Drive along Route 261 in Chesapeake Beach, Md., 35 miles south of Annapolis, and a cluster of crisp-looking town houses appears, directly facing the Chesapeake Bay. With French doors opening onto balconies, dormer windows and railed front porches, the houses have an upscale look befitting their $239,000-to-$249,000 price tags.

The town houses at Sea Gate don't look as if they arrived on a truck. But they did. In fact, it took about six boxes per town house, one box to a tractor-trailer, said Joe Doyle of modular builder DeLuxe Homes in Berwick, Pa., which has been making houses since 1965. Each box was lowered by crane onto the site and carefully lined up with the adjoining boxes. On-site construction was limited to a matter of weeks, not months. DeLuxe and its investment partner are now selling the last of Sea Gate's 30 units.

There are two major kinds of factory-built houses, modular and manufactured, and the Washington metropolitan area has not been fertile ground for either one.

Modular houses, such as those at Sea Gate, have little marketing presence, so few home buyers necessarily know about them. The houses also have a history of boxy designs, and may have less to offer buyers who want to tweak the layout of their house while it's being built.

Manufactured houses, which come out of the mobile home tradition, run into other obstacles here. With area per capita income averaging among the highest in the country, area home buyers haven't been interested in this less-expensive alternative to stick-built houses. Even if they were, zoning laws in most close-in counties rule out residential siting of manufactured homes, which are built on steel chassis with wheels that are removed at the site.

But things may be changing. Twenty-five hundred modular houses are being built in the Washington area each year, and more innovative designs are winning converts. And a recent explosion of upscale designs in manufactured homes, coupled with a technology breakthrough that allows for second stories, is making some communities that might have turned up their noses at the thought of a "mobile home" take another look.

An experiment in the District and four other cities using custom-designed manufactured homes for low-income redevelopment also has that industry charged about getting local zoning restrictions relaxed.

Just driving through a neighborhood, you may not be able to tell the difference between a stick-built home and a modular or manufactured one anymore.

Factory-built modular "mansions" are going up in wealthy communities across the country, with brick facings, wide porches, nine-foot ceilings, dormers and other trim. An 8,900-square-foot Georgian-style estate was built in Greenwich, Conn., last year.

At least three upscale modular homes popped up recently in Derwood, including a 3,600-square-foot, two-story classic American clapboard design with a separate three-car garage owned by Dean and Sue Ormsby. The house, with upgrades, cost almost $400,000 (not including the land).

The Ormsbys said they bought from North American Housing Corp., in Frederick, after failing to find a stick-built house with a first-floor suite for Sue's 84-year-old father, Carroll Wright.

"This option gave us the most flexibility and the most possibilities that we could afford," said Dean Ormsby. The cost was about 25 percent less than for a conventional home of the same size, the Ormsbys said.

Modular home sales could double nationally this year, from 2 percent of new homes to 4 percent, according to Vic DePhillips, chairman of a National Association of Home Builders (NAHB) group that tracks factory sales. And not just because of the cost factor.

DePhillips linked a steady climb in all factory building in the 1990s to a shortage of experienced laborers, to rising costs for materials and to innovative designs. "Empty nesters" and retirees also make up a growing proportion of manufactured home purchasers because of the low cost and maintenance required, according to industry analysts.

Only about 3 percent of new houses locally are built on an assembly line compared with about 28 percent to 33 percent nationally, but industry analysts say both sets of numbers are growing.

"There will always be a certain portion of the market that will always be served by high-end site builders," said Eric Alexander of the Manufactured Housing Institute (MHI), the industry group based in Arlington. "But within the next few years, with the advent of the second-story home, I think you will see more manufactured homes being built."

One hurdle MHI always faces is that the products of its members are zoned out of many locations, because of their historically cheaper appearance and the requirement that they meet a federal HUD code rather than state and local building codes considered more stringent. Modular homes, on the other hand, are built to state and local codes and therefore don't run into zoning problems.

But MHI maintains that the codes are very similar and that the trashy trailer image is long gone.

Driving local interest in manufactured homes is an upscale gated community in Elkridge. The 413 houses in New Colony Village provide a sharp contrast to a nearby mobile home park.

