Modular Homes – Everything You Need to Know

Modular homes are a way for new homeowners to say no to the established real estate market. Just down the road from me, there is a 1500 square foot bungalow circa 1936 asking for… wait for it… $1.3 Million. 

To be fair, I’m sure this property has had routine updates. In above average location, but the price does not match the true value. 

New homeowners continue to pile into the housing market. Home construction companies continue to struggle to build enough homes to match the outlandish demand. Meanwhile, high levels of inflation, soaring home prices, and rising mortgage rates leave those hoping to be new homeowners without any other options. 

Many may be thinking that the housing market is reaching a peak. We agree. If you’d like more detail on this, here is our article on the potential for a housing market crash.

Enter modular homes to save the day.

Where did Modular Homes come from?

Some have compared modular homes to being the “Tesla” of the housing market. 

Its links to Tesla don’t stop there. Elon Musk had his own pre-fab modular home moved on to the SpaceX grounds. Modular homes have been an idea in the real estate market since 1976, but have recently begun to find popularity. 

The idea of modular homes originated from a slow evolution beginning with mobile homes. 

Mobile homes allowed those with less in their pockets to build a home they could call their own beginning in 1926. Mobile homes are now obsolete due to HUD policy changes enacted in 1976. 

Slowly, mobile homes began to advance and mature into what are now considered manufactured homes. Manufactured homes are pre-built homes that are assembled at the factory and delivered to the home site on a rectangular chassis. 

Have you seen those massive homes barreling down the highway on the back of a semi? That’s a manufactured home. 

Prefab homes then came after manufactured homes. The main parts of the prefab house go through design and construction in factories. Then the home-builder delivers the parts to the home site. Finally, the factory-built pieces assemble at the home construction-site location.

Last, came the modular construction design. Where the modular home builders build out the entire home, inside and out. The manufactured home dealers deliver the prefabricated home to its final destination. Then it is unfolded and assembled with the help of a crane that assembles the shipping containers.

modular home

Those that are new to the industry will often see that the terms prefab and modular are interchangeable. So, we will do the same throughout this article.

Modular Homes Provide an Economically Sensible Option

While traditional, stick built homes have been built over long periods of time on a person’s property, prefabricated homes are built in a factory. Companies like Zennihome, a prefabricated housing builder, aim to completely change the home buying experience by doing this.

With customizable home floor plans, new homeowners are able to design their new homes in the same way as traditional homes. These home manufacturers are able to customize the countertops, decking, beams, baths, and even the crawl space! Some modular buildings are even two-story modern homes with expert craftsmanship.

Although, many new modular home companies have preset home floor plans and allow buyers to choose between a few different, sleek options.

To be as transparent as possible, most modular homes are smaller than a traditional house, but offer an efficient, minimalist lifestyle. 

Think of the guy that went out west after college and tricked out a school bus with every possible gadget he could find. That’s the mindset of a modular home, but much more spacious. 

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Another perk of prefabricated houses is their ability to match the unique wants and needs of a first-time home buyer in a sustainable manner. Each unit offers a climate-controlled, energy efficient environment, and shiftable cabinetry to maximize the smaller space. Zennihome’s main page touts the ability to turn a 640 sq ft floor plan base chassis unit into more than 1500 square feet of living area available. 

More Benefits of Modular Home Design

Accelerated Construction Time

Modular home construction offers up to 50% higher turn around on projects. This is due to the fact that all work occurs in the same factory and weather is not a factor throughout the process.

Quality Control and Safety

Since these homes are factory-built, they are able to follow greater quality controls than on-site construction projects and limit construction injuries. Once again, lack of weather impacts on the construction materials help the materials maintain their condition.

Limited Construction On-Site

The main money saver for this modern home project is the limited building-site operations. Since the modular building is a turnkey unit, it is erected by craftsmen in less than a day or two on a permanent site-built slab. The assembly process follows the repeatable building system set for each of the home models. Since many of the floor plans and features are similar on modular homes, the process is as simple as it gets.

As you can see above, the modules of each home are made up of a shipping container with the outside being fully insulated. Once all exterior walls and sections are in place, then the builders do the final staging of all windows to allow natural light in and the interior goes through inspection. This sustainable design can go through mass production and is a truly scalable operation.

Overall Lower Costs

Since the processes are so efficient, factory workers are much cheaper to employ than skilled tradespeople. Additionally, the limited amount of material transportation can limit costs on the builder. 

These three main benefits provide affordability, energy-efficiency, environmental friendliness to the design-and-build process. In fact, many of the modest, modern prefab homes have solar panels roofing installed and leave a small, zero-energy footprint.

Due to the overall lower costs, new home buyers can use home financing strategies to buy a house with no money down.

Modular Homes Keep the High Standards of All Comparable Housing Options

Even though custom built modular homes follow a different building process than traditional homes, they follow the International Residential Code. This means that they maintain compliance with all state and local building regulations and building codes. 

Once again, showing how modular home building is a very unique, custom process from the beginning concepts. 

Many may be familiar with the HUD. The HUD is the US Department of Housing and Urban Development, which is in charge of all manufactured homes, but not prefab housing, which are set on a permanent foundation.  

Issues Prefab Homes are Facing

One of the downsides of being able to purchase a modular home for new homebuyers is that you need to own land where you can plop the project. Additionally, certain areas of land must follow specific zoning ordinances. 

Much like home prices, land prices in high demand areas have been increasing at drastic rates.

Additionally, modular homes are more cost-friendly than regular home construction, but they require many additions to make it a fully-outfitted project. Some of these add-ons include finding a company to pour the concrete foundation, connecting to the energy grid, and setting up plumbing.

Lastly, the current low levels of labor supply and high levels of inflation are creating major headwinds for modular home builders. As the average order to fulfillment time takes more than 12 months, and fluctuating materials pricing, many potential homebuyers are hesitant to dive into this new method of homebuilding.

Modular Homes Review

Custom modular housing will continue to allow homeowners to deal with a more controlled environment. It seems that the stereotypical modular prefab homeowner is someone looking for a custom build model home design in rural, off-the-grid areas. Not exactly the money saving venture it is made up to be. However, that is how most early stage markets began as they find more economically friendly processes. We will see if more first time home buyers make their dream home with this factory-made strategy.

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