What Is a Modular Home—and Is It Worth Buying One?
This type of alternative home might be an affordable option for people in a competitive home market. Here’s what you should know before you buy one.
If you're looking to buy a house, some of the most affordable prices in your area may be for modular homes. But what is a modular home? Modular homes aren't mobile homes—they don't move—but are often located alongside mobile homes in mobile home parks and similar developments. If you're on the fence about this style of build, learning about the key features will help you decide if a modular home is right for you.
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What Is a Modular Home, Exactly?
A modular home is a prefabricated (also known as prefab) structure that is built off-site and assembled on-site. They sit on the slab or foundation where they're pieced together. Modular homes are very similar to manufactured homes, except (among other differences) they're built to different codes.
"Modular homes are built in sections in a climate-controlled factory and transported to your land, where a builder assembles the home like building blocks on top of a permanent foundation," says Bailey Carson, a home care expert at home services finder Angi. "Modular homes are one form of prefab home, but their key differentiator is that, unlike manufactured and mobile homes, modular homes are built on foundations."
Modular homes are different than RVs and mobile homes, too.
"RVs are mobile, meaning they aren't constructed on a foundation like a modular home. RVs are meant to move around. Some people live in them full time while others use them for recreational, short-term use," Carson says. "If you're living in an RV full time, you typically purchase an RV and rent a space in an RV or trailer park, but you don't need to own the land where it's parked."
With a modular home, you own the land it is built on the way you would own the land a typical single-family home sits on. And like single-family homes, the value of modular homes appreciates over time.
You might hear modular homes compared to stick-built homes, which are homes built on-site. Modular homes are assembled on-site, but the actual construction of the structure itself takes place off-site.
Another feature that sets modular homes apart is building codes. Modular homes follow local, state, and regional building codes for stick-built homes. Manufactured homes, on the other hand, follow the federal HUD (Department of Housing and Urban Development) code.
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What is a Modular Home's Pros and Cons?
Carson says the building method for modular homes makes them more energy efficient than stick-built homes in many cases."Since modular homes have to make the rough journey to your construction site, they are usually built with tighter seams and tighter construction than some stick-built structures. Sealed construction means lower heating and cooling bills, which makes modular homes extremely energy efficient," she says.
Kristina Morales, Realtor at eXp Realty, says part of that building process means the homes aren't exposed to the elements while under construction.
"With a stick-build home, someone's going to come in, they're going to frame out your house over a year," she says. "However, when it's raining, that foundation is getting all of this moisture. With a modular home, it's pretty much never been exposed to the elements."
A potential downside of these alternative homes is that, because these homes are built in factories, they're not as customizable as traditional new builds when it comes to the floor plan. You'll have a handful to choose from, depending on each builder. Still, customizing the interiors is easy, Morales says.
The biggest pro is that modular homes are far more affordable than stick-built homes.
On average, building a modular home will be $100 to $200 per square foot, plus the cost of land and fees (including building permits). A 1,800-square-foot modular home will typically cost between $180,000 and $360,000, while the cost to build a custom home runs from $350,000 to more than $1 million. Of course, prices will vary depending on the types of custom details and finishes you choose.
One important thing to consider is that, due to zoning, these homes are not possible everywhere.
"While there are many perks to owning a modular home, there are a few drawbacks," Carson says. "For example, finding land that's zoned for prefab homes in an area where you want to live can be challenging, especially in today's real estate market."
Beatrice de Jong, broker and consumer trends expert at Opendoor, a home-buying service, points out that while modular and manufactured homes sometimes have a negative connotation, they are often built to last as long as stick-built homes.
"They're typically made with less expensive materials, but that doesn't necessarily mean lower quality," she says.
What is a modular home's ideal location? If you're in Florida, where hurricanes are common, a modular home might not make as much sense as a concrete block single-family residence. But if your area experiences relatively moderate weather, you may be okay with a money-saving modular home.
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What Is a Modular Home's Resale Potential?
Modular homes appreciate in value, so you should see a return on your investment in the right market. However, like other types of specialty builds, you'll have to find the right buyer when it comes time to sell.
"Modular homes are popular in senior living communities thanks to their affordability and energy efficiency," Carson says. "Residents can enjoy the comforts of their own home while benefiting from the community amenities and care found in traditional senior living facilities. In recent years, there has been increasing popularity amongst homeowners of all ages, especially in markets experiencing housing shortages or higher home prices."
And given their affordable price point, modular homes make good starter homes, too.
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Should You Buy a Modular Home?
Deciding whether to buy a modular home is up to you. There are pros and cons to these structures, as there are with any type of housing.
Because modular homes are affordable and quick to build, many first-time home buyers find they can get into a brand-new home quickly and affordably when they choose this option. Morales says a fully customized home takes six to eight months to build, while a modular home usually takes half the time, even as little as three to four months.
If a fast timeline makes you wonder about the quality of these homes, Morales suggests looking into the builder—something you should do if you're looking to buy in any new development.
"You just have to make sure that you're checking the materials and seeing the quality of workmanship," she says. "And that's just going to vary from builder to builder."
As with any home, de Jong suggests having an inspection done before you close on the property, especially if you're buying an older modular home and you aren't the first owner. With proper prep and research, though, there's no reason you can't be as comfortable in a modular home as you would in any other house.
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Other Alternative Housing Ideas
There are other affordable ways to own a home beyond a traditional single-family home, townhouse, or condominium that are cost-effective and comfortable.
The benefits of RV living, including the (usually) low cost of your initial purchase, include mobility and flexibility, which would work well for those with remote jobs, retirees, and digital nomads who want the freedom to come and go as they please. RV parks can be as luxurious as high-end hotels or as simple as a national park campsite, so there's something for everyone.
Tiny homes, sometimes built to stay put and sometimes built on wheels, have grown in popularity over the past few years as people look to reduce their environmental impact while lowering their cost of living. A tiny home can be created from a vintage trailer or designed to a home buyer's specifications.
An ADU (Accessory Dwelling Unit) offers separate additional living space where there's already a home built. What used to be a simple and functional mother-in-law suite is now a fashionable and customizable structure that can be used for extended family or as an income-generating rental.
Frequently Asked Questions
Where is the best place to put a modular home?
A modular home can be placed just about anywhere a stick-built home can. If you plan to buy land for a modular home, ensure you can access utilities, water, and other necessities and that a road will allow for the delivery and installation of your home. Check your local county ordinances for any restrictions on modular home building in your area.
How do you buy a modular home?
The most important steps for buying a modular home include: deciding on a location; finding a builder who can build what you need; securing the construction loan financing (if you aren't paying cash); and hiring a general contractor with experience in the modular home business, since most builders don't offer on-site construction of their products.
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