In factory housing, there's a trend toward homes a la modular
A cacophony of screaming table saws, thudding staple guns, and an intermittent hammer beat - it's music to Robert Killkelley's ears. ''This is the busiest month in our history,'' he shouts over the din. The Marley Continental Homes modular house factory, where Mr. Killkelley is vice-president of sales, is operating at peak capacity, churning out 13 homes a week.
In fact, of the three kinds of manufactured housing (mobile, panelized, and modular), modular has weathered the recession best. Manufactured housing makes up some 35 percent of the total housing market, and modular alone accounts for about 5 percent of the market, some 53,000 units in 1983, according to the Red Book of Housing Manufacturers.
''Modular has never been a big segment,'' says Donald Carlson, editor of the Automation in Housing trade magazine, but ''modular is hotter than it has been for five years.''
Modular housing production was up 35 percent for all of 1983. And the potential for continued growth is strong: Modular is affordable to the middle-income market and is profitable in the relatively untapped rural market. Forecasts for the first quarter of '84 predict a 35 percent rise over the first quarter of last year, according to a survey by Leo J. Shapiro & Associates, Chicago market researchers.
Modular housing received an important stamp of approval last year when the Houston-based U.S. Home Corporation, the nation's largest on-site builder, bought Interstate Homes, in Salt Lake City, the fifth-biggest modularmaker. Analysts say U.S. Home is in the market for more factories. It is looking for a foothold on the rural home-building market, Donald Spear, editor of the Red Book of Housing Manufacturers, speculates.
In an era of high interest rates, the modular home has the ''all-important advantage of speed,'' says Mr. Carlson. ''That's where the money is saved. On a big development, finance savings alone can reach $100,000.''
A site-built home can take three to six months to complete. Meanwhile, the builder is stuck with financing the house until he can finish it and find a buyer. But a modular home generally has a buyer, and it can be built and ready for occupancy within a month or less.
Factory-built homes are sold through a dealer network comprising mostly builders, not by the parent company. The builder-dealer sells the product to the customer (either from a catalog or a model home), arranges financing, and often does the site work (clearing the land, pouring the foundation, and finishing carpentry). Factory workers transport and place the house on the foundation.
The result is substantial savings to builder-dealers, who no longer have to find, manage, and maintain a host of carpenters or subcontractors. Concern over materials shortages, on-site theft, and cost overruns is virtually eliminated. The price of the home, once contracted with the factory, remains fixed. The builder only carries the financing for as long as it takes to build the house.
The modular home arrives in two or more sections, 95 percent complete: Carpeting, appliances, plumbing, electric heating, and even doorbells and light fixtures (including bulbs) are in place. The builder must simply landscape, hook up plumbing and electricity, and do some minor carpentry.
In the prefabricated housing spectrum, panelized captures the upper end of the market, mobile homes the lower, and modular the middle-income buyer. Prices vary according to local labor and land costs. In Gloucester, Mass., Continental homes alone start at $40,000 to $47,000. Add foundation and site work and the price reaches $55,000 to $65,000 but does not include land purchase costs, says Richard Carter, at the Gloucester Building Center.
Once land costs are tacked on to the house price, the factory-built home may match site-built prices. But many times the quality of the prefab modular house is higher than that of site-built.
''The modular is the strongest of all homes, to the point of being overbuilt, '' says Mr. Carlson of Automation in Housing. It must be built strong enough to endure the over-road travel and lifting into place by a crane.Carlson recounts instances of modular houses thrown by tornadoes and sections rolled in shipping accidents, with only minor damage.
Lumber quality is also higher, because low-grade lumber can slow the production process. Construction quality can be better because work is ''cut under ideal conditions,'' says Mr. Killkelley. ''On a cold day like this, if a site-builder miscuts a beam, he won't go back and recut it.''
What's wrong with a factory-built home? Very little, except, well, it is mass-produced. That's a common stumbling block, Killkelley agrees, ''Even though most (site-built) subdivisions really have only two or three designs to choose from. It's a matter of perception.''
Continental offers over 50 variations. Nonetheless, designs tend to be limited by the over-the-road 14-foot shipping width. Coming up with more creative designs is a high priority among manufacturers now, says Carlson. He credits part of the resurgence in modular to the appearance of some new designs.
Resale value of the homes is seldom a problem, according to real estate agents and bank appraisers, although one agent contacted was having trouble selling an older factory-built home. ''It just didn't look site-built,'' she remarked.
Structurally, most factory-built homes exceed site-built standards. So when choosing a manufacturer, servicing and ''cosmetics'' - the interior and exterior options - are worth shopping around for. Many factory homes are indistinguishable from site-built products. There is no reason for a prefab home to appear ''cheap,'' real estate experts counsel. Only if a buyer skimps on flooring tiles, carpeting, and such finishing options is there a danger of that.
Barring this caveat, ''there is no reason why it wouldn't be appraised at the same value as a stick house,'' says Richard Spalding, an appraiser at Merchants Cooperative Bank in Boston.
For any prospective home buyer, Dr. Thomas Nutt-Powell, director of the Manufactured Housing Research Program at the Harvard-MIT Joint Center for Urban Studies, suggests a plant tour of a nearby modular or mobile homemaker.
''How a house is built is worth thinking about. At the very least, a factory tour may have the effect of getting buyers to look more closely at site-built homes. And it helps the prospective buyer to break his analysis down into major systems such as walls, roofing, insulation, efficiency of floor plan, and heating plant.''