Modular homes’ value can fluctuate depending on what prospective buyers are willing to pay. A well-maintained modular home can increase in value over time, but several factors can drive your home’s value down, including some things in and outside of your control.
This article will discuss the difference between modular and stick-built homes as well as how homes appreciate and depreciate to help you answer the question, “Do modular homes hold their value?”
Modular Versus Stick Build Homes
Stick-built homes, also known as site-built homes, are constructed on-site using traditional home-building techniques. Stick-built homes typically take around nine months to build and weather delays can impede the process.
Alternatively, modular homes are constructed off-site in a controlled factory. They are made with the same materials as traditional homes and follow the same building codes. Modular builders produce a series of home segments called “modules,” which are assembled at the site. Because the modules are built in a controlled environment, the entire process can be completed up to 50% faster than traditional construction projects.
How Homes Appreciate and Depreciate
Appreciation refers to an increase in a home’s monetary value. Depreciation refers to a decrease. Modular homes appreciate and depreciate similarly to traditional homes.
The current rate of home appreciation is 14.5% year over year. However, this increase in value doesn’t happen on its own; homes are constantly depreciating without regular maintenance or renovation. The current state of the housing market and the general look and feel of your home are two of the main factors that will affect the value of your modular home.
How the Housing Market Affects Your Home's Value
The housing market constantly fluctuates between a buyer’s market and a seller’s market. In a buyer’s market, plenty of homes are for sale, but few people are interested in buying a new home. This causes prices to decrease and homes often remain on the market longer.
In a seller’s market, plenty of buyers are looking for a new home but few homes are for sale. This leads to competition among buyers, who will often spend more for a home than they would under different market conditions.
The current state of the market influences the value of your modular home. In a seller’s market, your home will often maintain its high value. However, if the market shifts to a buyer’s market, your home may lose value as prospective buyers become less willing to pay your asking price.
How Maintenance Affects Your Home's Value
Maintaining and making necessary repairs on your home can help its value grow over time. If you let your home slowly fall into disrepair, it will be difficult to keep its value from depreciating.
Renovations can also increase your home’s value. You can remodel your kitchen, install energy-efficient windows, or replace your HVAC system, which can make your home more comfortable. If you plan to sell, keeping your home updated can increase its appeal to buyers and raise the perceived value. Remember, the value of your home is only as much as buyers are willing to pay.
Benefits of a Modular Home
While modular homes and stick-built homes appreciate and depreciate similarly, modular construction has several advantages that may lead to higher long-term value.
Modular homes are constructed in a controlled environment, which eliminates the risk of high levels of moisture getting trapped in the materials. Modular homes are often longer-lasting than traditional homes. The longer your home’s expected life is, the higher its value and the better your return on investment. A well-maintained modular Accessory Dwelling Unit (ADU) can bring in as high as 15x return on your investment over a 30-year period between gross rental income and property value increases.
Shop Prefab ADUs at Modal
Modular ADUs increase your property value and can become a steady source of additional income. At Modal, we design affordable ADUs that are better for the planet too. When you purchase an ADU from Modal, we take care of the required permits, paperwork, site surveying, construction, delivery, and installation. We want to simplify the process as much as possible so that you can live without the extra stress.
ADU laws vary by state and county, so it’s essential to know whether they are permitted in your area. Click here to get started.