Lowell Cochran of the Manufactured Housing Institute of Maryland is optimistic that new designs will change lawmakers' "prejudices." "The old saying that mobile homes are for the near-dead and newly wed is truly past," said Cochran.

Manufactured-home critics such as author Kevin Burnside don't make it easy to change the image. Burnside, who was once a top salesman and sales trainer, warns that even expensive units could be built to minimum HUD code standards. "I recommend, for instance, against plastic fixtures and doorknobs. . . . A family could spend all that money to get their dream house and it falls apart within weeks."

DePhillips, a modular manufacturer and NAHB expert on factory homes, said his competitors have done a lot to upgrade their image. "I have seen the manufactured-home product become more and more like the site-built and modular products, primarily driven by marketing," he said.

But he doesn't see the competition between the two factory-built types of housing ending any time soon--particularly since the two are going head to head more frequently, now that manufactured-home builders can produce trendy two-story options.

The manufactured-home industry has a pretty firm lock on the low end of the market because of its price advantage: The average price of a manufactured home is $43,000 (excluding land) compared with $136,400 for a site-built home (also excluding land). Modular houses run between 10 percent and 30 percent less than stick-built.

The thought that manufactured houses could be the answer to the urban housing crisis also has the industry excited. MHI is backing an experiment in five cities, including Washington, to see if custom-designed factory-built homes that blend in with the neighborhood can meet low-income housing needs. Two manufactured homes were built last year in Deanwood, in Northeast Washington, as part of the demonstration.

The Marshall Heights Community Development Organization and the home buyers love the designs, by nationally known residential design firm Susan Maxman Architects of Philadelphia.

Joyce Jackson, who paid $115,000 for the one-story bungalow at 1014 44th St. NE, particularly likes the kitchen layout, with a counter that separates the room from the dining room/living room combination. And the two large bathrooms and wide porch meet with her approval. "I plan to stay here until they take me out in a box," said the Justice Department employee, who moved from subsidized housing in June 1998.

Michael Crescenzo, vice president for housing and economic development for the Marshall Heights group, had plenty of praise for the house and the two-story Victorian design at 903 44th St. NE that sold for $125,000. But he said no others are planned. He said he had trouble getting the attention of the manufacturer because he was such a small purchaser, compared with developers ordering hundreds of manufactured homes. And, he said, the two houses did not provide any cost savings because of the on-site construction work required.

MHI's Kami Watson said the group's conclusions are useful because "the program may not work for everyone" and was set up as "a learning tool." Other cities, said MHI's Alexander, have had different results, and spinoffs are underway in Seattle, Nashville and Louisville.

Another redevelopment project in the District, meanwhile, is using the modular rather than manufactured concept. The Anacostia and East of the River Community Development Corp. has been building 114 modular town houses over the past five years in the Knox Hill development in Anacostia. Units are currently selling for $135,000 to $160,000.

Developer Melvin Mitchell said, "Not only can you not tell [that they are modular], but I think basically what really surprises some people is the extent that modulars are being used at the upper end of the market."

But at that upper end there have also been challenges, one in particular that almost confounded the Ormsbys of Derwood.

The biggest downside of going modular, said Dean Ormsby, "was that our financing was a nightmare." Their bank had little experience with modular homes and refused to cut a check until the house was "set" in place. North American, the builder, refused to deliver until the check was signed.

After general contractor Lee Ivey of Lawrence Homes in Fairfield, Pa., intervened, the two sides came to an agreement and 10 tractor-trailer trucks showed up on a snowy March day to deliver the goods.

And then, in the tradition of all home projects but on a larger scale, an 11th trailer had to be dispatched when it was discovered that two dormer windows for the new house had been left at the factory.

What to Look For

The Manufactured Housing Institute's World Wide Web site,, refers potential buyers to a Federal Trade Commission publication called "How to Buy a Manufactured Home." It can be downloaded from the Web site or purchased, for $2 a copy, from MHI, 2101 Wilson Blvd., Suite 610, Arlington, Va. 22201.

To find out what to avoid in buying a manufactured home, who better to consult than a former top salesman who grew up in a trailer park?

Kevin Burnside tells all in "Buying a Manufactured Home: How to Get the Most Bang for Your Buck in Today's Housing Market," published in June by Van der Plas Publications ($14.95). The 160-page paperback offers tips on comparing brands, features and quality, and it pulls few punches.