Kit Homes and Modulars definitely hold their value–in contrast with Manufactured (mobile) homes, which go down in value over time.
Not all Modulars and Kit Homes are created equal–however.
Let’s dive into the nuances to see how you can expect your home’s value to appreciate over time.
Appreciation
Prefab modular and kit homes appreciate at the same rate as a traditional stick-built (onsite) home.
The reason for this is simple: They are built to last and sit on a permanent foundation.
This is in contrast to manufactured homes–which are built for affordability and mobility–and have been shown to go down in value over time like RVs..
In the end, the value of the land and the condition of the house is often the main driver of price growth–regardless of the method of construction for the home.
While the value of home kits and modulars tend to go up over time–there are some other less-obvious factors that make it more or less likely for the price growth to keep up with the broader market on your property.
Build Quality
Build quality and the reputation of your modular or kit home will matter–and any shoddy workmanship will come out during an inspection when you go to sell.
Modulars are required to abide by pretty strict quality controls set by HUD, but Home Kits can be all over the map in terms of build quality (like with anything else).
You’ll want to make sure the home is built with quality in mind if you want to experience appreciation with onsite built houses.
Land Value
There’s nothing more powerful for price growth than owning a structure on a piece of land that has a high demand.
Think about it–even a shack that’s on the beach is going to be worth a pretty penny due to it’s location.
At the end of the day–a house is just some lumber, concrete, steel and other raw materials all put together.
What matters to eventual price growth is the land–so location is much more important than your method of construction.
Interior Finishes and Layout
Kit homes typically don’t come with an interior–which means it’s on you to come up with fixtures, appliances, and flooring for the interior as well as the layout.
Your decisions on these items will definitely impact the value of the house more than the construction method.
For example, a house with recessed lighting, granite counters, and new vinyl plank flooring will be worth more than a house with carpet, poor lighting and formica countertops.
Condition of the Home
At some point, every home is going to need repairs and maintenance. Let enough things slide, and you’ll find yourself with a house that is worth a lot less than it otherwise would be in good condition.
While some modulars are built with sustainability and low maintenance in mind–there are still some things every homeowner will need to replace eventually.
If you have an old roof, hot water heater, HVAC unit etc–a buyer will be looking for a discount knowing they will have some major maintenance items to pay for in the near future.
Many insurance companies also won’t touch a house if the roof is older than 20 years–which means a prospective buyer might actually have a hard time getting a mortgage to buy your house.
You’ll often lose more than the cost of the repair–as you’ve now lost the huge majority of the pool of homebuyers (most will be using a mortgage).
Conclusion
There’s no reason to worry about the value of your kit home or modular not growing alongside their stick-built counterparts, as long as you get a few key things right.
Make sure the build quality is as good or better than what you’d do with an onsite built house.
Only build on land that is in a good location and is likely to have strong buyer demand.
Keep your house maintained and avoid selling when you’ve got maintenance or repair issues that would put you in the target of investors looking for a deal.
Also keep in mind–price growth isn’t ever a guarantee in real estate–and markets go up and down.
Assume you’ll get around the pace of inflation in your real estate price growth over many years–and anything else you get will be icing on the cake!