Another Opinion: Prefab is Not the Answer to Affordable, Modern and Green Homes

100K house image

The 100K House

Chad Ludeman, developer of the 100K House, has looked at the prefab industry closely and concludes: "I just don't believe it is the best way of delivering modern design to the average new home buyer." He writes a guest post at Jetson Green that is thoughtful and thorough. He disputes most of the claims made by those promoting modern prefab (including me):

1. Prefab is more Affordable
2. Prefab produces less Waste
3. Prefab takes less Time
4. Prefab is more "Green"He rips into each of these and makes some very good points. However Chad has a real advantage in his timing; prefab costs are fixed, with high capital costs and relatively constant labour costs. Four years ago a carpenter, if you could find one, earned $70K a year; they don't now. A conventional builder needs little more than a pickup truck and a nail gun to get into business, so in hard times the prefab companies cannot compete. In the last housing recession just about every prefab company in the States and Canada went bankrupt because of this, and it is likely to happen again. Advantage Chad.

However there is still an argument to be made for each of his points:

More Affordable. We are starting here because it is the easiest to disprove, and is also the main reason that many start looking into prefab. Unfortunately, most find, after weeks of research, that they just cannot afford any modern prefab unit on the market today.

I would agree that prefab does not scale down well. Because of the fixed costs of overhead and the crane, at a thousand square feet it is almost impossible to do a prefab as cheaply as site built. And of course, we don't like to promote houses that are too big.

But I spent four years in the business of designing and selling prefabs and I can tell you that people's expectations of what it should cost are completely unrealistic. They see vinyl clad carpeted prefabs at a hundred bucks a foot and demand that price for modern green prefab, even though the cladding, windows and flooring all cost over twice as much.

North Americans have a disease, pricepersquarefootitis, that drove the McMansion boom (air is cheap, so blow it up more) and makes small modern prefab look expensive. Nonetheless, for small houses, Advantage Chad.
Less Waste. Since prefab is built in a factory they claim to create much less waste by setting aside their scrap and reusing it in other projects. What they do not often advertise is that their structures use 20% - 30% more raw materials than stick-built homes in order to withstand transportation.

Absolutely true. But on a conventional construction site, studies have shown that 30% of the materials are wasted through theft, water damage, or just thrown into the bin. I would rather have the material going into making my house stronger and quieter than into the garbage.

These days, one needs armed guards on a construction site to keep people from stealing the wiring; a prefab gets delivered with the front door locked. This situation is only going to get worse. Advantage Prefab.
Less Time. Most prefab companies will claim that there are significant savings because the construction process is much faster than a traditionally built home. The site work can be done while the home is being built in the factory and the actual physical build time on the manufacturing floor is only a few short weeks. However, in practice there may be months before that process, and months after, that greatly lengthen the time before the home is ready to be lived in.

Here I profoundly disagree, primarily since Chad says "With site-built homes often going up in 4-5 months where is the time savings in prefab?"- And when did a site-built house go up in that time from start to finish? The six to twelve months that Chad claims prefabs takes includes design, building permits and probably all deficiency cleanups. I have built prefabs where the house started construction in the factory on the same day as the foundations were poured, and the house was set two weeks later. Allow two weeks per module for finishing on site and you are done. Advantage Prefab.
More Green. We'll throw this in here because "green" is hot now, so the prefab companies are jumping in and claiming superiority again in the green realm. Much of the green claims in prefab come from the lower waste myth that was dispelled earlier. The new one that we've been hearing more of lately is that the insulation is installed to better standards than site-built homes because of the superior labor and inspections put in place by the factories.

I could point out that the vapour barrier is as important as the insulation and in a prefab, where they build from the inside out, it is far more likely to be intact. I could also point out studies that show how much fuel is saved by not having those monster pickup trucks that every construction worker drives. But really, Prefab is just a house built in a factory instead of a field, and it is only as green as the materials in it. Advantage Neither.

In the end, at this time, I would have to call it a tie. If Jim Kunstler is right and the American suburban experiment is dead, then there will be lots of cheap labor about and prefab is pretty much dead too- it will never be competitive.

But at some point when the housing market returns and there are banks that lend money, people are going to demand the quality and consistency that comes from a factory. That's why cars aren't built in driveways.

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