Manufactured Home Subdivisions or Modular Homes: Are They For Me?

A manufactured home subdivision is a residential community of individually owned subdivision lots where the dwellings consist of manufactured homes recognized by the US Department of Housing and Urban Development under the same standards as a traditional site-built home. In the past, manufactured homes were generally found in rental parks or lots purchased by the buyer separately from the home. In a manufactured home subdivision, the home and property are purchased together in the same transaction, just like a traditional stick-built home. A modular home subdivision is a community of homes built in a remote facility separated into sections and transported to the subdivision site to be assembled. The subdivider installs or anchors the house to the ground in the case of a manufactured home or assembles the sections and “builds” the house on the property in the case of a modular home.

Today’s buyers view both manufactured and modular homes as an affordable yet stylish alternative to conventional beam-built homes. Developers are considering them more in their subdivision planning and financial institutions are making it easier to provide financing for them. Changes to the way land and home are purchased in a package and the way most lenders treat financing the same as conventional real estate financing gives buyers more options when purchasing a home.

In addition to the sleek new looks and amenities offered in today’s manufactured and modular homes, another attraction is that many of the subdivisions offer special amenities like those offered in site-built residential communities with homeowners associations. . There are often common areas that include recreational facilities, swimming pools, a clubhouse, or even golf courses. Because they are a fully planned subdivision, they are riddled with curbs, gutters, and paved driveways.

There are differences between manufactured homes, mobile homes, and modular homes.

• A manufactured home is completely built in the factory. This type of home is traditionally less expensive than a site-built or modular home and includes transportation to the site and installation (in-ground installation). Manufactured homes used to be called mobile homes or trailers, but today’s manufactured homes don’t look like the old mobiles of the past. They are still built on a non-removable steel chassis and are transported to the site on their own wheels. A double-wide or multi-section house comes together once it arrives at the property on which it will be installed. A manufactured home may or may not be placed on a permanent foundation, but inspectors must approve any site work just as they would a stick-built home. Most traditional subdivisions do not allow manufactured housing.
• A mobile home is a term used for manufactured homes built before June 15, 1976, when the HUD code went into effect (sometimes called “Pre-HUD Mobile”).
• A modular home is divided into multiple modules or sections that are manufactured at a remote facility, meeting state or local codes where the home will be located, and then delivered to the site of intended use for assembly. The sections are transported to the construction site on trucks where local contractors take over and join the sections together, “building” the house. Local inspectors must approve all work and make sure it is up to code. Modular homes are generally less expensive than site-built stick homes, but not always. Once built, they tend to last just as long and appreciate in value in the same way as a standard site-built home. The term modular home is sometimes confused with a manufactured home and may be restricted from regular residential subdivision zoning.

Manufactured and modular housing subdivision developments are gaining popularity in areas traditionally used for retirement living or second home purchases. Developers are finding that these homes can be a more efficient and affordable alternative to traditional site construction. Subdivision development projects can be completed faster for less money, giving subdividers and developers a greater return on their investment in a shorter period of time than a traditional built subdivision.

Financing for a manufactured home buyer is typically a conventional home mortgage. The house is financed and purchased as real property with the house and land financed together. Title to the house is given to the local Department of Motor Vehicles and an affidavit is recorded, so it is “fixed” to the land. The home becomes real property rather than personal property and will be taxed accordingly. Lending institutions recognize that the modular home construction loan take out process is much shorter due to the shorter construction cycle and reduced inspections, making construction loans typically less expensive.

As with any other real estate purchase, buyers should always do their due diligence before making the decision to purchase in a manufactured or modular home subdivision so that they fully understand the costs and fees involved, what amenities may or may not be available, and exactly what restrictions on land may be in place.