Are Prefabricated Homes a Bad Investment?
As a millennial who would love to own a home someday, I am bombarded with advice or other general sentiments regarding finance and real estate from all sides. One side says I’ll never be able to own a home. Another claims “these ten side hustles will make you a millionaire by 45!” But in the sea of loud voices telling me what I should and shouldn’t do, I have found a lighthouse—prefabricated homes.
What are Prefabricated Homes?
Prefabricated and modular homes are constructed in factory-controlled environments and assembled on permanent foundations. Some people assume that prefabs are the same as mobile homes, but that’s inaccurate. Consider mobile homes more like...the grandfather of modular houses. Sure, both get built in factories, but they’re not quite the same thing. Mobile homes are built on a permanent chassis and can be moved, even after they're set up. Prefab homes, on the other hand, are made in pieces, then assembled on-site and usually stay put for good. Think of mobile homes as RVs with a strong sense of commitment, while prefabs are more like custom homes delivered in separate pieces.
The Big Myth
I've done my research on prefab houses in the past and many folks always says the same thing: don’t bother, because prefab and modular housing is a bad investment. Well, after doing some of my own research, I’ve come to learn that this perception is often pushed by large real estate firms, developers, and what are known as “corporate landlords” who profit from traditional home sales and long-term rentals.
These same corporations push the thought that Millennials and Gen Z, will never be able to own homes, driving them to rent for years and years, which only further reinforces landlord/ apartment corporation profits. But lucky for me (and any prospective home buyer reading this), that sentiment is becoming outdated.
The truth is, prefabs can appreciate in value, just like traditional stick-built houses because these homes meet local building codes and are still built on sturdy foundations. If you own a piece of land and permanently install a prefabricated home there, the entire property (land + home) will appreciate over time. Land tends to go up in value, especially in growing areas, and a well-kept manufactured house on that land benefits from that trend.
For example, if you bought a manufactured home on a rural lot for a total of $120,000 a decade ago, and the land value in that area has risen, you might resell the combined property for $250,000 today, according to Tax Shark.
The fallacy that prefab homes lack long-term value stems from outdated biases rooted in an era when housing markets were more equitable and fair. That’s compared to today’s landscape of way-too-high prices and limited inventory due to corporations buying up single family homes all across the United States. Persisting with that old narrative only gatekeeps the housing market from young generations who could otherwise benefit from faster, more affordable entry into homeownership.
Solving the Global Housing Crisis
Prefabricated homes also offer a viable solution to homelessness and housing affordability. Built off-site and installed quickly, prefab units bypass many of the cost and time barriers of traditional construction. In fact, Australia is getting ahead of the curve by allocating A$54 million to support prefab and modular housing—aiming to halve construction timelines and increase accessibility for it’s residents.
According to the US Chamber of Commerce, there is a severe shortage of over 4.5 million homes, across the country, which has created cascading economic and social challenges. One of the major reasons for this lack of homes is because the construction of new homes has failed to keep pace with demand, particularly in high-growth areas. Modular homes, which take a fraction of the time to build compared to traditional homes, can help to alleviate this burden.
Durability in Natural Disasters
Prefab homes aren’t just affordable; they’re also built to be resilient. Modern modular units can incorporate fire-resistant materials like non-combustible siding, metal roofing, ember-resistant vents, and double-pane windows, which is great news for homebuyers who live in a hot, dry, or even earthquake-and-flood-prone areas.
After the devastating Pacific Palisades fires in January 2025, prefab housing emerged as a critical rebuilding strategy. Foundations like Steadfast LA, are delivering factory-built, fire-resistant homes to fire victims, enabling faster, safer reconstruction.
Design firms like Menu Homes—focused on wildfire recovery—highlight how modular homes meet California fire codes and streamline permitting, accelerating restoration for displaced residents.
Additionally. mobile robotic micro factories are now constructing fire-resistant homes on-site within the burn zone, reducing framing costs by roughly 70%, cutting prices by about 30%, and accelerating delivery timelines substantially.
Why Prefab Homes Are a Smart Investment
When you look at the advantages of prefab and modular homes, it’s pretty easy to see how these aren’t the money pit that real estate corporations would have you believe. Prefabs can be a compelling investment, particularly for Millennials, Gen Z, and other folks in need of an affordable solution to traditional housing issues. Here’s why:
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Modular homes are faster to build and are more affordable, which brings homeownership within reach sooner, with costs that are often lower than traditional builds—and with comparable long-term appreciation.
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They are durable and give young homeowners peace of mind, especially in areas vulnerable to fires and other natural disasters.
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The affordability of these prefab homes combats rental traps, breaking the cycle of permanent renting and landlord profiteering.
Prefab homes are no longer the cheap, temporary fallback they were once perceived to be. Instead, they’re increasingly sophisticated, resilient, and—even more importantly—accessible. For young people seeking equity, autonomy, and a place to call home, prefabricated housing offers a strong alternative to the rent-forever trajectory.
The narrative that prefab and modular homes are poor investments is rooted in outdated thinking. In today’s housing landscape—marked by high costs, limited inventory, generational inequality, and climate risk—prefab homes represent a strategic, smart path forward. Whether solving affordability crises, rebuilding from disasters like the Palisades fire, or offering durable, value‑retaining housing options, prefab homes are emerging as a critical solution—and a wise investment—for the generations that need them most.