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Myth Busted: Modular Homes Appreciate in Value

January 6, 2024

One of the most frequently asked questions about factory-built or modular homes is how their value will change over time. Will they appreciate or depreciate? This concern is not misplaced because, inasmuch as the home is a place to live, have a family, and thrive, it is also an investment, and like all investments, we want them to appreciate in case we want to sell in the future. Knowing what will happen to your property's value over time can also help you stay on top of valuations for home insurance purposes.

Unfortunately, there is a common misconception that modular homes depreciate over time. This belief, however, cannot be further from the truth. Modular homes appreciate at a similar rate, if not higher, than traditional stick-built homes in the same neighborhood

Modular Homes Vs. Manufactured & Mobile Homes

The association between modular and manufactured homes is one reason people wrongly think that modular homes lose their value over time. Therefore, it is essential to make the distinction between the two, for they are indeed very different.

Manufactured homes—sometimes also known as mobile homes—like their name, are built to be mobile. They are assembled in factories and then transported(towed) to the site for use. Unlike stick-built and modular homes that are meant to remain in one location, mobile homes are relocatable. They, therefore, tend to depreciate over time like automobiles and fetch a low resale price.

On the other hand, permanently-built modular homes are manufactured in a factory but assembled on-site like traditional stick-built homes. With the advanced technology today, modular homes can be built in any style, and once assembled, they look like any other home. Just like on-site built homes, modular homes must also meet the local or state building codes. You can read more about the differences between modular and manufactured homes in our previous post.

Why Modular Homes Appreciate in Value
Cost Less Money Upfront

The construction building of modular homes is done in the factory simultaneously with the site development reducing the time and labor costs. Therefore, it costs less to build a modular home than the same stick-built house. This cost advantage means your modular home will instantly appreciate from its actual cost to the market price.

Superior Quality

In most cases, the quality of modular homes is better than that of stick-built homes. They are built to meet the International Residential Code (IRC), which exceeds many state building codes. It is more efficient for manufacturers, who deliver modular homes to different states, to build to the most robust building codes of the combined regional building requirements.

Availability of Financing Options

One reason mobile houses have low resale prices is that many banks are reluctant to offer loans for their purchases. However, it is different for modular homes as they are treated the same by financial institutions as stick-built homes. They qualify for standard mortgages and home financing. Therefore, if you want to sell your modular home in the future, you are as likely to find potential buyers as anyone selling an on-site built house.

Final Verdict

Many factors determine whether a home, modular or stick-built, appreciates, or depreciates. For instance, the location or neighborhood in which the house is located is very significant to its future value. If the housing market goes up in that location, then the value of both stick-built and modular homes will increase at the same rate.

Another important factor is maintenance or the condition of the house during the resale. Unless there is a very high demand for housing in the location, poorly maintained homes, whether modular or stick-built, will depreciate in value.

However, it is safe to say that all factors held constant, modular homes appreciate in value as their stick-built counterparts and can prove to be a worthwhile investment for you.

Find a modular home builder near you today.

For more information on modular homes, feel free to contact Modular Home Builders Association today, and we will happily assist!