What is a prefab home?

| Buying

“Prefab home” is a term that seems to pop up a lot lately. From TikTok influencers to politicians, prefab homes have been described as the saviour for many woes whether it’s affordable tiny homes or a speedy road to resolve the housing crisis. But are prefab homes really all that fab?

Here we look at the basics you should know about the prefab home craze including the pros and cons.

What Actually is a Prefab Home?

Prefab, if you haven’t already guessed, is short for prefabricated. Prefab homes have revolutionized how homes and other structures are built by prefabricating the major elements in a factory ready to be shipped and assembled at the construction site. It’s kind of like Lego on steroids, coming together faster, safer, and more efficiently than the traditional “stick built” construction process. At least in theory.

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2 (and a half) Types of Pre-fab Homes

There are basically two and what we’ll call “a half” types of prefab homes:

#1: Manufactured homes

Manufactured homes are factory-built, all-in-one projects that require specialty transportation and professional installation via heavy machinery. As a primary house, they must adhere to building codes that meet municipal regulations including a permanent foundation such as a crawlspace or basement.

#2: Modular homes

This type of prefab home consists of factory-built modular pieces delivered to the site and assembled by a builder. Licensed tradespeople install elements including electrical and plumbing along the assembly line, adhering to strict quality control measures to ensure they are up to code. They also require a proper foundation.

# 2.5: Kit homes

You can literally order kit homes online ready for DIY assembly. While they might seem like an affordable choice for tiny home dwellers, it’s best to avoid the online option for anything beyond a fancy schmancy out building like a she-shed or home office installed on a concrete slab. An actual home requires thorough research and discussions with a real estate team and builder.

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Pros and Cons of Prefab Homes

Here’s a quick look at the benefits and pitfalls of prefab homes:

Pros of Prefab Homes:

  • Environmentally friendly with the latest in energy efficiency, saving you money over the time you live in the home
  • Trades install electrical and plumbing on the assembly line making it a more streamlined and affordable process
  • Modular assembly is faster than traditional construction
  • Can be more affordable but it’s wise to price compare against traditional construction, new build, and pre-owned homes
  • Can be easier if you purchase a tear-down with existing access to services
  • Paying the initial costs for the home itself up front saves interest on what you’d pay for a mortgage on a resale home

Cons of Prefab Homes:

  • Land costs, especially when considering purchasing a tear down in the GTA, are an additional high expense which likely requires a mortgage on top of your up-front costs for the home
  • You mostly face the same challenges of a custom-built home
  • Under the Ontario New Home Warranty and Protection Plan new homes are covered for seven years for things like shoddy workmanship, structural issues, etc. but this doesn’t necessarily include prefabs
  • Possible issues based on the municipality zoning by-laws regarding things like the type of homes allowed, home size based on the lot, etc. so It’s essential to check with your local zoning office to ensure that prefab homes comply with specific regulations in your area. Most residential zones accommodate prefab homes but permits and specific requirements may apply.
  • Complicated financing with much higher costs up front for the manufacturer, plus a minimum 25% down payment for undeveloped land or 20% down payment for a tear down property and the mortgage

As a homebuyer, it’s important to keep yourself protected from real estate fraud. Click here to read our post about spotting real estate fraud and protecting yourself in Toronto. 

How To Buy a Prefab Home

Here’s our quick overview of where to begin when buying a prefab home:

Find a real estate agent

Finding a real estate agent is the best way to get started. We’ll discuss your home options just to make sure you understand the costs and process for a resale, new build, custom, or prefab home. We’ll also explain the differences between the type of properties available whether it’s a tear down in a prime Toronto neighbourhood, or something further out on undeveloped land.

Choose a builder/manufacturer

At face value, prefab homes are not much different than building a traditional home with the same steps required such as permits, zoning, building codes, designs, finishes, yada, yada, yada BUT we highly recommend checking the Ontario Builder Directory when seeking prospective builders to ensure they are certified according to CSA A277: Procedure for factory certification of buildings. You can choose a full-service contractor (highly recommended) who does it all including permits and such, or a limited-service manufacturer who only manufactures and delivers the modules. Keep in mind homes not built in Canada require vigorous inspections to ensure they are up to Ontario and municipal building standards, so again you might want to avoid these.

The Bottom Line

Before you jump on the prefab bandwagon, it helps to bounce the idea off the pros. We’re here to explain what you’re getting into and support you no matter what route you decide to take.

Looking for the best Toronto real estate team to sell your home? Get in touch with The Christine Cowern Team today. Call us at 416.291.7372 or email hello@christinecowern.com!

Disclaimer: This post is for general educational purposes only. Always consult with trusted professionals for advice specific to your own personal situation.