Building BlocksThe terms “design” and “modular homes” are rarely uttered in the same sentence. But modular manufacturers say they're finally trying to upgrade the look of their houses to lure more buyers.

On Sept. 30, Mohegan Sun, the hotel/casino in Uncasville, Conn., gave away a 2,240-square-foot, two-story modular home, valued at $175,000, that it had built outside of its entrance as part of a $500,000 sweepstakes celebrating the resort's 10th anniversary. In the five weeks leading up to the giveaway, about 500 people per day walked through that home. Its builder—Fall River, Mass.–based East Coast Homes—generated more than 150 leads from the event. “The first thing people asked was, ‘This is a modular house?'” recalls Dave Megna, East Coast's owner. “The second thing they asked was, ‘Why isn't more modular built?'”

The interest the home stirred isn't surprising for New England, where “system-built” homes—virtually finished modules produced in factories and transported for assembly on buyer-owned lots—represent an estimated 11 percent of annual housing starts. But potential buyers in other regions are now starting to ask the same questions about modular, including people in Western states, where this kind of housing has been scarce. “People are screaming for modular homes on the West Coast,” says Bill Garnett, a Bainbridge Island, Wash.–based designer who specializes in custom modular housing (see “Westward, Ho!” page 229).

Most everyone agrees that a factory environment, where processes are controlled and weather doesn't intrude, is more conducive to efficient construction than a jobsite and generally produces better-made houses. Yet despite steady growth until last year, modular's share of new-home starts nationally has been stuck at around 3 percent (see “In Limbo,” above, left). Some of this relates to a distribution and sales network that focuses on certain regions—the Midwest, New England, and the Southeast—where demand is strongest. But the hard truth is that too many people and municipalities still lump modular and “manufactured” (that is, mobile or HUD-code) homes together and see both as marginal products for marginal buyers, no matter how many design flourishes they sport. For more than two years, the city of Gainesville, Ga., has been trying to block Atlanta-based manufacturer Building Systems Network from completing a four-lot project—which BSN started with a 6,800-square-foot home valued at $890,000—because its modules aren't built on site (even though Georgia permits residential construction using homes made outside the state).

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SURE BET: A 2,240-square-foot modular home that East Coast Homes built on the premises of the Mohegan Sun resort and casino attracted 500 people per day for five weeks before it was given away in a sweepstakes.

WIDE VARIETY: Atlanta-based manufacturer Building Systems Network has 450 unique designs, and its CEO is convinced that customization is the “future” of modular construction. His company, though, has been fighting with the city of Gainesville, Ga., for more than two years over its right to build in that market using homes constructed off site. SOURCE: HALLAHAN ASSOCIATES

THE LONG HAUL: Modular homes account for around 3 percent of annual new-home starts in the U.S. But manufacturers say that as the contractor pool shrinks, producing homes in factories makes more sense to help meet long-term demand.

REGIONAL BREAKOUT: Designers are leading the charge to bring modular homes to the West Coast. Activists include Garnett Design Group, which is consulting with several manufacturers, and Michelle Kaufmann Designs, which produces its signature custom homes (above) out of its own manufacturing plant in Washington state.

LUXURIOUS LOOK: Because it didn't evolve from the manufactured home sector, as some other modular builders have, HandCrafted Homes has always sold to a more discerning customer base. It will now try to expand that base by developing a line of luxury modular homes branded under the name of designer William E. Poole.

IT'S ACADEMIC: These renderings depict a redevelopment project in Elkhart, Ind., that Notre Dame students have become involved with. The students have proposed that modular design and construction be incorporated into the project.

REACHING OUT: Excel Homes, which markets modular houses under its own name as well as under its Avis brand, is a design vanguard among manufacturers. Before it introduced its Generation series, the company looked for ideas by visiting custom and production builder jobsites, combing shelter magazines, and talking with architects.

Manufacturers become their own worst enemies, say industry observers, by marketing modular and HUD-code homes in retail centers like commodities, and by doing as little as possible to educate buyers or city planners about the substantive benefits of photos: courtesy building systems network modular construction. A design-resistant mentality that still pervades certain quarters of this industry also keeps buyers at arm's length from modular houses, say designers and even manufacturers of basic modular homes. “If the design is inferior, that's a lightning rod,” says Kevin Flaherty, vice president of sales and marketing for Genesis Homes, a division that Auburn Hills, Mich.–based manufacturer Champion Enterprises started in 2000. Genesis Homes markets the company's modular homes, which accounted for 30 percent of Champion's production last year (see “Back to School,” page 232).

“More time is spent designing a McDonald's hamburger than a 3,000-square-foot modular house,” says Wilton, Conn.–based architect Douglas Cutler, who began posting his modular home plans online last summer. “It's a ‘monkey see, monkey do' industry, and factories view design as a loss leader. They're not interested in what I do.” That might be true; Garnett, also, sees a “moribund” modular industry. Yet, he and other designers and architects find themselves in demand by manufacturers who are seeking fresh design ideas and are opening new avenues for creative talent, such as Hans Roegele, a New York–based architect who's been helping Middlebury, Ind.–based Pleasant Street Homes rethink its designs.

“That modular homes can be standardized means that it's suddenly feasible for an architect to design an affordable working-class home,” says Roegele. John Carricarte, a former custom home designer in Colorado, entered the modular manufacturing industry three years ago with Patriot Homes and is now director of design and business development for Admiration Builders, another Middlebury, Ind., company, where he strives to come up with modular designs “that appeal more to builders and developers,” with better floor plans and site preparation.

Nationally renowned designer William E. Poole is making his first foray into modular design through a licensing agreement, announced last month, with Henderson, N.C.–based HandCrafted Homes. Poole is developing a branded line of 10 luxury modular home models exclusively for HandCrafted, which Poole says he chose as a partner—over other, larger manufacturers that had approached him over the past five years—because he felt it would be more “open” to producing the kinds of stylish houses that are his signature.

Bill Murray, HandCrafted's general manager, says that only 10 to 15 of the 85 builders his company uses to install its products in the field have the skills needed to execute Poole's design specifications. On the other hand, Poole echoes other builders, manufacturers, and designers when he states that the housing industry must embrace modular construction to meet buyer demand at a time when the labor pool of contractors and craftspeople is shrinking.

Labor raises tough quality-control issues for modular manufacturers. Thayer Long, executive director of the National Modular Housing Council (NMHC), in Arlington, Va., calls field installation the industry's “Achilles' heel” and adds that the absence of large builders and contractors involved in modular construction could stall the industry's growth.

Most manufacturers outsource the assembly of the majority of their modules in the field to small builders. But their choices are limited, as the vast majority of contractors avoid modular construction altogether, either because they don't see the demand or they fear the margins on the finished product would be too meager. Ironically, contractors that have made the leap into modular say they are realizing significant time and cost savings and are selling into a sustainable market.