By Barbara E. Hernandez
Special to The Washington Post
Saturday, July 8, 2006; F01
When Sally Arbogast was planning her new house on 47 acres in Charles County, she never thought she would consider a modular home.
"I saw them in different places and thought they all looked like trailers," said the single mother of two. "But once you look at the pictures on the Web site, whatever preconceived notion you had flies out the window."
The Web site that changed her mind is that of Nationwide Custom Homes, a Martinsville, Va., firm that makes modular homes -- that is, houses built in a factory in sections, or modules, then transported and placed on a permanent foundation.
Arbogast found a pretty, two-story Cape Cod -- a model called "Blue Ridge" from the company's Silver Series. She created a three-dimensional model of her floor plan, then adjusted it to add more space. The pieces were delivered to her site and put together by contractor GCI Inc. of Pasadena, Md.
After years of stigma, modular homes are winning over homeowners with their speed, quality and design. The days when they were lumped in with trailers as tacky firetraps seem to have faded as such houses become more mainstream and sophisticated. Now few people can tell the difference between a home built in a factory and one built on site. Even Country Living magazine chose a modular home as its House of the Year 2006 for its "one-of-a-kind design."
Arbogast, 39, said she overcame her prejudices when she saw the advantages of buying a slightly cheaper -- and faster -- modular home.
"The price of stick-built homes was what started it originally," she said. "Then it was the speed at which it could be done."
About 43,000 modular homes were constructed in 2005, up 4 percent from the previous year, said Steve Snyder, executive director of the Modular Building Systems Association. Although the market share is modest -- about 3 percent of new single-family houses sold last year -- they are being promoted in shelter magazines as smart and sustainable choices.
Fred Hallahan of Hallahan Associates, a housing consultant in Baltimore, said about 3,000 modular homes were built in Virginia last year and 1,200 in Maryland, up about 33 percent and 25 percent, respectively, from 2002.
Snyder said modular homes are gaining acceptance more quickly than the traditional manufactured housing. Those are the houses that most people associate with trailer parks; usually they're on pads, not foundations.
The main reason is that modular homes are indistinguishable visually from traditional, stick-built houses. "Modular homes are always on a permanent foundation and can be three stories and up," Snyder said. "We have the same code as stick-built homes."
Modular homes can have facades of stucco, brick, stone or siding. They can have wall-to-wall carpeting, hardwood floors or ceramic tile -- anything found in a custom-built house, he said.
They're usually 10 percent to 15 percent cheaper than stick-built homes, Snyder said. He said they appreciate in value at the same rate as traditional houses and can be financed using conventional mortgages.
Because modules come pre-made and ready to place, there's little problem with theft at the site and building supply prices don't increase from the time of order to delivery, he said.
"Once the home is priced out, those prices don't change," he said.
Hugh Hambruch, owner of GCI and the builder of Arbogast's house, said that if owners get all the necessary permits there's no technical reason why a house can't be ready in one day.
"But in reality, it's about 90 days, because that's how long it takes to get all the inspections and subcontracting work done," he said.
Not that modular homes are a perfect solution in every case.
"On some smaller roads, the modules simply may not fit," said Vladimir Kochkin, program manager for residential structural systems for the NAHB Research Center, the research and development arm of the National Association of Home Builders. "And modular homes manufacturers are limited economically by a few hundred miles."
Also, because modular homes are built in factories, it's harder to improvise on site.
"If the foundation is a little off, a traditional builder can make a wall a bit longer maybe to compensate," he said. "With a modular home, it's already delivered and there's nothing you can do."
Arbogast, a Pampered Chef kitchen consultant, was pleased with her three-bedroom, 2 1/2 -bathroom white Cape Cod.
"The beauty is that it's all built indoors somewhere so it was never exposed to the weather or the rain," she said. "I could have it as finished or as unfinished as I wanted. I didn't have to worry about some . . . builder who was in a hurry to get their money."
Starting with the original design from Nationwide, Arbogast was able to change around the master bedroom, add some square footage for a mud room and make a bigger sitting room upstairs for her children.
Hambruch said three-dimensional computer imaging helps ease the builder's burden of meeting a customer's quality expectations. What's ordered is exactly what's delivered.
Construction quality isn't the sticking point for modular homes. In fact, they are widely known as energy efficient, have few mold issues and good structural connections, Hallahan said. The industry hasn't been widely accepted, he said, purely for aesthetic reasons.
"People think of square, ranchy boxes, not knowing that modular housing can mimic any architectural style," he said. "Most builders accept the technical quality; what is not accepted is the design quality."
That technical quality was tested after Hurricane Andrew in 1992, when the Federal Emergency Management Agency found that modular homes fared better than other types of houses because of their "inherently rigid system."
And as modular housing moves northward, the basic, boxy ranch of the deep South turns into a two-story colonial or Cape Cod, which becomes more acceptable to homebuyers, Hallahan said. Most of Maryland's 1,200 modular homes placed in 2005 were high-end houses in St. Mary's and Calvert counties, he said.
A big part of the industry's aesthetic problem is that many people lump modular homes in with manufactured homes, which carry the prejudices of living in a rural "double-wide" trailer.
In the industry, the term "manufactured homes" refers to what were once called mobile homes -- homes that are built to one uniform federal standard, the HUD code, which is less stringent than most local codes. Modular homes can be built to conform to almost any existing building codes, which makes them a more flexible alternative.
While modular homes are financed like stick-built homes with traditional mortgages, manufactured homes are often financed through personal loans with higher rates. According to Bankrate.com, which follows the lending industry, the market is slowly changing, and some banks are willing to provide lower rates and traditional mortgages if a manufactured home is fixed on a permanent foundation or the resident owns the land. But more than three-quarters of buyers finance their manufactured home through a retailer.
The Manufactured Housing Institute in Arlington released a 2002 report that stated the average person who owned a manufactured home is a retired baby boomer and frequently uses it as a vacation or second home.
Bruce Savage, vice president of public affairs for the association, said that manufactured homes often face stigma and zoning discrimination. So although they may be built to federal code, many municipal codes make them hard to place.
"There's a lot of 'They're not going to put one of those in my neighborhood,' going on," he said. "Many times these municipalities say 'This is not up to our electrical code or plumbing code.' "
But with the cost of land going higher and higher, a manufactured home is an easy and often cheaper alternative to site-built or modular homes, he said. He estimated that buyers can save 20 percent by placing a manufactured home on a piece of land. About 4,000 new manufactured homes a year are placed in Virginia and Maryland, according to the Census Bureau.
Savage said the way to deal with local zoning is with modular homes.
"They are slightly higher than manufactured homes, although still cheaper than stick-built homes, and can get around municipal codes," Savage said.
He said that most builders already use manufactured components such as roof trusses and floors in their homes, so making the shift to factory-built housing isn't a giant leap for the public.
Perhaps because of this, several established manufactured home companies have started making modular homes, such as Palm Harbor Homes Inc., which acquired Nationwide Custom Homes in 2002.
In 2003, investor Warren Buffett's Berkshire Hathaway Inc. bought Clayton Homes Inc., a manufactured home builder in Tennessee. It has added modular homes to its products. Hallahan said the company has become the nation's second-largest maker of such homes. Buffett is a board member of The Washington Post Co.
At Berkshire Hathaway's most recent shareholder meeting, the company showed off its newest designs, one of which was called "Warren's Pad." It retails for $79,000 and is 1,703 square feet.
"Manufactured housing production has fallen off 60 percent, mostly because of lack of financing for HUD-code homes," Hallahan said. "Companies with savvy management are now very seriously looking at and becoming high-volume modular manufacturers."