Do Prefabricated Homes Maintain Their Resale Value?

Thank you for the A2A, Eric. When it comes to housing, sometimes it can be easy to get confused by terms like “prefabricated,” “modular,” and “manufactured/mobile” homes. For clarity, we are discussing ‘prefabricated’ or ‘modular’ homes, which are different from ‘manufactured’ or ‘mobile’ homes.

A Quick Clarification: Prefabricated vs. Manufactured

Prefabricated, or modular, homes are constructed off-site in a factory and then delivered to the construction site. These homes are built to standard residential construction codes and, upon arriving at the site, they are assembled like pieces of a puzzle. This process offers several benefits, including quicker construction times, better use of materials, and often, cost savings.

Manufactured or mobile homes, on the other hand, are built on a permanent chassis and can be transported to a new location if necessary. They are subject to different regulations and usually land on a concrete slab or a permanent foundation when placed on a prepared site.

Do Prefabricated Homes Keep Their Value?

The answer is yes, prefabricated homes do retain their value when resold, much like any other house. However, it's important to understand that the resale value of a modular home may not increase at the same rate as a “stick-built” or “stick-finished” home. This is not due to any inherent flaw in the modular construction but rather because modular homes are typically sold and purchased at a lower cost to start with.

When a modular home is new, it is often less expensive than a stick-built home. This upfront cost difference will remain through the life of the home. For example, if you bought a modular home for $25,000 less than a stick-built home, that difference is likely to persist in the resale market. Should one of both homes be torn down for land value, the modular home would then also be worth the same value as the land, but this scenario is rare.

Reasons for Disappointment and Expectations

Some buyers of modular homes may be disappointed upon reselling because they expect the value of their homes to be the same as stick-built homes, often at the same price as their neighbors. However, the value discrepancy between modular homes and their stick-built counterparts does not diminish over time. Modular homes provide cost savings and other benefits, but these should be recognized and embraced rather than expected to match the value of more expensive, stick-built constructions.

It's crucial for buyers to understand the market dynamics and realistic expectations. Modular homes are a viable and cost-effective option, and they should be valued for their quality, cost savings, and environmental benefits, not just for their potential to match stick-built homes in value and price.

Conclusion

In conclusion, while modular homes do maintain their value, it's important to recognize that the value discrepancies between modular homes and stick-built homes are immutable due to the initial cost differences. These homes offer a compelling combination of cost savings, structural integrity, and style, making them a solid investment.