On a budget? Take a look at manufactured homes (© Greg Vote/Getty Images)

© Greg Vote/Getty Images

It's no secret that a manufactured home often costs less than a site-built one. The structures that were once primarily known as mobile homes have long been a less-expensive housing option. But most manufactured homes on the market today are a far cry from the single-wides and double-wides of the 1960s and '70s. (Bing: What's a manufactured home?)

In this month's installment of Real Estate on the Cheap, we'll look at what's available and how factory-built homes compare when it comes to cost.

We'll also head to the Twin Cities to see what the housing market is like there and find out from agents what kind of deals you can get in Minneapolis and St. Paul, Minn.

Factory-built savings
A manufactured-home buyer can generally save 25% to 30% compared with a similar site-built home, depending on where the home is purchased, says Joe Stegmayer, CEO of Cavco Industries, a manufactured-home builder in Phoenix. The savings can be much higher in some markets, including in rural areas where it's inefficient for a builder to go to the middle of nowhere just to build a modest home.

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According to the Manufactured Housing Institute, the average cost per square foot of a new manufactured home was $41.24 nationwide in 2009, compared with $83.89 for a new site-built, single-family home. Those numbers don't include the cost of land and are based on Commerce Department and census data. At 1,530 square feet, the average new manufactured home in 2009 was significantly smaller than a site-built home, at 2,422 square feet.

Stegmayer, who is also chairman of the MHI, says manufactured homes have changed significantly in the past 10 years and now appeal to a wide range of buyers. "There is a much broader line of products with many more styles, designs and trends that are comparable to anything that site-built does," he says.

From ultra-affordable to ultra-luxe
Kevin Flaherty, vice president of marketing at Champion Home Builders, says he is primarily seeing manufactured homes in two market segments, one at the low end of the market and the other at the high end.

At the low end, the key is affordability, and Flaherty says some are purchased with cash. He says there has been a return to smaller units and even single-wide homes. "People are looking for a comfortable, safe shelter, and they're not heavily invested in amenities," he says.

At the other end of the spectrum, higher-end consumers are looking for the luxury finishes they would find in site-built homes, but they also want to save money and build more cost-effectively. Those manufactured homes have higher roof pitches than low-end models, as well as painted interior-wall finishes, wood cabinetry and granite countertops — "nothing different than you would find in a conventionally built home," Flaherty says.

Stegmayer says buyers are now realizing that it isn't necessarily wise to buy the most expensive home they can afford. "For some time now, housing hasn't been all that great of an investment," he says.

Buyers are realizing that — or may just have other priorities.

"Maybe they can afford a higher-priced home, but they don't want all their money tied up in a home," Stegmayer says. "They buy a factory-built product at a much lower cost and use that excess income for other purposes: travel, hobbies, pastimes, investment. We're seeing a lot more of that."

The perfect starter home?
For Ken Kilpatrick, a manufactured home made sense as a short-term investment to save for a bigger investment down the road.

"Having recently graduated college and newly married, the inexpensive investment into the purchase of a mobile home and the modest lot rent served as a great opportunity to save money and build up our credit ratings so we could have greater leverage when it was time to buy a house," says Kilpatrick, who now owns a site-built home in Bechtelsville, Pa.

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His mobile home was in a community where he rented space, but a lot of buyers place manufactured homes on land they own. Many are indistinguishable from site-built homes. Keep in mind that loans and interest rates may differ for manufactured homes based on if you’re buying the land or just the house itself.

Although the mobile homes of yesteryear depreciated just like vehicles do when you drive them off the lot, a manufactured home on privately owned land will appreciate much like its site-built counterpart. "If you attach it permanently to the land, it will typically react just like surrounding homes in its market," Flaherty says. "It's the neighborhood and land that appreciate."