Great Falls Tribune, Rion Sanders/AP

Are Prefab Homes the Answer to Affordable Housing?

April 13, 2009 07:30 AM
by Sarah Amandolare
Though some housing experts contend that the affordability of prefabricated homes is exaggerated, some manufacturers claim that their new prototypes are both affordable and eco-friendly.

Dissecting the Prefab Debate

Prolific prefab manufacturers in the United States, such as Maryville, Tenn.-based Clayton Homes, have stepped up efforts to make their products greener and less expensive.

According to a Popular Mechanics article, the new Clayton I-House is so efficient that it “can be powered for a dollar a day.” The homes have an Ikea-meets-Apple feel, and are targeted at “younger and more affluent” homebuyers rather than traditional mobile home buyers. Clayton plans to sell the most basic version of the I-House, which can be expanded and features “Low-E windows, solar augmentation, high-efficiency appliances and superior insulation” for around $100,000.
Missouri-based designer Rocio Romero’s LV series of “modern prefab dwellings” cost $33,900 for the “outer shell and structural components,” according to design magazine Dwell. The framework of LV homes is “flexible” and “accessible to do-it-yourselfers with limited budgets as well as wealthier clients.”

Although the homes are “not for everyone,” according to Popular Mechanics, particularly large families needing more space, many others could find a “small but stylish house that has lots of high-end amenities with a low energy bill” quite appealing. The article speculates that given rising energy costs and the shaky housing market, the demand for such cost-effective housing is likely to grow.

But some design experts contend that the affordability of prefab homes is a myth.

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Chad Ludeman, president of postgreen, a Philadelphia organization focused on affordable green development, thinks prefab has been falsely labeled as affordable and “green” by the media and manufacturers.

In a 2008 article for Jetson Green, an online magazine, Ludeman wrote, “Prefab manufacturers and resellers will tell you that prefab is cheaper because of the time and labor savings.” Ludeman, however, takes a critical look at the entire manufacturing and building process, listing manufacturing facility overhead and manufacturing company profit; delivery, setting and crane fees; and architect or reseller fees as costs that “actually make prefab more expensive than site built.” He also claims that prefabs are not as green as they claim to be: they generate more waste, he says, because they use more raw materials “in order to withstand transportation.”

Opinion and Analysis: Prefab in the downturn

Design expert and Sunset magazine editor Allison Arieff discussed with The New York Times how prefabricated homes could work in an economic downturn. “Prefab can reduce waste, shorten construction times, and also reduce the amount of time you’d have to carry a construction loan,” she explained.

Last year, Arieff spoke with the Los Angeles Times about the appeal of prefabricated housing for Americans wanting a less cookie-cutter home. She believes that “the time is right to rethink things” and the housing crisis may lead people to recognize “that there might not be such a great future in 10,000-square-foot McMansions.”

But James Trulove, author of “New Sustainable Homes: Designs for Healthy Living” and other books on design, disagrees. He told The New York Times that the housing crisis would “lessen prefab’s appeal” for two reasons: falling home prices “make all types of housing more competitive,” and the affordability of prefab housing is debatable, as “ancillary costs … can add substantially to the initial package.”

Related topic: Clayton Homes and Warren Buffett's Berkshire Hathaway

Clayton Homes, which was acquired by Warren Buffett and Berkshire Hathaway, Inc. in 2003, has designed and built manufactured homes since 1934, according to the company’s Web site.

In his 2008 letter to shareholders, Buffett expressed confidence and optimism, despite the current dire situation and challenges ahead. He wrote, “though the past has not been smooth, our economic system has worked extraordinarily well over time.”

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