Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine. She can be reached at email@example.com.
Shunning Prefab Preconceptions
Builders eye a fabulous future for factory-produced homes.
November 2, 2016
Prefab’s reputation isn’t exactly fabulous. Studies show consumers associate words like “prefab” and “modular” with mobile homes and double-wide trailers, and they feel factory-built homes don’t offer the quality or diverse options of conventionally built homes. But prefab manufacturers have a new message to share: These aren’t the boxy, plain vanilla, kit-made homes that in the past you could order from a catalog. Today’s factory-built homes, they argue, can be just as stylish and sturdy as homes that are constructed onsite (which are also known as “stick-built”).
They’re not necessarily cookie-cutter either. Computer-aided design allows for greater customization and personalization, offering shoppers the ability to design their new homes themselves. Those interested in smart-home technology and sustainability will be able to seek out those features, too.
Still, prefab’s public relations problem may be stifling demand. In a 2007 study, the Department of Housing and Urban Development found that limited awareness about advances in factory-built housing—particularly regarding its visual appeal—was dampening the style’s growth. But that could be changing, according to Fred Hallahan, a housing consultant with Hallahan Associates in Baltimore who specializes in prefab research. “The general public—and that includes real estate professionals and builders—have a big part in helping to change the perception of what modular and manufactured housing means today,” says Hallahan. “Prefab housing has the same degree of aesthetics and function at the same price—or maybe even lower price” than traditional homes.
“This is not your grandma’s double-wide ranch. We try to break new ground in what’s achievable in modular construction,” says Brian Abramson, cofounder of modular-home builder Method Homes based in Seattle, citing features such as vaulted ceilings and curbless showers. Abramson’s company offers styles from modern to traditional and is able to combine factory-built modular units with onsite construction elements to meet customers’ design requests.
Architect-led customization is helping these homes shed the homogeneous label. “We’ve never built the same exact floor plan,” says Steve Tuma, president of Landmark Home & Land Co. in Michigan City, Ind., which sells panelized home kits for anywhere from $50,000 to $10 million. “Every customer is different and has different needs. The belief that prefab is a production line that doesn’t want to change is untrue. We take advantage of having a production line, but we give customers what they want.” Home shoppers work with a design team to customize more than 2,000 of Landmark’s standard plans. Like other panelized and modular companies, Landmark also ensures each home adheres to local and state building codes.
What Defines a Prefab?
This term (abbreviated from “prefabricated”) often refers to a home partially or fully produced in a factory, later delivered for assembly onsite. Factories may create everything from roofs to entire rooms.
Prefab types encompass several categories:
- Panelized: Prefabricated sections like walls, floors, and roofs are created in a factory and delivered to the job site.
- Modular: Some 70 percent or more of the home may be completed in the factory, with full rooms or modules built and then delivered to the site, where they’re connected to create the home.
- Manufactured: Formerly called mobile homes, these are built on nonremovable steel frames and transported to the site. They must meet special federal building codes from the Department of Housing and Urban Development and are subject to different financing requirements than modular, panelized, and traditional housing.
The home-shopping process for consumers is also being upgraded with today’s technology. Blu Homes, a prefab company in northern California, offers a mobile app that allows shoppers to design their home from their mobile device, selecting models and design options and swapping out bedrooms, flooring, and appliances. Buyers also see pricing in real time for the different configurations they create.
The turnaround time is also much faster with prefab, which some housing experts believe could help respond to current inventory shortages in many markets. When construction is partially handled at a factory, delays can be minimized or even avoided, which can lead to greater control over the building and price-estimating process. Method Homes says it can deliver a custom modular home up to 75 percent faster than a traditionally built home. That means its customers often move into a home in about three to four months, compared with about a nine-month build time for a traditional new construction. In fact, the actual production process is sometimes the quickest part. Once Landmark has the design finalized and permits received, the panels for the home are built in the factory—including the flooring, walls, and roof system—and can be delivered for onsite assembly in about four weeks.
Technology is also enhancing possibilities for prefab homes abiding by the highly energy-efficient “passive house” design concept. Some manufacturers are setting out to significantly reduce a home’s ecological footprint, and they believe factory-built is the key to do that more broadly. For example, Ecocor, a Maine-based panelized home manufacturer, teamed with RPA, an architecture firm focusing on sustainable design, to make passive homes more widely available at lower prices. They offer 11 different models that meet Passive House Institute energy standards, priced between $190 and $275 per square foot.
Energy efficiency is also central to the vision of other prefab visionaries who create homes that truly turn heads in a neighborhood. These include everything from dome home kits to “upcycled” shipping containers. Geodesic dome homes, first conceived as a modular dwelling option in the mid-20th century, are seeing a resurgence as an eco-friendly, inexpensive, and hurricane-resilient choice. Container homes use prefab materials in a different way, recycling industrial steel to create an energy-efficient home that costs half as much as traditional new construction. Build a Box Homes has plans to create an entire neighborhood in Houston’s Fifth Ward out of shipping containers. The first prototype—a 1,228-square-foot, two-bedroom, two bathroom home made by combining two 40-foot shipping containers onsite— was recently listed at $189,995.
Trent Draper, a sales associate with NB Elite Realty in Houston and the container home’s listing agent, wasn’t sure how locals would embrace it at first and pondered whether the appraisal process could cause problems at closing since there are no comps in the area for a container home. But now that the model is complete, he says he’s gotten strong positive responses, including cash buyers who’d like to turn it into an office and others who want to build a container residence elsewhere. “Buyers think it’s trendy. It looks like a bungalow” with an open kitchen and modern appliances and finishes, he says. The distinctiveness of a shipping container residence or office is a selling point, he says. He highlights it in the marketing: “Come and see the newest trend in shipping container housing today!”
Prefab also often is used to describe more specialized type of homes, such as dome homes, modular log cabins, tiny-home kits, or shipping container homes.
How Prevalent Are They?
Prefab still makes up a relatively small supply of housing. Around 14,000 to 15,000 homes a year are built using modular methods, making up about 1.5 percent of housing starts, according to Hallahan’s data. Modular housing is most common in the northeast, where construction costs are highest. There, modular housing made up about 4 to 6 percent of all homes built in the region in 2015. Hallahan estimates that 100,000 panelized and 80,000 manufactured homes are built each year.
Are They on the MLS?
Panelized and modular homes must meet the same local or regional building codes as stick-built homes and are assembled onsite for inspections. They do not typically require any special distinction on the MLS. However, manufactured homes might. In particular, if the home is considered a vehicle (it has wheels or equipment used for mobility), it can be transferred only as personal property. Such homes must be converted to real property (where the underlying land is owned or leased by the home owner) to be listed for sale or for lease on the MLS. Check your MLS for further guidelines.