The Pros, Cons, and Costs of Modular Houses

29 March 2019

How much does it cost to build a new home? In 2017, the average U.K. house price was estimated at £226,071 ($300,075), while the average US house price was similar at $290,203 (£218,633). The cost of purchasing a house just keeps rising up and up. With the need to make a 20% down payment, buying a new home is a challenge for many people. For others, it’s out of the question.

Modular construction, however, is making it easier to buy new homes. Houses built using the modular construction approach, offer numerous advantages over traditional dwellings. These include:

  • Faster and easier method of  building
  • More durability than traditional homes
  • Modules constructed separately, forming better acoustics than traditional houses
  • Lower risk of structural damage
  • High level of portability
  • Generally less-inexpensive
  • More flexibility and versatility (customizable)

Modular Houses

Thanks to these benefits, modular construction has come a long way. Once considered cheap and low quality, modular homes are now cost-effective, viable options for many home buyers, contractors, and developers.

Below we review the pros, cons, and costs of modular houses, explaining how the marketplace is developing. Also, how they differ from manufactured houses, the cost of building modular houses, and some of the latest advancements in this form of construction.

Modular Construction on the Rise

Modular construction isn’t confined to single- or multi-family house building. Studies show that almost 40% of low-rise office buildings worldwide include elements of modular construction.  While the house building market has been slower to adapt to this approach, it’s picking up speed.

Studies show that the modular construction market is set to rise dramatically, forecasting an annual growth rate of about 7.0%, with the market’s projected value reaching $157.19 billion by 2020.

The primary causes of this rapidly growing market, include the added demand for new housing and increased investment in infrastructure. These drivers are the biggest and most influential.

Additional reasons include (1) the desire to eliminate inefficient conventional on-site construction techniques; (2) an advance in modern technology, e.g. building information modelling (BIM); and (3) collaborative supplier engagement models. 

Modular Houses

Modular Houses Versus Manufactured Houses

When salespeople talk about modular homes with house buyers, they sometimes refer to them as manufactured houses, which aren’t the same thing. In fact, they’re quite different.

Modular homes are built in sections in a climate-controlled factory using an assembly line process. They then transport them around the site in different sections, set them in place with a crane, and join them together, refinishing as necessary.

Manufactured houses are also constructed in sections, using an assembly line process. This factory is climate-controlled, but these sections are placed on a removable chassis that can be towed straight to the building site, where they can be connected together.

Permanence is the difference between these two styles. Modular homes are placed on a permanent foundation, whereas the steel chassis serves as the primary foundation for manufactured homes.

Although manufactured homes tend to be less expensive to build than modular ones or traditional forms of housing, manufacturers don’t place these homes on permanent foundations, they may sometimes be hard to refinance.

Cost of Building Modular Homes

Companies work on more than one modular home at a time, recognizing production efficiencies along the way, such as less downtime and faster completion rates. Houses can then be put up for sale at a lower price.

Modular houses can cost as much as 15% less than stick-built houses. They’re even cheaper if placed on remote plots or some distance from manufacturing centers. They also offer more financing options to choose from compared to traditional housing.

Unlike stick-built houses, modular houses offer the option of going through the company involved for financing, some of them providing impressive financing rates. This means home buyers not only obtain less expensive housing but also more favorable financing.  

What’s on the Horizon for Modular Houses

Modular houses are a satisfying option for many home buyers. They also work well for manufacturers, developers, and contractors. However, if they remain attached to traditional methods of building, they may ignore and lose out on the benefits of modular construction. This is unfortunate because new advancements are improving this form of construction dramatically.

New processes and innovative technologies are reshaping the industry and driving it forward. For example, 90% of apartment buildings can now be constructed off-site using these advancements.

This can save anything from four to eight months of construction time and generates significant cost savings from reduced labor during these shorter time frames. Below are some key advancements impacting modular construction:

  • New processes enable companies to install facades in sections and build complete roofing structures with parapets in-house. These new designs expand the options that house buyers can choose from while helping to cut building costs.
  • 3-D printing of components and the design options of cross-laminated timber help cut costs and save field time and money. Meanwhile, integrating building services into structural components reduces field labor costs.
  • 3-D printing technologies use fewer materials than traditional shaping techniques, enabling developers to offer cost-effective methods of adapting modular construction techniques to today’s environmental standards.

Modular Houses

  • Generating less waste, modular construction can reduce the level of CO2 emission associated with traditional construction. It also makes it possible to design and build structures requiring only minimal resources.
  • Integration of the BIM workflow in the modular construction process enhances the design process, allowing designers to automate some complex modeling and documentation activities requiring no design expertise.
  • With the ability to preserve resources, modular construction can be seen as an eco-friendly solution for home builders, enabling them to go green, minimizing site disturbance, while promoting the recycling process and producing less waste. This can by recognized by the capability to relocate, refurbish and re-purpose the structures built.

Some developers and contractors looking to test the waters in modular construction start out using smaller modular elements, which they then incorporate into traditionally built structures. This can be an effective approach, e.g. choosing apartment structures which are slightly less typical than usual.

Of course, modular houses have their downsides. These include less customization capabilities than stick-built homes. The cost of the land and construction of the home may be higher than some people can afford, land restrictions, and perceive quality issues. Modular homes may also have more a complicated loan process.

Modular construction isn’t new. But it’s come a long way since its inception. Once considered a cheap low-quality housing choice, modular construction is undergoing a significant re-booting—with help from advanced processes and forms of technology.

As a result, this house building approach is quickly becoming a viable option for more and more home buyers, manufacturers, contractors, and developers—one that not only cuts costs and saves time but provides eco-responsible home-buying solutions.

New call-to-action

Jenny Snook

Jenny Snook is content executive at GoContractor with the job of researching the latest health and safety trends in the heavy industry. Her past-experience includes the research of large museum collections such as the Louth County Museum, many from the industrial age.

Show me more!

Take a look at how GOCONTRACTOR can save you thousands of hours