A prefab or modular home is a structure that’s manufactured and preassembled off-site and then transported to its final location. This is in contrast to a traditional home that is constructed entirely on-site, a process known as stick-built or site-built. Those who are in the market for a home should consider both the advantages and disadvantages of prefabrication before assuming that stick-built is the best option.
Prefab homes are not new. In the early 20th century, Sears & Roebuck sold tens of thousands of kits for prefab houses. Around the same time, famous architect Frank Lloyd Wright also began designing and shipping prefab homes. After World War II, however, veterans who were starting families were more interested in buying traditionally constructed homes. Thanks to advances in construction technology and a desire for energy-efficient housing, people are once again looking at prefab options.
Modular House vs. Mobile Home
The term "modular" is sometimes used incorrectly to describe mobile homes and double-wide trailers that are manufactured in a factory and then transported to a location with no on-site assembly or customization. These residences are also known as manufactured homes. A true modular home is made from higher-quality materials than a mobile home and is intended to be a permanent residence rather than one that is moved around.
A mobile home is basically a box constructed around a steel frame. In contrast, prefab and modular homes are available in a wide range of sizes and configurations, from tiny modular guest houses with less than 300 square feet to sprawling 5-bedroom houses with several thousand square feet made up of more than a dozen modules. Although many prefab houses have a modern design, they are also available in styles ranging from Tudor to Craftsman.
When it comes to buying a modular home, many banks and other lenders treat it more like a traditional home that increases in value over time. Mobile homes tend to decrease in value, are sold by dealers and are treated like vehicles when financing.
Advantages of Prefab Homes
In most cases, prefab houses are faster to build. According to the National Association of Home Builders, a prefab home can take three to four months to build compared to nine to 12 months for stick-built construction. Since a major portion of the time required to build a prefab is factory time, bad weather isn’t as much of a problem as it can be with traditional construction. You may also save time on inspections since factory inspectors can check each module as it’s completed.
Depending on the manufacturer, you may find it easier to customize a prefab or modular home’s floorplan compared to buying one of a limited number of models in a large tract of site-built homes. A prefab home can also be remodeled by experienced contractors who take the home’s structure and support into account. However, nothing is as customizable as a one-of-a-kind, site-built home. This is usually also the most expensive option.
Prefab and modular homes have proven to be safe and durable in weather emergencies, surviving hurricanes in Florida and other natural disasters. Because prefab houses must be built to withstand transportation by truck, the interconnected design of these homes provides a rigid system that in most cases is as good as or better than conventional house framing.
Compared to moving into an existing traditionally constructed home, a new modular home offers brand new construction, a modern design and updated fixtures and appliances. Most are energy efficient and may have energy-saving features like high-quality insulation and state-of-the-art windows. The fact that a prefab home is factory-built means that it is tightly constructed and able to keep weather out.
In many cases, a prefab home is less expensive than a comparable stick-built home due to the savings in the cost of labor. However, all the transportation and add-on costs of a prefab should be considered before comparing it to new or existing stick-built homes.
Disadvantages of Prefab Homes
Although prefab and modular homes come with many benefits, there are also some disadvantages compared to constructing a traditional home. Local zoning may prohibit the construction of a prefab home in certain areas, so the first step is finding a suitable lot with the right zoning and finalizing its purchase. You’ll need to cover the cost of soil testing and site surveying if needed. After you purchase land for a prefab, you will also need to level the site and add a foundation, as well as connecting to public water and power and sewage systems. If you’re building in a location outside local services, you may need to put in solar power or a septic system. The cost of the land combined with any necessary site upgrades can significantly drive up the price of a prefab.
The floor plan and other features of a prefab house can be customized, but there are some basic limitations that are inherent to the manufacturing and transportation processes. If a modular home must be transported by road, then individual pieces will be limited in width to 14 to 16 feet, although they can be 60 to 70 feet long. Also, most prefab home designs are limited to two stories because of transportation restrictions. These size limitations go against the current popularity for homes with a great room and open floor plan.
The logistics of transportation can also be an issue to consider with prefab construction. You must adhere to state transportation regulations for size and weight loads, and special permits and escort vehicles may be required to transport oversized modules, all of which adds to the price of the home. In addition, it can be challenging to move a prefab into an urban area where narrow streets and overhanging powerlines make delivery difficult.
Although a prefab home can typically be financed with a mortgage like a conventional home, initial financing can be tricky since the manufacturer may want a significant payment in advance. In many cases, modular home owners can only obtain a mortgage after construction is complete.
Fighting an Image Problem
If you decide to sell your prefab home, you may be fighting the preconception of some buyers that a modular home is similar to a mobile home and that both are inferior to stick-built homes. They may think the materials used were lower quality or that they won’t be able to customize the home. You and your selling agent may have to spend time explaining the prefab construction process to potential buyers.
The fact that there are so few prefab houses in most neighborhoods is another disadvantage. According to the U.S. Census Bureau, less than 2 percent of new homes in 2016 were prefab or modular dwellings. This proportion has changed very little in the past 25 years. Contractors with prefab experience can be difficult to find because there are so few projects of this type being done.
Prefab home projects require more upfront planning, which requires changes to the ways that many construction companies do business. There is some resistance in the industry to these changes since many builders have built their success using traditional planning. As new business models are introduced to deal with the planning, transportation and installation of prefab homes, many of the current disadvantages could disappear.
Catie Watson spent three decades in the corporate world before becoming a freelance writer. She has an English degree from UC Berkeley and specializes in topics related to personal finance, careers and business.