When Julia Coit started looking to buy her first home outside Portland, Maine, this spring, she was “bright-eyed and bushy-tailed,’’ she said — “fresh preapproval in hand, super excited.’’
That early optimism soon faded, though. “Then you get the quick dose of reality that, first of all, there’s really not that much on the market,’’ Coit said. “Then, secondly, you start to hear through the grapevine that people are making these crazy offers in cash. And the whole notion of you actually owning something starts to slip through the cracks.’’
So Coit, cofounder of the consulting firm capital H., started researching alternative pathways to homeownership. She grew intrigued by modular home construction, in which a home is built in sections (or modules) inside a factory and then delivered to a building site, placed atop a waiting foundation, finished off, and hooked up to local utilities.
Seeing the range of energy-efficient homes Portland-based BrightBuilt Home offered — including some models, like the 560- to 742-square-foot Sidekick, that start around $200,000 — Coit thought she had found an affordable backdoor into the housing market.
“I was so excited about it,’’ Coit said. “This is going to be it — I don’t have to deal with one of those 1970s beige vinyl houses in the middle of town that I hate,’’ she told friends. “This is functional, it’s beautiful, it’s eco-friendly … every little space is so well used. It’s not, like, tiny-house small, but it is that efficiently built.’’
Coit wasn’t alone in her enthusiasm. Jason Webster, co-owner of Huntington Homes, a modular home builder in Vermont, said customer inquiries went up three- or fourfold beginning last fall.
“The existing home market got so crazy that people who might not have considered building new thought about building instead of [contending with] the existing housing market, where there were bidding wars, no inspections, all-cash offers,’’ Webster said. “They rightfully saw building a new house as a more controlled way for them to be able to move somewhere else.’’
Control is also the main advantage that modular construction affords over traditional on-site building, Webster said. Whether a new home is built on-site or in a factory, the process is similar from a home buyer’s perspective: They still need to buy or own a buildable plot of land and secure any required permits, and buyers generally need to hire a local contractor to grade the site, pour the foundation, and connect the home to water and power. However, the construction component proceeds faster and more predictably when it takes place inside a climate-controlled facility. “We don’t have weather delays,’’ Webster said.
“From a materials standpoint, we’re all using two-by-sixes, we’re all buying the same windows,’’ Webster added, and modular homes are built to the same local building codes that an on-site builder must adhere to. “The real benefit of building in a factory is that there’s more control over the product, process, and the pricing.’’
In fact, it takes Huntington Homes just 12 eight-hour days to build a full, nearly finished home in its East Montpelier factory, Webster said. “We can do mechanical rough-ins. We can install kitchen cabinets. We can install the windows, install interior doors and trim, [and] bath fixtures.’’
While modular construction doesn’t necessarily save money (though it certainly can), it almost always saves time over traditional construction. Even with a backlog due to increased demand, Webster said it now takes about nine to 12 months from an initial conversation with a client until they’re setting down finished modules on a foundation. Ordinarily, it takes three to five months. “Buttoning up’’ the home on site, meanwhile — connecting to utilities and other finishing touches — takes about one to three months after the modules are put in place, he added.
That amounts to a six-month headstart, said Kate Stiassni, co-owner of Imagine Design and Construction in New York, who tapped Huntington Homes for a recent modern farmhouse build in Litchfield County, Conn. The design and site preparation stages weren’t much different from any other new construction project, she said. “The difference here is, when they left, I had a house in one day that had windows, that had inside and outside trim, that had been plumbed and wired,’’ Stiassni said. “I wanted to do this experiment, getting as much as I could put into the house before I started on it with my own local subcontractors.’’
That allowed Stiassni to jump right into what she loves most — putting her stamp on the look and feel of the luxurious five-bedroom property through lighting fixtures, custom millwork, and other finishes — without having to oversee a monthslong build-out. “I really feel like I saved myself six months of standing on site, probably shivering in the winter or sweating in the summer,’’ she said.
Stiassni chose Huntington Homes partly because energy efficiency seemed “baked into the company’s DNA,’’ but she had been interested in the idea of modular construction for some time and now says she would do it again. “I wanted to show that I could produce a high-end Litchfield County home building this way,’’ she said. “I’ve had to tell people that the house was ‘Made in Vermont’ in that it presents like a stick-built house.’’
