A model modular home and a calculator on top of blueprints

Are modular homes a good investment? It’s a question asked by many potential property buyers. Unfortunately, with the world changing so dramatically, it’s not easy to make a sound choice.

Modular or ‘prefab’ homes are commonly used titles for houses built off-site. By reading on, you’ll discover the different types of prefab homes, why they may or may not be a wise investment, and the benefits of buying one.

Are Modular Homes as Good as a Traditional Build?

Modular homes are a good investment. Their value is tied to the general real estate market like normal homes, so if prices are rising where you are, so will your home’s value. However, there are differences in particular prefab homes, and not all of them are a wise investment choice.

Firstly, building a modular home is quicker than building a traditional on-site home.

They’re also much more affordable, making them excellent for first-time buyers. In addition, all inspections are pre-done, so no bothersome and potentially infuriating on-site reviews are necessary. 

What’s more, modular homes are much more environmentally-friendly and energy-saving. Also, these homes are incredibly strong and have been acknowledged by FEMA to be more effective at withstanding hurricanes.

The Differences Between Modular, Manufactured, and Mobile Homes

Before we continue, we should clear up any confusion regarding the different types of prefab homes. These factory-built structures are often referred to as modular, manufactured, or mobile homes.

Mobile Homes vs. Manufactured Homes

First, let’s look at the mobile home. This type of house is also commonly called a trailer. These terms mainly became obsolete after passing a new national code in 1974 called the National Mobile Home Construction and Safety Act. 

A mobile home along the coastline

This was followed up in 1976 when the US Department of Housing and Urban Development passed the HUD Manufactured Home Construction and Safety Standards.

These codes implemented several new standards in construction, safety, and energy-saving. Mobile homes, or ‘trailers,’ officially became known as manufactured homes from this point on. However, the pre-1974 name is still commonly used.

Manufactured Homes vs. Modular Homes

One significant difference between manufactured and modular homes is that they abide by different codes. Manufactured homes must follow the 1976 HUD code. However, modular homes follow the applicable state and local building codes.

This means that standards and design can vary from state to state and even county to county.

Other differences include:

  • Construction styles
  • Mobility (a modular home is a permanent structure)
  • Customizability (a modular home can be customized more as it is not a single factory-made unit)
  • Cost

A modular home costs more than a manufactured home. However, it is a more sound investment as manufactured homes tend to depreciate while a modular home is tethered to the current market.

Is a Modular Home a Good Real Estate Investment?

Modular homes follow local market trends meaning they are every bit as good an investment as a conventional built-on-site home. Not only that, modular homes are highly sustainable. They often use energy-efficient and durable materials in their construction, such as bamboo.

Solar panels are often a source of power in modular homes. Many even feature solar batteries, which store the unused energy from solar panels. This feature efficiently reduces home energy bills by as much as three quarters.

Additionally, you can start living in your new home within three months of the start of construction because building in a controlled environment factory setting is more efficient than on-site construction. 

A modular home is assembled in a factory

In contrast, a house built traditionally can take up to a year or longer to produce. With weather stoppages and delays due to inspections, this can be a frustrating and costly process.

How Much Does a Modular Home Cost?

Estimations vary for the average cost of a modular home in the US. Prices are typically based on the size of the house, the number of rooms, stories, and customizations. Keep in mind that the cost of land is not included in the cost of the home.

The national average for a modular home in the US ranges from $120,000-$270,000. However, builders can construct smaller and simpler houses for a minimum of $40,000-$50,000.

In contrast, the veritable palaces of the modular home world can cost more than $500,000, or millions if you have it!

How Long Do Modular Homes Last?

Modular homes last as long as traditionally-built homes. With advancements in design and better quality materials, modular homes are safely constructed and can withstand the elements better.

Many mobile homes built after WWII are still standing. However, some of the houses from this era were of inferior quality, and that stigma has been hard to shake off for the modern modular home.

How Modular Homes Are Environmentally-Friendly

Let’s explore what makes modular homes environmentally friendly.

Use of Non-Toxic Materials

Modular homes typically use non-toxic or low-VOC materials. VOC stands for volatile organic compounds. These can be found in many household products, such as paint, glue, and sealant. However, they are also present in other commonly-used materials like PVC, cement, and even plywood.

VOC materials present harmful chemicals. They evaporate at room temperature and can be inhaled by people and pets. These materials have been found to be toxic and unsafe for the environment.

Green Building Practices

Building materials used in modular homes are often recycled. Roof panels are regularly made from FSC-certified timber. The FSC (Forest Stewardship Council) is an organization that ensures the wood they certify is from responsibly-grown forests.

This modular home utilizes reclaimed wood siding and runs on solar power.

Its website states that it makes sure the wood certified is “environmentally appropriate,” socially beneficial,” and “economically viable.”

Therefore, any environmentally-conscious home buyer can rest assured that they will construct a home with minimal impact on the environment.

Energy Efficiency

Heating and cooling contribute over 50% of the average American home’s energy use. However, with the high-quality insulation that modular homes tend to use, the average American can stay warmer in winter and cooler in summer with much less usage.

