Manufactured, modular, and stick-built homes: what’s the difference?

Manufactured, modular, and stick-built homes: what’s the difference?

What’s the difference, and which type of home is right for you?  These terms can be confusing, especially for first-time homebuyers.  Let’s take a look at what they really mean.  Then we’ll review the pros and cons of each construction method.

Manufactured homes were once known as mobile homes, and sometimes you’ll still hear them called that.  (Technically, more stringent code requirements enacted in 1976 mean that homes manufactured after that date are designated as “manufactured” rather than “mobile.”)  Some of these homes are now built to fairly high standards.  And despite being mobile, their only trip is usually from the factory to their first and final destination.

Still, they’re built on a steel frame with wheels.  They come in “double-wide” and even “triple-wide” variations, and once assembled they’re usually not going anywhere.  Typically, installers remove the wheels and build a skirt around the outside of the home so it looks just like any other house.  These homes are always just one story, and they usually have a crawlspace rather than a basement.  Even if they’re parked on a concrete slab, their structural “foundation” is the metal frame on which they’re built.

Modular homes are different.  Like manufactured homes, they’re built in a factory and assembled on-site.  The difference is that they arrive in more than just two or three pieces—usually several block-shape modules, plus trusses and panels for the roof.  They’re often two stories, and they can be built on a slab foundation, over a crawlspace, or over a basement.

“Stick-built” is the term used for most other home construction.  It’s called that because of all those “sticks” of lumber, mostly 2x4s and 2x6s, that are delivered to the site and used to build the house.  Sometimes you’ll also hear the term “site-built,” which would include other construction methods like timber-frame and log homes.  (Strictly speaking, however, many “log homes” are actually stick-built homes with siding that looks like logs.  True log homes use logs for the wall’s actual structure.)

Stick-built homes are the gold standard to which modular and manufactured homes are compared.  You can never go wrong building or buying a stick-built home.  Later, when it’s time to sell your home, no buyers will cross it off their list because they were hoping for a modular or manufactured home.  These homes are more likely to appreciate, and they’re a safer long-term investment.

Modular homes have most of these advantages, plus a few others.  They usually cost slightly less to build, and they tend to be more energy-efficient.  The modules are built indoors, where they’re not exposed to weather.  Once modules arrive at the building site, the house goes up faster than a stick-built house.  As with any other new construction, you’ll have more choices when it comes to things like flooring, cabinets, paint colors, and even exterior siding and roofing materials.  With a manufactured home, you may not have all these options.

Once construction is finished, most modular homes look just like a stick-built house.  For that reason, they rarely face the sort of zoning restrictions that prohibit manufactured homes.  If you’re buying a modular home that’s already built, you can expect great energy efficiency and solid construction.  One FEMA study found that modular homes withstood hurricanes better than the stick-built houses nearby.  Financing is the same as it would be for any other home.  In terms of resale value, the only disadvantage of modular homes is that buyers could potentially confuse them with manufactured homes.

Manufactured homes have a lower purchase price, but are riskier as a long-term investment.  For that reason, they’re sometimes harder to finance.  On the other hand, if you’re purchasing a new one you may be able to spend less, move in sooner, and afford more land or a better location with the money you’ve saved.  (In some locations, however, local zoning restrictions may prohibit manufactured homes.)

Thinking of buying an existing manufactured home?  Consider carefully the trade-offs you’ll be making in terms of lower purchase price vs. long-term value and salability.  Fair or not, many buyers are uninterested in manufactured homes.  Even when these homes are built to reasonably high quality standards, they may not appreciate at the same rate as nearby stick-built homes in the exact same neighborhood.  In some cases, they may actually depreciate over time.

This means some banks are reluctant to offer financing for manufactured homes.  That’s been especially true the past few years.  Unfortunately, the buyers who could most benefit from the lower purchase price of a manufactured home are likely to face even more challenges.  Even if you’re already pre-approved, be sure to talk with your banker before making an offer on a manufactured home.

For some buyers, however, manufactured homes can still be a good option.  Maybe you’re one of them.  With the money you save, you’ll be able to afford more land, a better location, or a bigger downpayment.  And there’s a lot to be said for smaller mortgage payments every month.  Just make sure you understand the trade-offs.

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