Home prices are off the charts and I’m sure you’re probably sick of me saying it over and over again these last couple months. But with those words engraved in everyone’s mind, it has buyers thinking of other ways to get themselves into a new home. One of those most common questions I have been getting lately is “What if I just bought a mobile, manufactured or modular home or whatever they’re called, it seems like they’re affordable?” And you’re right! But let me first break down the differences between all three as well as a quick pro’s and con’s list.
Believe it or not, there are more than 22 million people in the United states who live in manufactured homes according to the National Housing Institute. It also plays a role in 10% of new single-family home starts. Which makes sense in an affordability stand point, the price per square foot is less than half of your everyday site built home.
According to Homes Direct, the average price of a new manufactured home in April of 2020 was a little over $111,000. Whereas, your typical new construction home is over $350,000.
Before we go further, I want to define what a manufactured, mobile and modular home is, as people tend to use these terms interchangeably. If you know these terms already, feel free to skip ahead at any time. Onto the vocab, Manufactured homes are completely constructed in a factory and transported to a home site.
Once they are placed, they typically aren’t moved again. These homes are also built according to federal construction codes from HUD or Housing and Urban Development.
Modular homes are built entirely or in pieces at a factory and brought to the home site to be put together and placed on a foundation. The construction must follow local state building code standards. There are on-frame modulars and off-frame modulars. On-frame modulars have a permanent beam or chassis and tend to be cheaper than off-chassis modulars since they don’t require a permanent foundation.
An off-frame modular is lifted off the transportation carrier and set on a foundation. An on-frame modular has a close resemblance of a mobile home, the difference is how they’re financed. A mobile home is classified as personal property for financing, insurance and taxes, whereas a modular home is financed like your typical home.
A mobile home is actually just a manufactured home built prior to June 15Th, 1976 and is now obsolete due to Housing and Urban Development changes. So if you use these terms interchangeably you get a pass I guess.
Let me get the misconception out of your head now, these home styles aren’t trailers, in fact modular homes are available in numerous home styles such as: ranch, colonial, cape cods, etc. Whereas, modularhomes.com best explains the process of manufactured homes as sections that are a maximum width of 16 to 18 feet and 70 to 80 feet in length with height restrictions dependent on highway transport requirements that differ from state-to-state, thereby limiting manufactured homes to single story construction and minimal exterior elevations, but that doesn’t mean they lack character because customization is limited.
Let’s jump into the pro’s and con’s of modular, manufactured and mobile homes:
One big pro for modular homes is the use of a different construction technique. Modular homes typically have 30% more lumber and higher insulation values than stick-built homes. With that in mind, the homes are more durable and sturdier when it comes to harsh weather.
Modular homes also appreciate and gain value in the same way traditional homes do. All of these home types can definitely be less costly than a traditional home. As I mentioned before, Modular homes are financed the same way as a traditional home, not as personal property. Another pro is the duration of the build. Most traditional homes take 10-12 months, whereas a modular home can be constructed on-site in 3-6 months.
In comparison to a manufactured home, a modular is better quality and allows you to have more customizable options. Modulars are also created to be energy efficient to conserve energy with high quality windows and insulation.
As far as the cons for modular homes, they are more costly than manufactured homes and they must meet the same local building codes as a traditional site-built home. There’s also the cost and availability of suitable land.
There are neighborhoods and municipalities that won’t allow you to build certain types of houses, so it’s very important to make sure that if you’re wanting to buy land for a modular or manufactured home, that you make sure it is actually allowed.
These restrictions are known as restrictive covenants. A restrictive covenant is an agreement that restricts a company or other party to a contract from engaging in certain actions. They were put in place a long time ago to deny the ability to build these types of homes as they were considered inferior and an eye sore.
The biggest con about buying a modular home is that the majority of people like I mentioned before, intertwine all these housing types together and still consider them to be inferior. Yes, a modular will surely experience appreciation, but the buyer pool will definitely be limited due to the biased opinion of people thinking they’re simply inferior to traditional housing.
As far as pro’s and con’s for mobile and manufactured homes (since the term is now interchangeable, so I’ll just say manufactured to not make it confusing):
One of the biggest pros for manufactured homes is the low cost and the convenience of having it all put together and on-site in a short amount of time, and even if you establish yourself somewhere in that home, you may be able to move it to another home site.
When it comes to con’s there’s a few to keep in mind:
In most cases, Manufactured homes are considered personal property for financing, taxes, and insurance, and not real property. Requirements of course vary from state to state, but in general, a manufactured home would require a title, just like a car would. So with that in mind, it tends to depreciate over time.
That’s why it’s crucial to get a piece of land that is in a very well desired area so it can help in your favor when you decide to sell down the road. When you buy an existing manufactured home, understand that you most likely don’t own the land it is on, so you’ll have a contract for purchasing the home and another contract for renting the land from the park owner.
Why is there such a harsh opinion on these home styles?
The mobile homes that were built prior to 1976, are homes that are hitting the market today more and more, and people are seeing the following issues: sinking foundations, doors and windows out of alignment, roof leaks, acoustical panels instead of drywall, bursting plumbing pipes, unpermitted DIY projects, and damaged skirting.
A lot of the materials used to build these homes weren’t standard, so it would be expensive to special order new products when a repair or replacement is needed. I know all that probably just discouraged you from even venturing out into different housing types, but understand that after 1974, these structures were held to a higher standard and building code according to the National Manufactured Housing Construction and Safety Standards Act of 1974.
It’s safe to say that these home types have come a very long way over the years with the improvement of their overall quality, standards, and increasing customization options. If you’re still not quite understanding the difference between these home styles.
Look for the tag! If the home is a manufactured home built after 1976 it will have a big ole HUD tag typically on the back of the home indicating it’s a manufactured home. If all else fails take a look below the home if you can. Manufactured Homes are supported by metal beams and modular homes are on a foundation, but in some occasions modulars have a metal chassis, but it’s not the norm.
Andrew McManamon is a licensed Real Estate Professional in the great state of Michigan. His philosophy to put people first has paved the way to his extraordinary real estate career. Born and raised in Brighton, MI, Andrew acquired a bachelors degree in business management and marketing from Cleary University in Howell, MI. The combination of his experience and education allows him to take a strategic approach towards every transaction and help his clients make more informed and confident decisions.