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Is Building A Prefab Cheaper Than Buying An Existing Home?

070208_prfab.jpgA few weeks ago, we were invited to a dinner party hosted by one of our former architecture professors. The topic of conversation? The cost of prefabs. Another guest at the party was building one and remarked, "You know, I thought when I was going to start building a prefab, the overall cost would be cheaper than just buying an existing house in a good neighborhood! Turns out? I'm paying almost 30% more, plus I can't move in my new house for another six months."

[ Photo of the Living Home by Ray Kappe via BestHouseDesign Blog ]

Aside from some costs that he wasn't anticipating (soil testing alone cost about $20,000!), this guest was already worried about the longevity of his as-yet-unfinished home. "At least it's the house I want, brand new, with all the eco-friendly appliances, solar power, and custom landscaping!" he said. Hypothetically speaking:

If you had a decent amount of money socked away in your underwear drawer and you were looking to get a house, would you buy an existing house or build a prefab?

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Comments (24)

Judging from what I've seen on this site, the term "prefab" signifies a luxury niche product more than it signifies a building method. It's similar to how the "Starbucks" in Starbucks coffee is more important than the "coffee" part. Sure, if i had the money to blow on a premium item like that, i'd do it; for the same reasons i buy Starbucks.

posted by Tinyvoices on 2008-07-02 16:59:16
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As they say, the "greenest" building is one that's already built.

posted by J. Cipa on 2008-07-02 17:08:55
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I'd be willing to with any permutation of pre-fab, shipping containers WHATEVER if it would get me into my own home, but there is no land in seattle for such things.

posted by DahliaCactus on 2008-07-02 17:16:08
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why does every apartmenttherapy post start with a dinner party? seriously....is that the new key party for this decade?

jessus, what can be more obnoxious than discussing the values of pre-fab bizarchitecture over goat cheese roulades and garlique crostinis?

AMEN for this video...http://www.youtube.com/watch?v=K4HINhXvZRs

posted by randylandd on 2008-07-02 17:25:14
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Out of curiosity... at what point does a prefab house become more environmentally friendly than an existing house, factoring in the cradle-to-grave lifecycle of a home?

Sure, these new homes are more energy efficient, use renewable materials like bamboo, etc. but there is still an environmental impact in actually harvesting and manufacturing new materials, manufacturing the home's components, transporting it to the site, building it, etc. vs. an buying an existing home where that kind of impact is already over.

posted by Benjy on 2008-07-02 17:37:27
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@ randylandd - If you're not sure of the answer to your question, just reread your post.

posted by elvedon on 2008-07-02 17:40:10
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hope to buy an existing home and greenovate. i've done about a dozen prefab tours now and find the square footage costs shocking for what you get. i'm pretty sure i can add nana doors and knock out walls for less. i'd do a prefab garden shed or roof addition (both of which cost out well)....but not a dwell home at current economics.

posted by healthyhome on 2008-07-02 17:41:12
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My dream house is a craftsman bungalow so I'm not interested in prefab unless there is an original Sear Catalog bungalow kit left over from the 1920s

posted by LaDonnaNichole on 2008-07-02 17:47:12
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well see, that's the thing. in many markets the land "value" is preposterous, almost making it a poor choice to even think about putting a prefab much less any other type of buildout on it. in addition, has anyone ever tried to get a loan from the bank for dirt...it's one of the more difficult things to do unimproved land loans, so you could be fronting some major dough unexpectedly. if it weren't such a (pardon the pun) cottage industry right now that keeps the prices up in the higher ranges, i'd totally be prefabbing like a madman!

posted by ubertimmo on 2008-07-02 17:53:31
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I have to laugh -- Prefab a PREMIUM product??!

Oh, we've come a loooong way, baby!

But, hey, being Czech I have totally different idea and experience of prefab... Actually, a very dear friend of ours was a professor of architecture back in Prague, and was offered a professorship at a North American university because of the innovative work he had done with prefab. Wonder if his students have been part of this prefab movement...

And that dinner party guest... if he had been honest, he would have admitted that although he could purchase an existing house for 30% less, it would cost him at least that to renovate the home to a point where he was comfortable (that's what a kitchen, 2 bathrooms and miscellaneous work comes to), and it still wouldn't be a fully customized home like the prefab will be.

posted by monika1 on 2008-07-02 18:15:59
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The answer, as is the case with most question is: "depends."

When I was in a home search I briefly looked at pre-fab. It cas be expensive, but when you see these prefab modern houses, that is not the inexpensive end. The modern prefab house is VERY expensive. I was watching a show on green living and they were highlighting a prefab house and they said the cost tofabricate was over $300 a square foot! That is just for fabrication.

When you build a house it is a lot more than a building, you need to buy the land, test the land, connect the house to power, water, waste, etc and all these things add up VERY fast. Then you get to the matter that most available land is more rural.

The best option would be to find an existing house that suits your needs or to renovate with an eye towards being green.

The "prefab is cheaper" rule of thumb has gone the way of the dodo.

posted by tallguylehigh on 2008-07-02 18:46:26
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I've dealt with a lot of prefab homes over the years and almost all of the time people buy prefab because they buy land with an existing house that would require wayyy too much money to renovate. New foundations, etc. I'm all for utilizing already built architecture, but if the cost to make a building livable is significantly higher than ripping it out and building new, the solution is obvious.

posted by sallyTV on 2008-07-02 18:57:18
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6 months? You've got to be kidding me.
A friend of the family runs Eco Urban Homes ( http://www.ecourbanhomes.com/) in Saint Louis and has them up in 2 months... foundation to move in. And they have done LEED Platinum certified ones...
And the price tag isn't bad. If my husband hadn't already bought this 100 year old gem we are currently in, we would have chosen one of these and used it as infill housing in one of my favorite neighborhoods in the city.
This is what real pre-fab housing can do. It doesn't need a humongous price tag or long wait times... otherwise, what's the point?

posted by magdelane on 2008-07-02 19:47:31
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"@ randylandd - If you're not sure of the answer to your question, just reread your post."
posted by elvedon

that made me laugh out loud. i woke up the kitty.

posted by mscot on 2008-07-02 19:54:03
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"If you had a decent amount of money socked away in your underwear drawer and you were looking to get a house, would you buy an existing house or build a prefab?"

