Are Modular Homes a Wise Financial Investment Compared to Site-Built Homes?

House Roof Attic WindowsThe U.S. is the second largest construction market in the world, with a market share of 10%, and new types of construction and sustainable initiatives are quickly growing in popularity. One example is Permanent Modular Construction, “PMC”: homes built using PMC are 60% to 90% completed in a factory-controlled environment and transported and assembled at the final building site. While this building process is efficient in more ways than one, it takes some serious effort to make sure the value of your home will continue to grow.

Take it from Gary and Debbie Halvin. After purchasing an empty lot in Ralston, Nebraska over 20 years ago at a tax auction for $7,100, they installed a modular home for $68,000.

“There was some opposition,” Gary recently told the Omaha World-Herald. “They didn’t want any manufactured homes in Ralston.”

City officials eventually gave the couple the go-ahead. Upon completion, their home was fully equipped with a two car garage, a full basement, and landscaping. But this spring, they made a surprising discovery — one that, according to Steve Jordan of the Herald, “negates the myth that all manufactured homes decline in value.”

They discovered that the value of their home had now increased to more than double its original $68,000 price — from $126,300 to $163,700.

In 2016, there were 560,000 homes sold in the United States, and the home’s increase in value has led some professionals to believe that these homes shouldn’t be treated as personal property, like campers and automobiles. Of course, this value only rises if the home is large enough and truly built with quality.

“If a manufactured home meets certain aesthetic characteristics (a high-pitched roof, a garage, a porch, some masonry on the front, for example) … we think that it should be financed, zoned and appraised like any other traditional home,” Kevin Clayton told the Herald. Clayton is the CEO of Clayton Homes, which is based in Maryville, Tennessee and operates as a division of Berkshire Hathaway.

Patti Boerger, vice president of the Manufactured Housing Institute in Arlington, Virginia, cited to the Herald that about 80% of manufactured homes around the nation are categorized as personal property as opposed to real estate.

Depending on your location, a manufactured home may or may not be a viable option. In some rural areas, finding permanent financing for a traditionally constructed home can be a challenge as well. The bottom line, experts say, is the way your home is built. Smaller and more basic homes are more likely to depreciate, but if it’s a larger and better maintained manufactured home, the price is likely to increase with time.

“Ten or 15 years from now, there really isn’t anything different other than somebody that owned it having that historical knowledge that the (building) process was different,” Mike Morrow, Chief Industries’ BonnaVilla Homes sales manager, told the Herald. “But the end product, what’s built and financed, isn’t any different. To the real estate market, it’s just a house on a lot like it normally would be.”

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