Why Are Manufactured Homes So Affordable?
Top 4 Reasons Why Manufactured Homes Are So Affordable
One of the most attractive things about purchasing and owning a manufactured home is affordability. Most people carefully shop for true value when buying a home, whether it be a conventional, site-built home or a manufactured home. They consider the location, size, amenities, quality, luxurious features, energy efficiency and even environmental impact to name a few. But like so many purchases, it usually comes down to the cost or affordability.
Very few buyers have an unlimited budget. A starting point for most mobile home buyers is examining what you pay in rent compared to what you’ll pay for ownership of a home. When you look at the cost of conventional, site-built homes, you may find a severe lack of affordable houses for sale in southeast Michigan. They may not offer what you want in a home, and you may not be able to fit the cost into your budget.
There’s no question that manufactured homes are more affordable than conventional homes. The average cost of a manufactured home can be as much as a third less than a regular home. There is far greater efficiency found in the manufactured home building process. This holds true even with the abundance of amenities found in today’s premium manufactured homes.
Affordability in manufactured homes is realized in their construction. Efficiency is found particularly in three main areas: building materials, bulk purchasing and labor costs. Let’s take a closer look at the main reasons why manufactured homes are more affordable than conventional and other types of homes.
1. Building Materials
Builders of site-constructed or stick-built homes are required to purchase enough material to assemble the home on its particular lot. This includes lumber, fasteners, roofing, doors, windows, sheetrock, insulation, wiring, plumbing, ductwork, fixtures, flooring, cabinets, millwork, paint – the list goes on.
These materials are estimated and purchased in sufficient quantities to make sure the job can be completed without time-delaying shortages, yet not in such amounts that create excessive waste. Most conventional home builders, especially custom builders, never construct the exact same home twice, so there’s a certain amount of error or slippage that occurs in the estimation. Plus, purchase procedure and waste disposal must be passed on to the eventual owner of the home.
Storage of material for site-built homes is always a problem for conventional builders. The home is constructed out in the elements of heat and cold, rain or snow, which can cause damage to the materials. Loss of materials also occurs through theft and vandalism.
Factory built homes, like HomeFirst’s luxury manufactured homes, don’t face excessive material issues. The indoor, environmentally controlled climate of a manufacturing facility where multiple homes are assembled has a more effective use of materials than a one-time, site-built home. Manufactured home facilities are masters of efficiency and know precisely what materials are required for each home, in what quantity, in what length and in exactly what specifications. The security of a manufactured home factory virtually eliminates the threat of theft of materials and the loss through damage or vandalism is nearly non-existent.
Wastage of building materials in a manufactured home plant is kept to a minimum. Part of the quality control procedure is knowing in advance exactly what materials are required, so the initial orders are precise. Where there is leftover material from a portion of an assembly, the excess is placed back into inventory for use in another home or is remanufactured into another component.
Very few building materials are wasted, so there’s a significant savings on disposal of waste. There’s no need to contract a waste disposal company to haul the material away in a dumpster to a landfill or spend valuable time sorting material into the acceptable groupings for a recycling center to accept.
The cost of wastage is huge and can be up to 10 percent of the material costs of building a home. Wastage is a built-in cost and an acceptable part of the budget of constructing a site-built home. This isn’t due to neglect, carelessness or inattention to deal. It’s a regular occurrence in conventional building sites and is part of the overall cost that’s passed on as an additional expense to the eventual homebuyer.
Wastage in the manufactured home industry is kept to an absolute minimum. It’s common in the factory environment to have a 1 to 2 percent wastage factor that, again, is passed on in savings to the homeowner.
2. Bulk Purchasing
Site-built homes have limited space for storage, so builders are forced to purchase materials in quantities necessary for use in that specific home and at the exact time that the materials are required. Often the purchases are made and the material arrives with the specific installation contractor, who also has to buy in small quantities at retail or barely wholesale prices before adding their profit markup to them.
The economies of scale are not effective for the site-built construction segment. It’s not a matter of poor business practices or carelessness. It’s simply not possible for small builders — who manage individual job sites and have limited resources — to deal with bulk quantities of building materials. Unfortunately, the additional costs are transferred on to the end user and reduce the affordability of the end product: the home.
Manufactured home facilities, on the other hand, have considerable space in their factories to store materials in a climate-controlled, safe and protective environment. In a facility where dozens or perhaps hundreds of homes are manufactured per year, manufactured home facilities have massive buying power compared to one-time, stick-frame builders.
This is where the economies of scale kick in for the manufactured home builder. They can negotiate favorable terms and conditions with suppliers of building materials and stockpile when buying conditions are good. It’s common for manufactured home facilities to buy lumber by the lift, rather than by the piece. They purchase fasteners by the caseload and fixtures by the hundreds. Wire is bought in huge reels and pipe is purchased by thousands of feet at a time. Paint, glues and caulking are obtained in commercial containers while finishing items like lights, cabinets, countertops, flooring, window coverings and bath accessories are bought in bulk.
Bulk purchasing gives the manufactured home factory favorable financing terms on its materials. Commodities like lumber are traded on the open market and can fluctuate wildly during a year or a cycle. It’s common for softwood products like wall studs, beams, headers and plates to rise or fall during the construction period of a home. An astute buyer in a manufactured home facility will be aware of market indicators and is in the position to capitalize when the prices are low and stockpile materials for a projected need.
