Austin

Modular Housing

Brooks Lawson

07 Jan 2025 • 4 min read

There exists a new type of housing that is changing the way homes are created. It's efficient, safe, cost-effective, and fast.

What is modular housing?

Modular homes are dwellings that are built ~80% off-site, in a factory, then shipped onsite and dropped into place.

How is it distinctly different from "manufactured" (AKA "mobile") homes?

Manufactured homes are not fixed to the foundation. For this reason they are also not built to typical "stick-built" or "site-built" construction standards (code). Manufactured homes are built to Housing and Urban Development (HUD) code where modular homes are built according to International Residential Construction (IRC) code, as well as any local municipal codes. This means manufactured homes are often (but not necessarily) lower quality, less durable, and don't last as long. Modular homes are fixed to the foundation and cannot be moved. They are appraised, valued, and financed identically to a stick-built home (due to the aforementioned construction standards).

What kind of homes can I build?

Anything your heart desires. Auxiliary Dwelling Units are popular choices but you can also buy small single family, large single family, multifamily (stackable), commercial, etc.

What are the advantages?

Cost-effective - It is far more cost-effective to have homes built in a warehouse off-site where materials and equipment can be kept permanently rather than shipping those equipment and materials on-site for assembly.
Weather resilience - These factories are usually indoors and don't need to worry about damage or delays caused by bad weather.
Time-efficient - You can buy a resale manufactured home + lot and utilities, then order an inventory modular home and have the existing home demolished and the new home delivered and installed onsite in weeks (assuming it isn't custom). Site-built homes will take several months at a minimum, probably years if it's built on your lot, and can be subject to long delays for various reasons. Of course, you can buy a site-built inventory home as well, but not on your particular lot.
Durability - Modular homes have to survive hundred or thousands of miles of transportation, so they're often even more durable than stick-built.

What are the challenges?

Financing - It can be challenging to find financing because the process is atypical. The builder expects to be paid before delivery and the lender doesn't want to pay them based on the promise of delivery (it's perceived as risky). Typically they have lenders lined up who are experienced in these sales, but that greatly limits your options.
Resale - Modular homes are often equated with manufactured homes, and it can be difficult to convince buyers otherwise.
No construction oversight - Typically you can have a third party inspect the home during it's construction. This is often not standard and not allowed in modular construction.