Exploring Modular Homes – Cheapest Path to Net Zero?
Owning a home is an important life milestone for a lot of people, but the ever increasing cost of construction materials and affordable housing is a major roadblock. And on top of that, traditional construction methods and materials cause a surprising amount of gas emissions and waste. But there are some really cool trends around more sustainable building practices that may change that … if you can get past some preconceived notions that pop into your head when you hear, “modular homes.” These aren’t your father’s modular homes … cheaper, cleaner, extremely energy efficient, and still customizable. Can modular homes keep the dream of home ownership alive, as well as make a positive impact on the environment?
Both the manufacturing of building materials and energy consumption of homes are major contributors of carbon emissions. The most commonly used structural materials like concrete, steel, and aluminum account for 22% of global CO2 equivalent emissions. In a typical building, 55% of embodied carbon is in the structure and substructure. But an even more fundamental issue: building a traditional home has become way too expensive. 1
According to an analysis performed by the National Association of Home Builders, spikes in softwood lumber prices during the COVID-19 pandemic raised the average cost of a new single-family home by $16,000. Also, the Producer Price Index registered a boost of 50.8% in iron and steel scrap, and all this makes peoples’ dream of owning a house even harder. On a personal note, I’ve been experiencing a lot of these price spikes because my wife and I have been looking into building a new home, which is partially why I went down this rabbit hole. I’ve got really bad timing for deciding to build a home right now. But, we may have a cheaper and greener alternative that can make a big difference: prefabricated modular or panelized homes. 2
Now a modular home may make you think of something like a mobile home, or something not as durable as a traditional stick built house. I know I did a little bit, but in my hunt to build an energy efficient home I found some interesting things. There are some significant differences between a modular home and what most of us call a “mobile home,” which is actually a manufactured home.
A modular home is a house that is completely built off-site, section-by-section, inside a building facility, and then transported to the final site and installed on a traditional foundation. These factories are massive, climate-controlled facilities that assemble homes according to the International Residential Code (IRC), which means it complies with all state and local building regulations. IRC is similar to the Department of Housing and Urban Development (HUD) in the U.S., and both roll out standards for quality and safety.
Similar to modular homes, manufactured homes are also built inside climate-controlled facilities. But when it comes to manufactured homes, HUD requires each home to have an attached steel chassis to help with its transportation. Usually, manufactured homes have a pier and beam foundation with skirting that can be used to customize the house. They’re considered a vehicle for tax and zoning purposes and can be relocated. In a nutshell, manufactured homes have to comply with Federal HUD building requirements and modular homes comply with local requirements like a traditionally built house.3 4
To complicate things a little bit more, there’s another variant of modular home to consider: panelized homes. In this case, just the structural components of the house (walls, roof and floor systems) are built inside a factory and delivered to the worksite where it’s finished just like a site-built home. But, the panelized building system is usually more costly than modular.5
When a modular home has been completely produced, a semi-truck transports the different sections to the building site. Then, with the help of cranes, the parts are assembled on a typical poured foundation, like Lego blocks. After it’s assembled, the building process is just like a conventional build: it’s connected to the utility grid, the interior fitted with appliances, cabinetry, flooring — everything finished out just like a typical build. 4
These indoor-built homes are usually a single story, but there are companies making larger two or three story models as well. They require less on-site assembly because you’re putting together and mating a few completed sections. But, a modular home will have equal or superior quality and a significantly lower price than a comparable site-built house.6 Because they’re built indoors, bad weather doesn’t delay or affect construction. And with most of the assembly done before it’s shipped to the site, the building time on location is significantly shorter.
One of the big reasons that Modular homes are more affordable compared to on-site construction is due to waste. In the United States, over 500 million tons of construction and demolition debris are produced annually. Prefabricated homes can help cut back on that waste. An on-site home may have a few dumpsters worth of waste and scrap by the end of construction. Compare that to some modular home companies that may have a couple of garbage cans worth of waste. Better for the environment and your wallet.
And while modular homes may not be as customizable as on-site-built homes, they do still have enough customization options to fit your style and needs.
But here’s where it gets really interesting if you’re like me and looking to build a net zero home, or something closer to the passive home side of things. That means a significant savings on your electric and heating bills. They can operate approximately 15% more efficiently than site-built homes, having solar panels, water storage, low-energy light bulbs, and other green features. Many modular home companies are focused in on energy efficiency and assembling homes with an incredibly air-tight envelope, high insulation value, ERVs for air circulation, and triple-paned windows. Some offer designs that can meet green building standards like Passive House, which I already hit on in a previous video. Depending on the company, some homes can be as much as 75% – 85% more efficient than a standard built home. 4 7 8
The three key factors that determine the cost of modular homes are: location, size, and design.
Enhancements such as custom flooring, countertops, utility hook-ups for electrical equipment and plumbing systems can be additional costs. And if you want a larger, luxury home … the price is obviously going to go up.
Like I mentioned, location is a major factor in cost no matter the type of house you want to build. For example, a modular home in New York, where the median home value is a staggering $669,500, will cost much more than a home in West Virginia, where the median home value is just $99,000. In addition, to keep costs under control, homeowners should buy modular homes from nearby factories because the further the factory is from your build site, the higher the transportation costs. 7 8 The companies I’ve been looking at for myself are all located in New England, where I live, to keep those costs down.
