Pre-Fab Houses and Energy Efficiency: Help or Hype?

prefabricated home

April 10, 2017

Modular or “prefab” homes have become more popular in recent years. Visually stunning, these dwellings have become a favorite subject for the publishers of architecture and design magazines. Prefab homes also have attractive qualities. The elements that comprise these state-of-the-art houses are mass produced, allowing builders to save on construction costs. Because of their small size and enclosed design, prefab units are much more energy efficient than brick and mortar homes.

Will moving into a prefab building lead to significant energy savings? What if going modular is not an option? Is there anything that “regular” homeowners can do to get some of the same benefits that owners of prefabricated properties enjoy?

A Buyer-Friendly Price Tag

The main advantage of a modular home is its price tag. According to the National Association of Home Builders, the cost per square foot for a typical prefab home is less than $77, while the average stick-built home is almost $95 per square foot. Because the builder produces a high number of modules at a time and because the on-site construction costs are much lower, allowing prefab units to be sold for surprisingly cheap.

If a first-time homebuyer must choose between a sleek (but small) modular home and the standard first-house “fixer-upper,” the prefab option will seem like the better choice. Even if the two homes have the same price tag, the factory-made choice will be newer, so the buyer need not worry about immediate repairs.

Is It a Good Investment?

Modular homes, unlike trailer homes, appreciate in value over time. Therefore, as long as the real estate market is not in a slump, a prefab owner will be able to sell their property for more than they originally paid for it. There are several other costs associated with prefabricated homes. First, a buyer needs land on which to construct the new building. This can add a significant amount to the overall price of the project.

Other costs will arise from the need to hook up utilities such as water, electricity, and sewer. So yes, providing that the prefab movement continues to grow, these structures will be sound investments. Individuals who make that investment should understand that the cost of a modular property will be higher than the price tag of the building itself.

Why Are Prefab Homes Considered Energy Efficient?

Will living in a prefab home truly lead to energy savings? It depends.

Builders make modular homes in a controlled factory setting, so they are more airtight than their site-built counterparts. Designed with an optimal insulation layout, the homes are often quite small. These qualities make it cheaper to control the climate inside a prefab home than in a regular dwelling. Manufacturers realize that energy efficiency is an integral part of the prefab movement. They often include features like LED lighting, Energy Star appliances, and even solar panels in their designs. These traits can further reduce month-to-month energy costs.

There is evidence to support the idea that prefab homes are models of energy efficiency. The question is: do you have to move into this kind of home to get such a high level of energy savings?

Incorporating Prefab Efficiency into Your Current Home

Homeowners can make improvements to increase the efficiency of their brick and mortar homes. For example, sealing cracks and gaps, and adding extra insulation can help bring about some of the same benefits as an air-tight prefab structure. Upgrading to an Energy Star furnace or air conditioner can be expensive, but the current tax breaks from the federal government can make such a project more affordable. The government provides tax credits to homeowners for larger efficiency upgrades as well.

Geothermal heating or solar power can slash month-to-month energy costs significantly as well as earn homeowners a 30 percent rebate, thanks to the Investment Tax Credit (ITC). Financing programs allow homeowners to pay for their efficiency improvement with no money upfront and then pay it back over time on their annual property taxes.

Not a One-Size-Fits-All Solution

Modular homes are ideal for first-time homebuyers who shudder at the thought of buying up a cheaper home to fix up. In many cases, a prefab construction will allow them to avoid the so-called “money pit” problem that many new buyers are forced to endure. On the plus side, manufacturers of modular homes will either provide financing themselves or offer loans through a third-party partner. This means that the buyer will not have to worry whether or not their bank will approve them for a mortgage.

Which Option Affords Better Savings?

An efficiency inspection will give homeowners an idea of how much they can save on energy costs. Upgrades, such as a new furnace or new windows, could improve a home’s efficiency. Or, perhaps the inspector will find that something as simple as caulking around windows and doors, that will translate into noticeable savings. Often, it is the simple projects that provide the best cost-to-energy-savings ratio.

More Questions to Ask

Other variables also play into the modular home debate. Is a prefab building suitable for the climate? What are the zoning laws in the city where the home will be? Certain types of prefabricated buildings do not meet zoning requirements in some cities or towns.

What will the property taxes and insurance costs be for a modular home versus a traditional site-built home? With their practical design, modular homes are designed to be easy to construct and live in. However, zoning laws, weather, and local regulations may make a modular home less than ideal.

Is a Modular Home Worth It?

Modular houses are energy efficient – but this impressive level of efficiency comes with drawbacks that some homeowners may be unwilling to accept. However, efficiency improvements to an older home can help create prefab-like energy savings. One more thing to consider: in many parts of the country, home improvement projects that increase energy efficiency can be paid for over time through property assessed clean energy (PACE) financing. These programs reward homeowners who choose to make energy-saving improvements by making it possible for them to pay off their upgrade on their annual property tax bill.

Ultimately, prefab homes are one option for people who want to live in an energy-efficient dwelling. They’re not the only option, though. PACE financing can help traditional homeowners achieve the energy efficiency they desire.

Find out if PACE financing is available in your area – call Ygrene at (855) 901-3999 or check your eligibility online