Get Your House Delivered?

manufactured home

August 20, 2018

Trailer parks have long suffered a negative reputation but “manufactured homes” are becoming increasingly mainstream, and now represent 10% of new single-family home starts. The popularity of manufactured homes reflects the high cost of site-built houses. With home building becoming so expensive in some areas, many people are opting to have their houses delivered right from the factory.

Rising construction costs have been driven by an increase in the price of raw materials and commodities. For example, lumber prices are still close to all-time highs because of high demand, a severe Canadian wildfire, and the new 20% trade tariff on Canadian lumber (which accounts for 97% of US lumber imports).

Estimating the cost of a custom, site-built home is difficult because of the wide range of options. Generally, custom, site-built homes cost between $100 and $400 per square foot. Location and materials will play a major role in the price of your custom home, but the current average price in the United States is $295,000. Roughly 50% of costs come from materials, 48% come from labor, and 2% come from machines. By comparison, the average new manufactured home in the U.S. was $73,400 or slightly over $50 per square foot, according to U.S. Census Bureau data that was last updated in February.

Manufactured houses are built in factories, then assembled and are transported to the housing site via trucks and trailers. These homes cost at least 10-20% less than the cost of site-built homes and are cheaper for a multitude of reasons. The factory uses an assembly line to build these homes, so the process becomes more efficient. The home is built inside so there are no weather delays. Manufacturing is not disrupted by theft. The scale of production enables manufacturers to buy large quantities of materials at lower prices. Lastly, the property taxes on manufactured homes are also lower than on-site homes.

Homes built in factories are not only more affordable but have also become very customizable “without the old trailer-park stigma” says Jeremy Hill of Bloomberg. Options like vaulted ceilings, rainforest showers, built-in entertainment systems and electric fireplaces are very appealing, especially to young home buyers who require the latest bells and whistles. Buyers are also no longer limited to single or double wide homes. Many manufactured home builders offer two-story homes with five bedrooms. Technological advances, evolutionary designs, and a focus on quality are also driving forces behind the growth of manufactured housing.

Over the five years ending 2017 the number of manufactured home shipments has risen by 50%, according to information from the Manufactured Housing Institute. The companies benefiting from this growth include Skyline-Champion, Clayton Homes (owned by Berkshire), and Cavco Industries – the three largest players in manufactured housing who currently control over 70% of the U.S. market. It would not be surprising to see further significant growth, especially in expensive home building areas where families can save hundreds of thousands by getting their home built at a factory.

Dan Hall

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