Bulk buying also lets the builder of manufactured homes obtain premium quality materials for the same price as a normal or standard brand. Savvy purchasers understand loyalty to their suppliers, as well. Negotiating prices of materials with a regular supplier who profits from a regular and long-term business relationship with a manufactured home company allows the supplier to recommend products that are new to the market or perhaps surplus to the market. Bulk buying of materials at the right time results in considerable savings — savings that contribute to affordability.
Beyond lower acquisition prices for materials when buying in bulk, a manufactured home company can negotiate lengthy time to pay and reduce its interest cost when financing materials. During the course of a financial year where millions of dollars in building materials are purchased and consumed, it can amount to tens of thousands of dollars in savings from sharp buying alone.
In a free enterprise society, competition will always be present and prevail. Affordability in homes comes with affordability of the materials and the labor consumed in producing the product. Competition between the conventional home building industry and the manufactured home business continues to thrive, as does the competition between various home manufacturers. Savings, regardless of how it’s found, will be passed on to the customer in the final cost of a home. Better savings in material purchasing and handling greatly contributes to the affordability of a manufactured home.
3. Savings in Labor
In conventional, site-built homes the cost of construction is fairly evenly divided between the price of building materials and the burden of labor. Conventional home builders normally budget half of their costs toward the purchase of supplies, and the other half into their cost of paying employees and sub-contractors.
With labor costs being half of the conventional building project, builders do what they can to economize and reduce their workers’ paychecks. Unfortunately, the demands of a worksite open to the elements have many fluctuations that result in labor inefficiencies.
Delays and poor work progress is predominantly due to weather factors like excessive rain, snow, freezing and high winds but can also be affected by intense heat or shorter daylight hours as the year progresses. Another portion of construction labor is continually exposed to the weather. This affects workers building the foundation, doing the site servicing, constructing the frameworks, installing the exterior cladding like roofing, siding, soffits and eaves troughs. Exterior painters are constantly struggling with weather, and so are the concrete flatwork finishers and even the landscapers.
Substantial labor costs on a conventional home construction site are wasted due to inefficiency, as well as through poor levels of skill. Stick-built construction companies are notorious for a high turnover in labor because workers are only employed on that particular project before moving on to the next, often as sub-contractors for a different builder.
High turnover rates manifest into slow starts and long finishes that drag out a conventional home construction schedule. This ultimately transfers into increased costs, which naturally are passed on in the overall cost of the home. Affordability is seriously affected.
Manufactured home companies are the best in the entire construction industry when it comes to labor efficiency, which is why they maintain affordability and are considerably less to build per square foot than their conventional counterparts. Again, the savings in labor is passed along to the homebuyer, who gets a manufactured home the same size as a conventional home — but at a 10 and 30 percent overall price decline.
The key to this exceptional labor saving lies in the assembly line process that takes place in a manufactured home facility. Each worker becomes a specialist. The same worker may spend years dealing with wall assembly or roof systems, while another worker may do nothing but install cabinets. Painters paint and are not sidetracked to do drywall or spend their highly paid skill time doing menial tasks like job site cleanup.
The climate control in a factory setting means there’s no downtime due to weather slowdown or material shortage due to weather damage. When a worker shows up for their shift at a manufactured home factory, they know what they’re going to do that day, that month or even that year. This allows the worker to hone their skill.
Manufactured home facilities maintain a continuous stream of productivity, so workers are retained by the company at a far higher rate than conventional homebuilding firms. The confidence of guaranteed employment and a steady check allows the workers in a manufactured home plant to be focused on their specialty and become continually more efficient at their task.
The efficiency in labor also transmits into an economy of scale, where the total cost per person-hour is far less in a manufacturing facility. The additional labor burdens of training and retraining, hiring and re-hiring, and the rate of sickness and injury is greatly reduced in a factory setting.
The significant savings in labor costs prevalent in the manufactured home business ultimately is passed on to the homebuyer. Like the advantages of bulk purchasing and volume handling of building materials, the reduction of labor burden is one more reason why manufactured homes are affordable.
4. Another Affordability Factor
Land is a huge cost in any home purchase. Depending on the location, land can range from one-third to one-half of the home construction budget. The price of land in any community significantly affects the price of homes and can be so expensive in some areas that it removes any sense of affordability from the average home purchaser.
Thankfully, there are other alternatives to expensive land costs. Manufactured homes offer a solid solution to the affordability issue. Unlike conventional homes, manufactured homes can be built for a lower per square foot cost and can be transferred right to the site where it’s to be placed. It doesn’t require an expensive outlay in freehold land.
Manufactured homes can be placed affordably on a site within a manufactured home community. Many communities dedicated solely to manufactured homes are cropping up like those HomeFirstTM has developed in 15 incredible locations across southeast Michigan. These locations include:
- New Haven
- South Lyon
Affordability without sacrificing luxury is the true value found in a HomeFirstTM manufactured home community. HomeFirstTM Communities are a collection of manufactured home communities in Michigan, providing a pleasurable and affordable lifestyle for individuals, families and retirees alike.
If you’re interested in the total comfort, affordability and flexibility of living in a manufactured home, apply today for pre-qualification in financing or schedule a visit to one of our communities.