Using a SIP (structural insulated panels) system for insulation is a common choice in modular structures. These panels feature a high-performance insulating foam that considerably impacts your energy saving.

Water-Saving Capabilities

A rainwater collection system is a great choice when designing your modular dwelling. This will also be a lifesaver if you’re in an area that experiences drought.

The solar panels ubiquitously found in modular homes can also provide 90% of your hot water. Low-flow faucets are also a common feature in prefab homes and will further contribute to saving the planet.

Fisheye lens of a solar panel array on a clay tile roof

Waste Reduction

Modular factories are also responsible for reducing waste by as much as 52%. This benefit is because the frames, trusses, etc., are factory-made to specific measurements, drastically reducing waste.

Additionally, builders can reduce landfill waste by as much as 40% by constructing homes in factories.

Potential Problems With Modular Homes

Of course, nothing in life is guaranteed, and everything comes with pros and cons. Modular houses are no different. As such, there are some potential drawbacks when pursuing a prefab home.

Accessing Suitable Land

This drawback is probably the most significant obstacle if you do not have a site already. Finding the right plot can be a pain because there are many things to consider. It would be best if you thought about the following:

Land Location

This is crucial, especially if you have children. Does the plot of land you possess or are looking to buy have easy access to:

  • Schools or childcare
  • Malls, grocery stores, medical facilities
  • Roads

These are all critical factors. However, it would help to consider whether the location will have you or your family feeling isolated from the community.

Soil Type

The type of soil on the land may have a massive impact on how a builder will lay your home’s foundation. Soil type may affect costs, as some soils will expand and contract differently. Hiring a geotechnical engineer will add to your expenses but may save you from making a costly mistake.

Land Slopes

The terrain’s slope is another consideration you need to consider before building your modular home. This consideration is because uneven land may require a custom design, which will add to your budget. You don’t want this to happen.

The silhouette of a worker surveying hilly terrain with mountain peaks, clouds and sunset in back

Natural Disasters

Although modular structures hold up better against disasters than traditional buildings, it’s still preferable to be away from areas prone to hurricanes, floods, or the like.

If you already own land in a designated catastrophe area, e.g., east of Texas 146, specific building codes need to be adhered to. Also, it would help if you time when you start building carefully to avoid any hurricane season or other potential disasters.

Planning Controls

These may dictate how you can design your home, the types of flora you are allowed to grow or remove, or what style your building must adhere to.

Additionally, the type of land you own matters. For instance, you may only be permitted to use it for commercial or industrial purposes, or planning controls may dictate the height you can build to.

The Home’s Orientation

The exact location of where to start building is essential for energy efficiency. For instance, solar panels need to be placed in an optimum spot, while drainage needs consideration. Also meaningful is your connection to the local sewage pipes and power supplies.

Experts can also advise exactly where to position your home to get maximum benefits from Mother Nature, such as exact orientation to the sun for cost-effective heating or cooling bills.

Who Lives in Prefab Homes?

Anyone can live in a prefab home. Any number of bedrooms can be constructed, so a single person or ‘the Bradys’ can call a modular house their home. There are 7,000,000 prefab homes around the US, accounting for 7.5% of all family homes.

Many celebrities, including Matthew McConaughey and Pamela Anderson, live in modular homes. Actor David Arquette made big waves when selling his prefab home for close to $1.5-million.

A modular home's backyard with a pool in the foreground

Superstar Robert Redford is another celebrity to have endorsed modular houses. He is quoted as saying:

“Building smaller, along with building houses prefabricated – in the process using less time, fewer materials, and using both more efficiently – is the sanest and wisest recipe for home construction, for now, and the future.”

So you see, modular homes are an emerging real-estate market trend that is here to stay. Prices will remain low as long as there is a traditionally-built market to compete with.

It could be that it is best to get a foot on this ladder as soon as possible. After all, if a modular home is suitable for Robert Redford, who are we to argue?!

The Future of Modular Homes

With the world heading towards environmental change on a massive scale, prefab homes seem to be a no-brainer when considering which type of home to buy. Modular construction uses resources more intelligently, with little waste, safer materials, and better energy efficiency.

Furthermore, with the advancements in technology, it is also likely that this type of home building will eventually replace the traditional on-site construction we still commonly see. Future technological advances can only develop the quality of modular building even more.

Therefore, it’s likely that building a modular home will only be a profitable exercise as we advance. With the values of modular homes now the same as traditional, gone are the days of looking down on ‘trailers.’

Final Thoughts

Since moving to Mars may not be an option, it’s probably best to look after our homes a little better. Modular homes are a massive step in the right direction, especially with the planet’s population increasing exponentially.

Cities are becoming more densely packed. As a result, it will soon be challenging to continue building the traditional way to balance building with growth.

Modular structures are more economical, sustainable, and better for our environment. As a result, they’re not only an excellent choice for first-time homebuyers but also for traditionally-built homeowners wishing to contribute to the better health of our planet.


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