Lenders and real estate appraisers don’t see the difference either, generally treating modular homes the same as their site-built brethren. Unlike manufactured homes (or mobile homes), which are built to a national standard and delivered on a steel chassis that remains with the house, modular and prefabricated homes are constructed meeting all local building codes and are permanently secured to a concrete foundation. “There is no difference in how a bank treats a modular home, or how an appraiser treats a modular home, because they are still built to the same standard as a site-built home,’’ Webster said. “They were just built by a different process.’’
Realtor Sara Holland has worked with buyers and sellers of modular homes in New Hampshire, and said they hold their value as well as traditional homes. “For resale, they’re valued the same as stick-built,’’ Holland said. “When speaking with consumers about modular in my area, they often note that they’re more cost and time-efficient, as well as incredibly well built to withstand the transportation process.’’
However, prefab and modular homes earned a bad reputation in their early days. “If you go back 30 or 40 years, when the modular industry was in its infancy, it did not have a great reputation, but it deserved the reputation it had,’’ Webster said. Now, there’s no shortage of quality modular builders, including impressively high-end companies like Bensonwood in New Hampshire. “They are doing really cool stuff at the top of the market,’’ Webster added.
Whether that decades-old reputation still lingered with consumers was one concern Max Taylor harbored when his Boston-based real estate investment company, OnPoint Capital, completed an eight-unit condominium development in Chelsea, The Spencer Flats, using modular construction.
But after sitting down with the builder, “I realized that it was actually a higher quality product than a stick-frame building in New England,’’ Taylor said. “When you then add the fact that, particularly in New England, these things are being built in a climate-controlled warehouse or manufacturing facility, as opposed to outside on a day like today, where it’s pouring rain and the wood’s getting wet,’’ Taylor added, “there are actually a lot of good reasons to go modular from a quality perspective.’’
Perhaps owing to our unpredictable weather, the Northeast led the nation in modular construction in 2020. Of the 57,000 new homes built in the Northeast last year, roughly 5 percent (3,000) used modular construction, according to the National Association of Home Builders.
There were still a few challenges, Taylor said. For example, narrow city streets meant breaking down the project into 28 modules, creating more on-site hookup work than expected. “There were a lot of connections — plumbing, electrical, sprinkler, HVAC — and so that’s four different trades that all need to get in there,’’ he said. “So quite a bit of extra time that we weren’t anticipating and extra money that we weren’t really anticipating went into the final buttoning up and connecting.’’
But having learned a few lessons, Taylor is eager to try another modular construction project, and he expects the efficiency of the process will attract more multifamily developers over time. “Obviously, if you can build the building faster, you lower your holding costs, and you lower your time to market, which de-risks the project,’’ he said.
After a pair of modular buildings in Scotland burned down quickly in 2019 and 2020, some fire safety officials expressed concern about the air cavities created between walls or floors in modular construction.
Stiassni expects modular construction will continue expanding in the residential market, too. “Is this going to change the paradigm in a tight housing market, building this way?’’ Stiassni asked. “My answer is just a hypothesis — but I think it has to. It’s so much more efficient.’’
As for Coit, the first-time home buyer, she didn’t end up buying a modular home. The cost and legwork involved in purchasing a plot of vacant land, surveying and grading the lot, digging a well and septic system, and pouring a foundation, among other things, got to be overwhelming.
BrightBuilt Home director Parlin Meyer estimates that preparing a site can cost anywhere from $30,000 to $130,000 or more — on top of the price of the land itself. “If the house is 700 feet from the road, that is a huge difference in infrastructural costs versus if it’s 20 feet from the road,’’ Meyer said.
She suggests calling the town planning office to inquire whether a property has any special considerations, such as wetland setbacks or utility easements. “All of those factors are really important to understand in terms of how they’re going to affect the bottom line of the project,’’ she said.
“That felt like a whole other part-time job, to go figure out how to get land and do the zoning and construction,’’ Coit said. And though she was preapproved for a mortgage, she would have had to reapply for a construction loan. “I would have then had to redo all my financing, too … the whole thing was just so onerous.’’
So for now, Coit has half-heartedly returned to her original real estate search. “I’m looking for already-existing places and warming up to the idea that I might have to redo some of them,’’ she said. “I’m seeing a lot of price drops with things that are currently on the market, so that’s sort of giving me a little bit of hope.’’
Jon Gorey blogs about homes at HouseandHammer.com. Send comments to [email protected]. Follow him on Twitter at @jongorey. Subscribe to our free real estate newsletter at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook, LinkedIn, Instagram, and Twitter @globehomes.