Modular Homes Could Help Solve the Housing Crisis—but They Need To Fix Their Image Problem First

The phrase "modular homes" may conjure up a boxy, barebones structure—or worse yet, a classic trailer park community filled with cookie-cutter mobile homes of dubious quality.

But Scott Malouff, a longtime agent with Keller Williams in San Antonio and the head of KW's new Modular initiative, wants to change that perception.

Malouff has been in real estate for over a decade and after a recent month-long trip to Asia, his eyes opened to the benefits of modular housing.

Currently, only around 4% of U.S. housing is modular construction, compared with 15% in Japan.

But Malouff believes the benefits of modular housing—the speed and quality modular assembly can bring—will become increasingly attractive to homebuyers amid a housing shortage and affordability crisis.

"You can build a house in seven days, compared to taking seven months," he says. Plus, he adds, "costs are way more predictable because it's more streamlined."

Scott Malouff, a longtime San Antonio, TX-area agent with Keller Williams and the new head of KW's new Modular initiative, is working to change the perception of modular homes (Scott Malouff)

For example, new-home construction is often weather dependent. Unpredictable storms might add weeks or months to a new build.

With modular homes, "everything's done in the factory where there's quality control and climate control, and you don't have that delay," he says.

Buyers still face an "education gap" when it comes to modular housing, says Malouff, specifically when it comes to the difference between modular homes and manufactured homes, which were until recently called mobile homes.

Modular homes are built with the same building materials as traditional stick-built homes. They're attached to a permanent foundation, while manufactured homes aren't, and around 40% of manufactured homeowners don't own the land their houses sit on.

Because they're legally classified and built to the same codes as stick-built homes, modular homes can be financed with traditional mortgages. They also appreciate in value in the same way that a traditional stick-built home would.

Modular homes typically cost between 10% and 20% less per square foot than traditional homes, though that doesn't factor in the cost of the land and the foundation you'll eventually need to put the home on.

Malouff speaks with a manufacturing expert inside a modular home facility. Modular homes typically cost between 10% and 20% less per square foot than traditional "stick-built homes" (Scott Malouff)

Malouff encourages buyers to think of modular homebuilding as a technique, not as a limiting factor that dictates the size or quality of a property.

"You can build a 8,000-square-foot luxury home with as a modular home," he says,

Even a hotel can be built this way. The 20-story Citizen M Bowery Hotel in downtown Manhattan was completed in 2018, and features 210 modular units that were built in Poland before being shipped to New York. The project reportedly took half the time that an on-site build of that size would have typically taken.

In many cases, he adds, modular homes exceed stick-built homes in quality, because they have to withstand being transported from the factory at speeds of 60 or 70 miles an hour, and because they're assembled using cranes, "they have to be able to be strong enough to be able to be lifted up on a crane as well," says Malouff.

With a market shortage of around 4.7 million homes in the U.S., Malouff believes that modular housing is only going to grow in popularity.

While KW isn't aiming to get into the modular construction game itself, the new initiative aims to educate consumers on the benefits of modular construction and connect them with modular builders in their area.

"We're thinking about the well and not the sink. A lot of people just focus on the sink, and they don't focus on the well," he says.

In the future, Malouff hopes that the U.S. modular market will expand further into steel and concrete, which are now some of the most popular modular building materials in Asia. He also envisions modular factories utilizing automation more so that it's "more like the car industry."

"The price per square foot that they're building out there compared to where we are today is significantly lower," he says of the Asian market. "It's just more streamlined. It's more predictable, and it's really where we feel that future of homebuilding is."