Prefab 101 for anyone who is interested:

Modern prefab is cheaper than a site built EQUIVALENT.

Nobody marketing prefab today claims that their product is cheaper than all other forms of housing. It is not about absolute pricing - it is relative pricing.

Unless the substitute "existing" house referred to in the question has very similar design values to a prefab being considered, then the buyer is making a different decision.

This is really so simple: The value of the current crop of prefab products is that they offer design ideas that otherwise would be MORE EXPENSIVE to site-build than the prefab product.

If you can find an existing dwelling that looks and performs like one of the current prefabs (whether it is Marmol Radziner, Michelle Kaufmann or a container home or whatever) and it costs less than a prefab project then buy it. Otherwise if the existing home is "cheaper" but "different" then the decision is really based on what you can afford.

If all prefabs looked like any other existing home then this would be a good question, but most popular prefabs are about offering modern design ideas that are not available in any other less expensive way.

posted by MDS on 2008-07-02 19:55:38
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For all of those that live in the Southeast (we're in Atlanta) this is especially true. You can build an equivalent or better modern, ecofriendly home for 60-70% of the cost of a prefab modern home. We're building our own now!

posted by decaturmodern on 2008-07-02 21:10:01
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I like the idea of prefab . . . I just haven't found one yet that I like AND can afford. Of course, I have the same problem with existing homes . . . if I like it, I can't afford it. Guess I want too much and that's why I'm probably staying right where I am.

posted by williamsweyr on 2008-07-02 21:38:34
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My answer is: NEITHER!
I'd design and build my own home from scratch, from the ground up.

posted by Daily Nuance on 2008-07-02 22:56:14
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The fact remains that it's still cheaper to have an architect-designed, custom-built-to-suit home on a site than to do pre-fab - especially if you go the route of a Marmol-Radziner or some other high-end modern. And it's not necessarily greener. So I still can't quite figure out the point.

posted by DarrenB on 2008-07-03 00:00:29
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While I like modern furnishings and decor, I tend not so much to like modern architecture, and when I do like it, it's more of an aesthetic oh-that's-nice versus wanting to occupy a modern home myself. The house I grew up in was about 160 years old, and I suppose that had a big influence on what I desire in a house of my own some day. Anyway, I'm for an existing home all the way. I can't imagine buying a prefab or building new, personally-- the customization of such things has very little appeal to me. Ideally I'd like a nice, older home (1910s or earlier): sometimes the (minor, anyway) irritants are a part of the charm, and if they're large enough problems to need fixing, then that process helps make a house a home in my eyes, though of course that statement has its exceptions.

posted by slushlily on 2008-07-03 01:00:36
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I am forever and old home junkie. The older, the better.

posted by Seaside on 2008-07-03 01:05:17
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Darren B: show me an architect who can build you Marmol Radziner quality cheaper than Marmol Radziner can.

Most people who think they can construct a site-built EQUIVALENT home cheaper than the prefab version are really talking about an APPROXIMATE version of the home that fits within their budget.

Michelle Kaufmann built her own home (a Glidehouse) as a site-built project. She then started marketing a prefabbed version because it cost less and could be built quicker. This is a rare example of comparison between site-built and preffabed versions of the identical house design.

If you hold quality level constant then prefab offers more value. i.e. it costs less than site-built to get the SAME quality. However many people are willing to trade off quality for a lower price. i.e. they prefer to site-build a home at a quality level that meets their budget. In essence they are happy to choose an approximate substitute.

This is really about creating a custom value equation (simplistically: price divided by quality) rather than accepting the preconfigured value equation offered by the prefab vendor.

I think a Bentley automobile is very good value (price divided by quality)- but I'm not going to pay that much for an auto. I'd rather select something else at a lower price point that has an acceptable level of features and luxury (maybe an Audi) even though I know it is not equivalent to the Bentley.

Also note that prefab competes on value better in some markets than others. In remote locations there really is no alternative source for that type of design and construction.

Of course there are thousands of architects and builders who will point at a prefab and say "I can build you the same thing for less". This is no different to subcontractors who claim they can hang drywall or build a retaining wall for less than the other guy. At some point you have to ask which corners will get cut to get the approximate job done. Is there really that much profit in prefab that others can build the same thing for less?

Finally, if you have seen Marmol Radziner quality in person and you really know how to build it for less money then you should start a business because there are lots of people who would love those homes at a lower price point. So far nobody has worked out how to do that.

posted by MDS on 2008-07-03 03:45:01
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I am an architecture student and all about the modular aspects of shipping containers and the like. I recognize the house in the post from the architect's website, but i cannot remember the name of the firm, where did you find this and what is his/her name?

posted by chrhardy on 2008-07-03 08:02:59
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When you think of a house you cannot think solely of the immediate cost, particularly, when examining a Prefab, you have to consider the cost savings to the environment and your future savings, as well as, potential value. When you factor all these costs you will have the true cost. Besides, I live on the West Coast where a house like this would be widely received and I think it's really a show stopper.

posted by peach2008 on 2008-07-04 20:41:33
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