It’s no secret that the real estate market hereabouts has been through an upheaval-and-a-half in recent years. Once the bedrock of the northshore economy, homebuilding has become a struggling sector. The housing market, though, is more than just black or white.
Modular homes, built indoors and then trucked to a home site, became all the rage post-Katrina. Now, they’re barely a ripple in the local housing pond.
“Many people confuse manufactured housing, or trailers, with modular homes,” said Ben Kirk, director of government affairs for the St. Tammany and Washington Parish Homebuilders Association.
Modular homes don’t look like mobile homes, or trailer homes, or what are now called “manufactured homes” – at least not once they’re installed. They are built in factories so the materials are never exposed to the elements. Then they’re placed onto trucks in modules and assembled on the prepared home site.
When modular homes hit their peak after Katrina, it was largely due to the speed and ease with which they could be purchased and assembled, not to mention a lower price tag than a traditional “stick-built” home that is constructed on-site. The quality of construction, too, is different.
“The difference between the products is the building code,” said Calvin Klein, owner of Calvin Klein Homes near Covington. “The mobile or manufactured home is built to a federal building code. The modular home is built to a state code.”
Unlike manufactured homes, which can be moved with relative ease from place to place, a modular home is not placed in a temporary site. Once the modules are assembled, the structure becomes permanent, affixed to a pre-poured foundation, plumbing, etc., for the duration of its existence. Thus, the companies building modular homes build them to suit the buyer’s home state’s codes.
“You’ve got minimum standards for both, but some manufacturers build to a higher standard than what’s required,” Klein said. “They go above and beyond, improving the stability of a home.”
Still, the structures have gotten unpleasant reactions from citizens groups, homeowners associations, and some local governments.
“There has been some resistance to modular homes in some areas,” Kirk said. “They are built according to the code for the region. They’re typically built very well. They’re faster to build than traditional, stick-built homes. And they filled a need, particularly post-Katrina.” “When Hurricane Katrina hit, modular homes became very popular,” Klein said. “They were easy to get to, the materials were never exposed to outside elements. The benefit was we could get this product quickly.” It wasn’t all a primrose path, though.
“One of the problems after Katrina was that going through the permitting process in various parishes was difficult,” Klein said. “We also didn’t have a lot of people experienced in what was needed to install them.” That experience includes crane operators to hoist the modules off the trucks and onto the foundation, which also created a logistical problem. “It worked in some places and not in others because of access,” Kirk said. Since the products were relatively new, some jurisdictions completely lacked permitting procedures for them.
“If you sat through the Parish Council meetings, the majority of Council members were completely confused about the difference between modular homes and trailers,” Kirk said.
“St. Tammany Parish has been pretty cooperative with the product,” Klein said. “There are just not a lot of people applying for modular home permits anymore.”
Now, however, the market for modular homes has all but died, in part because the prices have virtually equalized – or come close – to the cost of stick-built homes, and in part because of regulation that makes installation difficult or impossible.
Klein and Kirk both said several local municipalities have completely banned modular homes, in large part because of the problem caused by large trucks and cranes and in part because of neighbor complaints. “People perceive it lowers their property values,” Kirk said. “Modular homes done right look fine. You can’t tell the difference. There are good ones and bad ones.”
Some, in fact, do resemble double-wide trailers (or “manufactured homes”). Others are indiscernible from traditionally constructed houses.
Regardless, the market for modular dwellings has all but dried up. Efforts to reach a dealer in the homes in Tangipahoa Parish were fruitless, and an employee of the Tangipahoa Homebuilders Association described the market as “dead” and said local dealers there were experiencing a “sad time.”
“We sold a modular home this week and it’s the first one we’ve done in six or eight months,” Klein said.
While a manufactured home, or mobile home, can be acquired for about $38 a square foot, Klein said modular homes are now about $80 a square foot – significantly below the square-foot price for a traditional, stick-built home. What cannot be overlooked, however, is that unlike a traditional home whose price includes the land on which it sits, a modular home’s cost is exclusive of the lot – which accounts for much of the price difference. All told, Klein said, you may be able to get a modular home for about $20 per square foot less than a traditional home, but there are a lot of variables including the cost of installation, foundation, etc.
“The thing to realize is that when a modular home is purchased there are a lot of other costs,” Kirk said. “You have to have a crane on-site to lift the home off the truck and put it in place.” When Klein installs a modular home, too, he removes the I-beam that supports the structure, replacing it with concrete pilings. “The cost of the concrete is significant,” he said. “If you leave the I-beam, it goes down significantly.”
Klein said his market has shifted from modular homebuyers back to manufactured homebuyers, in part because of the much lower cost and in part because the quality of the manufactured homes has improved.
With that flexibility, homebuyers just aren’t looking at modular homes anymore. Add to the formula the low interest rates currently available for homebuyers, and most in the market for a piece of the American dream are opting for traditional structures.
“It’s slow,” Klein said. “But it’s still better than prior to Hurricane Katrina. Our business is all about financing and affordable housing. When interest rates are high, our business flourishes.”
And as the quality and availability of manufactured homes continues to improve, Klein said he is steering customers away from the modular option.
“I can take a manufactured home and make it look like it’s a modular home,” he said. “If it’s not a zoning issue, that’s what I recommend for my clients.”