Pros and Cons of Modular Homes

By PropertyClub Team
Jun 8th 2024
Modular homes can often be more cost-effective and the construction process is usually faster than traditional homes. The assembly line construction process can lead to savings in labor and materials. However, Some areas may have restrictions on where modular homes can be placed or may require special permits. It's essential to research local zoning laws and regulations before purchasing a modular home.

When it comes to home design and house-building options, it’s hard to ignore how popular modular homes have become. They’re the talk of almost every real estate magazine. People are starting to ask for them by name. They’re trendy and surprisingly elegant. 

Of course, modular homes can be an excellent investment for the right person—but they’re not for everyone. If you’ve been debating getting a modular home built as your future homestead, it’s essential to understand the perks and pitfalls of this popular new trend. 

hash-markWhat Is a Modular Home?

A modular home is a home that has been created in a factory setting. They’re mass-produced and are designed to be made as a single home, or as a “mix and match” type of deal.  When you order a modular home, you get all the supplies plus a guide to help put things together. 

In the past, modular homes were designed as a cheap way to make a home fast. They used to be stigmatized, but that’s not the case anymore. Today, they’re a lot more luxurious than they once were. 

hash-markPros of Modular Homes

In recent years, modular homes have seen a boom in popularity. This isn’t a mistake, nor is it a trend that doesn’t have a reason for being. This is because modular homes are becoming increasingly sensible in today’s economy. Here’s why people are so interested in getting them by each major selling point. 

1. Cheap Cost

Modular homes are usually 15 to 20 percent cheaper than stick-built homes. One never needs to ask, “Are modular homes cheaper than stick-built homes?” The answer is clear yes. Since modular homes are made to be easy to assemble, the amount of labor you have to buy is lower.

You also get the added perk of having pre-cut items, no need for an architect, as well as everything delivered on-site. This, too, cuts down on costs by making it easier to get everything finished quickly.

2. Quality Control

Modular homes are well made. They are not the “cruddy prefab” homes of the past. Each modular home goes through rigorous quality control. This means that you get to enjoy high quality without having to worry about it just being superficial. That’s why there are usually fewer zoning issues when they’re being shipped over. It’s also why they can increase in value as the years pass and why you don’t hear complaints about modular home resale value.

3. Speedy Setup

Modular homes can be set up in a few days or weeks. Modular homes provide a quicker solution than traditional ones, which typically take seven months or longer to build. They are designed to have a speedy setup in mind, and that includes the actual building portion. If you are looking to build a home in a rush, you would be wise to check it out.

4. Energy Efficiency

Modular homes are far more energy-efficient than traditional homes. Fans of eco-friendly design will be happy to know that most modular homes that are being sold on the market today come fully outfitted with energy-efficient windows, siding, and insulation. This translates into a better home that requires less energy to run.

hash-markCons of Modular Homes

Sometimes, they are just not a good match for people. The dangers of modular houses in the wrong hands aren’t life-threatening, but they can be disappointing. Here’s what you need to know about the significant downsides of modular homes.

1. Financing Difficulties

Though they can be a great investment, lenders tend to have a problem with modular homes. Because they’re not deemed to be a traditional type of building, there are extra steps involved in securing enough funding to make these homes happen. 

One of the biggest problems with modular homes is that many buyers often have difficulty in getting funding in time to pay contractors. This is a consideration that you need to take into account if you want to get a modular home. Thankfully, there are more routes than just banks when it comes to financing this type of home. 

Many modular home manufacturers make a point of offering their own financing and lending programs. So, if you are at a loss on lenders, this is an option to pursue. 

2. Finding Land

This issue is twofold. First, you are going to need to find an adequate patch of land that is large enough (and high quality enough) for you to build a traditional-style home on. This can be difficult, especially if you want to live near an urban environment. 

There’s also the fact that many areas have land restrictions that detail what kind of buildings they allow on them. Some jurisdictions ban modular homes, which can make finding a town that’s right for you difficult. 

Additionally, you also have to pay for the land that you want to build your home on. That can add a serious amount of money to your budgeting. 

