In recent years, manufactured housing has become a key component of combating the affordable housing crisis in the United States. This sector, once viewed as an inferior housing option, has transformed and attracted the attention of both investors and innovators. Our article explores the reasons for this change, the challenges faced, and the technological advances driving the industry forward.
The Manufactured Housing Industry Is A Growing One
Are manufactured homes a good investment for investors? Today’s Answer: It’s still a mixed bag.
It Might Be Time To Get Excited About MH
Your soon-to-be home would be purchased like a hot tub or coffee: custom-made for you and ready to pick up or drop off. It may sound like we’re describing a manufactured home of the modern era, but it is not.
These homes are not your average house. These aren’t even houses you can move into right away. Prefabricated homes are the type of real estate buyers, and developers didn’t realize they needed.
- Consumers and first-time homebuyers have started turning to manufactured housing as affordable housing becomes more scarce.
- The result has been a boom in the development of manufactured homes. Manufactured Housing Institute CEO, Lesli Gooch had stated in 2022 that the Manufactured Housing Institute produced over 100,000 units by 2021. It was the first time since 2006 that this had happened. In terms of affordability, the average home costs $87,000. Compared to a national median average of over $300,000, MH looks like the new safe haven for anyone looking to buy a home in the next 5-10 years (or until rates fall below 4% again).
- This aligns with several other statistics about the overall cost of manufactured homes. MH Authority and other sources even highlighted the fact that the average price per square foot for a home built on-site is near or above $150 these days. The average cost of a manufactured house is roughly half that ($70-75 per square foot).
Prefabricated homes combine the best of both traditional home ownership and technology. Prefabricated homes are typically built using 3-D printing and other prefabrication methods before being assembled on the construction site. Modular homes, which are also prefabricated to a minimum of 70%, are a form of prefabricated house. The structure is prefabricated and made in sections. They are easy to transport, disassemble and reassemble. Modern fabrication technology is now able to keep up with modern design. This means that prefabrication homes are more affordable than “stick-built” homes and more attractive and sustainable.
The Real Estate Market Still Has Some Sizzle Left
Money is flowing, and interest rates are low. Mortgage rates are at their lowest in 50 years. Cheap money is available. Some billionaires’ wealth has increased by as much as 400% since the pandemic. Now, along with their investors and anyone else who could work during this time, they are purchasing hard assets such as real estate. The “haves” in American society are asset owners and those who pay for investments. It may be time to take advantage of these mortgage rates by strategically combining them with home loans and tax write-offs.
Modular housing is a great way to do that. It’s also a good investment, as it can be done at a discount. Here’s how my money was put to work on this niche but growing market, and I managed to save over $2 million.
Stick-Built Vs. Prefab Construction
You may have a few concerns when you first hear of modular homes. What is the resale price? Does the construction quality compare to that of traditional homes? What are the available loans? With a little bit of research, this is what you may find:
- Modular homes appreciate/depreciate similarly to stick-built, and loans and mortgages are also treated similarly. Mobile homes built on a weak foundation are not treated the same.
- Construction and building materials account for 39 of the total carbon emissions around the globe. Typically, 40% of these materials end up in landfills.
- Modular houses, on the contrary, are easier to deconstruct and recycle at the end of the life cycle. They are also more environmentally friendly to build. Tax credits may also be available as they are recognized as green forms of construction.
- Modular houses can withstand wind speeds up to roughly 180 mph.
- The construction of a traditional home can take between four and six months. The construction of modular homes can take between 6 and 10 weeks.
Purchase A Home For A Third Of The Price
In several cities we surveyed, where the average price for a property ranged from $2 million to $3 million, the average cost of an equivalent modular home was between $600,000 and $1 million. This is a 33% decrease in property value at the low end. Do you feel that your money is worth it?
Traditional properties had a space of 1,000-1,300 sq. ft. Modular homes, however, offer 2,000-3,000 sq. ft. on an acre or less. The modular design that we were interested in cost $900,000. It covered 3,000 square feet. This comes out to $63 per sq. ft. (this does not include foundation and hookups). The average cost of a traditional house is between $200 and $500 per square foot, depending on the upgrades.
Opportunities Are Everywhere
Google searches on modular homes yield little at the moment. The market is only beginning to grow as buyers and developers can take advantage of the size.
Consider a modular home if you are looking for a way to use a conventional mortgage. You must deposit to reserve the house, but you only have to pay for something once it is built. Developers can provide financing options. Real estate agents in your area will be able to identify modular housing options, which are increasingly prevalent.
You can also benefit from building your own modular house, as you will keep the generated profit margin. You will have to use a construction loan with a higher interest rate than a conventional loan.
The Future is Modular
In the future, modular homes will be more common. Ultimately, we may not ask, “Who built your home?” We may ask, “What factory made it?”
The future of community management: the bottom line
Manufactured homes have always been an affordable option for housing. Investors are finally taking notice of this affordable housing option. The industry faces challenges, such as a limited housing stock. There are also production barriers. However, the industry has shown itself to be resilient.
Manufactured housing, with its substantial investments and government initiatives that support it, has proved and will likely continue to be an essential player in solving housing shortages and a wise investment going forward.