But how long does it take to build a modular home compared to a standard build? The process always starts with the design. In the case of predesigned modular homes, this period is much shorter since the design is already done, so the customer basically picks a design and the contractor deals with pricing and site prep. But, for custom modular homes and site-built homes, the design stage takes more time since some changes may be necessary or the client is asking for customizations. 9 Permits and zoning can take about three months for both modular and typical construction, and grading and site work takes about one month. But after that is where we start to see some time-optimization.
For modular construction, the foundation is finished within two weeks and, at the same time, the house is being constructed in the facility. On the other hand, the foundation work for a typical home takes about a month, and you can’t start building construction until that’s finished. The modular home parallel build path isn’t the only edge it gets. Being built indoors means no weather delays.9 10
While the whole process of building a typical home takes almost one year, modular construction can be finished in 8 months from permits to finishing. Of course that can change with the design, size, contractor company, and location of the house. Or if you’re trying to build during a pandemic. Construction timelines are much, much longer right now across the board.
Regarding cost, a modular home typically costs 10% to 20% less than a stick-built home. A conventional stick-built, non-luxury home costs about $150 to $250 per square foot while a modular home can cost from $50 to $250 for some luxury houses. But, additional features, design modifications, taxes and transportation that vary with the location can impact the price of a modular home. The cost breakdown is 50% for construction, 15% for finishing, and 35% for the shell materials.11 12
So where do you start to look if you want to get one? There’s no shortage of interesting companies in the market to take a look at here.
The California-based Shelter Dynamics produces three sizes of modular houses. It’s a little bit like Goldilocks here. The company has a 1-bedroom, 450 square foot house, ideal for an individual. Or a 750 square foot, two-bedroom house for a couple or small family. And a 1,000 square feet, 3-bedroom modular home. For people who don’t want the responsibility or cost of a big house, or people looking to downsize, these can be great solutions.
The modular homes produced by Shelter Dynamics are net-zero ready, featuring Energy Star appliances, on-demand tankless water heaters, LED lighting, a “Mini-Split” heat pump HVAC system with separately controllable zones, and a standard solar panel array with options for larger systems and battery backups. Their price is under $200 per square foot. 13
Still in the U.S., Phoenix Haus sells five types of prefabricated homes, selling options featuring from two to four bedrooms, triple-pane windows and doors and a 24-hour continuous fresh air system. Some of the models feature heat pumps, solar panels, slab insulations, and other energy efficiency features … even Passive House Certification. 14
In the U.K., nHouse also offers several models of modular homes featuring eco glazing, LED lighting, air-source heat pumps, high-insulation, sustainable timber, and more to provide low running costs. Some innovations are a home management system, house battery, solar panels, car charging, and even a robot vacuum cleaner. The nHouseB2 Self Build Home is a 1604 square foot, two bedroom modular house that starts at £124,000.15 16
In Canada, the Legendary Group … that’s the name of the company, not me calling them a legendary group … they produce panelized homes costing between $85 – $125 per square foot. The finished cost of a completed home could vary from $250 – $350 per square foot depending on the finishes. The company’s homes come with a hybrid wall system complete with factory-installed siding, trim, windows, and doors. And according to the company they’re assembled in 3 days or less after delivery.17
That’s just a few examples from around the world. Companies I’ve been looking at here in New England for myself are BrightBuilt Homes, which makes modular homes, and Unity Homes, which makes panelized modular homes. Both offer incredible, energy efficient houses. I’ve been really surprised by the prices and flexibility available to build out a net zero, energy efficient home.
In 2020, the global modular construction market size was $72.11 billion, and based on analysis made by Fortune Business Insights, the market is expected to grow from $75.89 billion in 2021 to $114.78 billion in 2028. 18
With a growing trend to achieve net-zero emissions in the coming decades, governments all over the world have been providing incentives with tax reductions, grants, and rolling out policies to drive energy efficiency and renewable energy. At the same time, modular home companies have been stepping up to help reduce energy consumption, reduce construction waste, and opening up more possibilities for people who can’t afford expensive site-built homes … and it doesn’t hurt that they’re move-in ready 30% to 50% quicker than traditional houses.
- Carbon Emissions in Construction Materials ↩︎
- Skyrocketing steel, lumber costs threaten to slow construction jobs ↩︎
- What’s the Difference? – Mobile vs. Manufactured vs. Modular Homes ↩︎
- What Is a Modular Home, And Should I Consider Buying One? ↩︎
- Prefab vs. Modular vs. Panelized ↩︎
- What Does “Modular Home” Mean? ↩︎
- Pros & Cons of Prefab Homes ↩︎
- Pros, Cons, and Costs of Modular or Prefab Homes ↩︎
- PREFAB PROCESS ↩︎
- Why Module? ↩︎
- Prefab Housing Disadvantages ↩︎
- Budget and Timeline ↩︎
- Shelter Dynamics ↩︎
- Phoenix Haus ↩︎
- nHouse ↩︎
- nHouseB2 Self Build Home ↩︎
- Legendary Group ↩︎
- Market Research Report – Modular Construction ↩︎