3. Mixed Perception

Even though it’s not fair to houses that are being sold now, the stigma that once loomed over modular homes is still alive and well in many circles. Back in the day, modular homes were almost identical to mobile homes—and that meant their quality was in the pits.  

Though modular housing has become de rigeur as of late, the truth is that this type of home still has a serious bias against it from the days of old. Many realtors and older homebuyers won’t go near them as a result of the stigma they used to have. 

The good news is that this is a reputation that is rapidly dissipating. Even old-school buyers know that a modular home that’s high quality will fetch a great price on the resale market these days.

4. A Lack of Customization

When most people think of building a home, they tend to do so with the assumption that their home will be all their own. It’ll be their own unique design, filled to the brim with the amenities they want, in the exact style they desire.

The problem with modular homes is that they’re not customizable—at least, not entirely so. This means that you will probably have to be okay with not having all the features that you want. Or, you might have to tolerate a floor plan that doesn’t work with your ideal vision.

A lack of customization can be a dealbreaker for many aspiring homeowners, especially if the home you want to make is a major life goal of yours. It’s up to you to decide if this is a major dealbreaker or if it’s something you can tolerate.

5. Smaller Sizes

Though this is not a rule by any means of the word, modular homes tend to be slightly smaller than your typical “stick-built” home. If you choose to go for a modular home, expect to see a lot of pint-sized houses that are sleek but modern. 

That said, there are large modular homes for sale. However, you won’t find mansions that are modular-made.

hash-markPros & Cons Of Modular Homes Bottom Line

If you’re looking for a high-quality home that offers stylish living at a fraction of the price, you’re going to enjoy modular homes. They are a great way to get more bang for your proverbial buck. Like with any other home investment, getting the right modular home isn’t a cakewalk. At times, it might not even be the best decision for you.

It can be hard to get a loan to finance a modular home, difficult to customize and fit everything you need in such a small space, and find land that will welcome your modular home. You will need to do your due diligence and know what will be ahead of you if you decide to go the modular route.

Overall, it’s about what you want in a home and how you want to go about it. If you’re looking to spend money on an elegant home that offers a lot in terms of investment, then, by all means, check this trend out.

hash-markModular Homes FAQs

What Are the Best Modular Homes to Buy?

There is no “best modular home to buy” in the most typical sense of the word. What would be great for one family might be too petite or too traditional for another. However, there are some things you should keep in mind when looking for a modular home to buy:

  • Building Codes: You should not buy a modular home that wouldn’t be up to code in the area you want to live in. When in doubt, check zoning boards before you put down the cash for a modular home. 
  • Quality: It’s better to pay extra for a high-quality house made from a reputable manufacturer than it is to try to save a couple bucks. Good modular home manufacturers will have sterling reputations, warranties on their hardware, and excellent customer service. Bad ones? Well, they’ll be shady about almost every aspect of their work.
  • Curb Appeal: Like with all other homes, your modular home’s curb appeal will be a major deciding factor in your home’s future purchase price. If you want to make the most of your investment, get a pretty house.
  • Avoid Mobile Homes: In a lot of areas, mobile homes and modular homes are considered to be interchangeable. They’re not! Mobile homes are “trailer” homes that can be picked up and transported from lot to lot. They are not investment pieces in most cases.

Are Modular Homes Cheaper Than Buying a House?

Though modular homes are affordable compared to building a house the traditional way, they are still pricier than buying your own home most of the time. So, if you are looking for a way to be the first one to live in a home on the cheap, this is a good option. Otherwise, buying is a better option. 

Are Modular Homes a Good Investment?

Yes, modular homes are often a very good investment! Unlike mobile homes, which tend to depreciate with time, modular homes hold their value or even increase with time. In many cases, the resale value of modular homes will be higher than the initial purchase price. As a result, buying a modular house can be a smart way to get more bang out of your proverbial investment buck. 

How Long Do Modular Homes Last?

Modular homes can last just as long as a standard home assuming they are well-made. Most modular homes are made of the same high-quality materials you'll find in new construction homes, so they can easily last for decades as long as they are well-maintained.

If the drawbacks of modular homes outweigh the benefits and you're in search of more alternatives, don't forget to explore our separate article on the cheapest types of houses to build.