Modular house being constructed.

Modular Homes: Definition, Cost And More

4-Minute Read
Published on November 6, 2020
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Forget everything you think you know about modular homes.

Not to be confused with manufactured or mobile homes, modular dwellings are more similar to traditional homes than you might think. Plus, they come with lots of benefits of their own.

What is a modular home, and could it be the right choice for you? Let’s take a look.

What Makes A Home Modular?

Modular homes are different from traditional homes mainly in how – or more precisely, where – they’re constructed.

Traditional homes are built onsite, meaning that a construction crew builds the home from the ground up on the plot of land it will permanently live on. These types of homes are often called “stick-built,” referring to the on-site construction of the home’s wooden framing.

By contrast, modular homes are mostly built in factories. Instead of building the entire home all together, the home is built in sections, or modules, which are then shipped to the site that the fully constructed home will permanently live on. Then, with the help of a crane, a crew will place and assemble the home on either a crawlspace or basement foundation.

Beyond that, modular homes are actually pretty similar to stick-built homes and often visually indistinguishable to the casual observer.

Just like stick-built homes, modular homes can be designed in a variety of styles and home types and can be built large, with multiple stories. They’re also built to the same codes, can be financed with a mortgage and tend to hold value in the same way.

In spite of this, modular homes get somewhat of a bad rap. Part of this may be due to the fact that these homes are commonly confused with manufactured homes (sometimes referred to as “mobile homes”), which suffer from stigmatization and the belief that they tend not to hold value (though it turns out that might not even be true).

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How Much Do Modular Homes Cost?

Compared to stick-built homes, modular homes can be a more affordable option, though how much you’ll spend can vary quite a bit. Currently, the median home sale price for all homes in the U.S. is $324,900.

If you’re building your own modular home, you’ll likely pay a base price somewhere between $40 – $80 per square foot, according to HomeAdvisor.com. However, this doesn’t factor in the cost to have the home delivered and assembled. You’ll also pay more for customization, such as upgraded flooring or cabinetry.

HomeAdvisor.com says you can expect to pay between $180,000 – $360,000 to build a modular home when you include customization and assembly costs.

In addition to the cost of the home itself, you should also consider how much you’ll need to spend to purchase land for the home to sit on. Once you have the land, it will need to be prepared and a foundation will need to be installed.

The home will also need to be connected to utilities, including gas, sewer, water and electric. The cost of this can vary depending on the availability of these utilities in your area; HomeAdvisor.com says it can cost anywhere from $3,000 – $20,000.

Though more space and more customization can drive up the costs of a modular home, these homes can end up being much more affordable than a typical stick-built home, especially for those who don’t need a ton of square footage.

What Are The Pros And Cons Of Modular Homes?

Pros

Modular homes are just as durable as stick-built homes, if not more so. They’re built with quality materials and held to the same building standards as site-built homes.

Because they’re almost entirely built in a factory, modular homes aren’t exposed to the elements during the building process, meaning that bad weather or natural disasters don’t get a chance to compromise the integrity of the building materials.

If you’re looking to build your own home, modular homes are a great option because they can be constructed much faster than traditional homes, and without many of the most common delays that site-build homes have to endure (such as weather delays). From your initial order to move-in, these homes can be finished in around three months, which is about half the time it typically takes to site build a house.

Cons

Though a modular home can be great while you’re living in it, if you ever need to sell the home, you might have to have bit more patience than those selling stick-built homes.

Because some potential buyers might be less familiar with modular homes and thus more hesitant to buy one, these homes can be more difficult to sell, depending on the market you’re in.

The a la carte pricing of a modular home build can also make it difficult for you to figure out just how much your home will cost when all is said and done. Though the initial base price you’re given might be quite attractive, the cost to buy and prepare the land and have the home hooked up to utilities can push your budget into the red if you don’t plan carefully.

You might also find that you’re limited in where you can build your modular home by homeowners association rules and municipal zoning regulations.

What’s The Difference Between Modular And Manufactured Homes?

Though these terms are often used interchangeably, modular and manufactured homes are two distinct types of dwellings with several key differences.

Though both of these types of homes are constructed in a factory setting, manufactured homes – colloquially known as mobile homes, though that term has actually become outdated since the Department of Housing and Urban Development (HUD) began regulating the construction of these types of homes in the mid-’70s – are permanently affixed to a chassis that allows wheels to be attached to the home for transport. Once the home has reached its destination, the wheels are removed.

Unlike modular homes, which are built to local and state building codes, manufactured homes are built according to HUD code. Additionally, manufactured housing doesn’t need to be placed on land owned by the owner of the home; often, manufactured homeowners have a lease on the land their homes are placed on.

In most cases, manufactured homes are considered personal property, rather than what’s known as “real property.” Real property refers to the type of property we’d consider “real estate” and describes a given plot of land and any buildings that are attached to it.

Typically, manufactured homes aren’t eligible for traditional forms of home financing.

Is A Modular Home The Right Choice For Me?

If you’re in search of your next home, don’t discount modular homes out of hand without taking the time to fully understand what they are and the benefits they provide. These homes are durable, affordable and can be just as beautiful and unique as a traditional, stick-built home.

Ready to begin the home buying process? Get started today with Quicken Loans®.

Apply for a Mortgage with Quicken Loans®

Call our Home Loans Experts at (800) 251-9080 to begin your mortgage application, or apply online to review your loan options.

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