorganChase PolicyCenter report and represent estimates that may vary by project. Performance, estimates, and projections are for illustrative purposes only and are not indicative of future results. Prospective customers, builders, investors, and readers should conduct their own independent investigation. Villa expressly disclaims all claims and liability that may be based upon or related to the information provided herein.