By Michelle Gamble
Prefabricated homes have recently become quite impressive. Not only are the price points, some starting at around $10,000, cost effective, but also the innovative engineering and contemporary features make some of these structures nearly impossible to distinguish these buildings from permanent housing. In fact, many buyers sometimes elect to invest in one of these new homes versus buying a standard building or home. To make matters more interesting, some property owners expand their inventory of rental units by dropping in small homes onto existing rental properties (much like accessory dwelling units aka ADUs), and therefore, creating more available housing and increasing profitability.
Right now in the East Bay, housing shortages continue to challenge providers. The San Francisco Chronicle reported, “San Francisco's housing production hit a 12-year low during 2024. At the same time, census data shows that housing underproduction fell by over 15,000 homes in San Francisco, Oakland and Berkeley.”
This housing environment invites much-needed solutions to quickly open up new rentals, not just for renters, but also to quickly place the homeless in safe housing at an affordable cost per unit. Prefabricated homes not only can potentially fill the shortage in available housing, but also can make it happen within weeks or months.
“Right now, prefabs are mostly used for ADUs, vacation homes, and a host of other things that aren’t primary residences,” said Pete Evering, Utopia Management based in San Diego. “I think there's a huge untapped potential there, especially considering how unaffordable the housing market has become. Prefabs offer a viable and cost-effective solution to housing shortages, as they can be rapidly produced and installed for a lower cost per square foot compared to traditional homes.”
“Prefab homes are like the Swiss Army knife of housing, they are super versatile,” said Luke Beerman, CEO of Freedom Fence FL. “A lot of people use them as ADUs, perfect for guest houses, home offices or even a rental property to make some extra cash. They are also a solid option for primary residences if you want something affordable but stylish. Vacation homes are another great use since they are quick to build and easy on the wallet. Plus, they are ideal for temporary housing after disasters or as on-site housing for workers.”
Evering added that stereotypes exist about these homes not being high quality or these structures are low-income alternatives to traditional housing, and these beliefs can hinder adoption. “I think the biggest reason why we don't see mass adoption yet is the stigma that comes with alternative housing solutions,” he explained. “You can ask any man on the street, and chances are they would rather rent than own a prefab. This is largely because prefabs are commonly associated with lower-income neighborhoods, so people who consider themselves middle class tend to be hesitant about embracing this alternative housing solution. Times may force them to adapt, though. As the market becomes ever more unaffordable, we have to consider rethinking the way we see non-traditional homes, and fast.”
In order to change these attitudes, property owners and renters need better information and even tours of these amazing, cost-effective and innovative new homes to increase adoption and overcome stigmas. “The versatility of prefabricated homes is one of their greatest strengths,” said Denys Schwartz, civil engineer, Constructionfront.com. “As a civil engineer, I've seen these homes used in a wide variety of ways, from accessory dwelling units (ADUs) and vacation homes to impactful solutions for social and affordable housing.
“The adaptability of prefabricated homes makes them ideal for addressing various housing needs,” continued Schwartz. “Whether it's for individual units in densely populated cities or larger multi-unit developments in suburban or rural areas, these homes can be customized to fit the specific requirements of different housing projects. They can also be designed to meet the demands of different demographics, from affordable homes for low-income families to more upscale properties for middle-class buyers.
“The ability to build quickly – what used to take months or even years can now be completed in weeks – offers a significant advantage in tackling housing crises. Moreover, these homes are often more affordable to build and maintain than traditional houses, making them an attractive option for governments or organizations focused on providing cost-effective housing solutions.”
SETUP AND CONSTRUCTION
The advantages of these homes when it comes to setup and what could be referred to as “drop in” is exciting and fascinating at the same time. Property owners can literally have a prefabricated home shipped and erected within days. “Prefab homes could seriously help ease the housing crunch,” said Beerman. “They are cheaper to build because most of the work happens in a factory, cutting down on labor and material costs. Plus, they go up fast, some projects can be done in weeks instead of months. Since they are built under controlled conditions, the quality tends to be topnotch too. This makes them a smart option for areas where traditional housing is either too slow or too expensive to build.”
“From a construction standpoint, installing prefabricated homes involves several key steps,” said Schwartz. “One of the key advantages of modular construction is that the foundation can be prepared ahead of the home’s arrival on-site, allowing for a faster overall construction process. However, this requires strong coordination to ensure that the foundation is compatible with the specific modular home being delivered. The foundation could be a concrete slab, crawl space, or a more specialized design, depending on the home’s structure and local regulations.
“Once the home’s modules are delivered and positioned on the prepared foundation, the next step is connecting the home to essential utilities such as water, electricity and sewer systems. In urban areas with established infrastructure, this process is relatively straightforward. However, when installing prefabricated homes in more remote or rural locations, it may require extending utility lines or building new connections, which can add complexity.
“For electrical connections, power lines need to be run from the nearest grid connection, and the home’s internal wiring must be completed to accommodate appliances, lighting and HVAC systems. Water and sewer connections also require careful planning, especially if the home is being placed on vacant or undeveloped land. In these cases, bringing in infrastructure such as water supply lines or septic systems may be necessary, which requires additional time and resources.”
AMAZING FEATURES
Prefab houses are not your old-school trailers or motorhomes. These structures are flat-out homes with foundations, four walls, and lots of amenities, some more impressive than ever. “Prefabricated homes are becoming a big hit for their flexibility and efficiency,” said Beerman. “Right now, the trend is all about open-concept layouts that make small spaces feel big and airy. People are going for eco-friendly materials and energy efficient designs to keep costs down and make their homes more sustainable. Smart home tech is also huge, think automated lights, security and climate control, all managed from your phone. What’s really cool is how customizable these homes are. You can tweak the size, layout and features to suit your needs, whether you are building a tiny guest house or a full-on family home.”
If you watch footage of how quickly and efficiently these homes are installed, you will be amazed. “I’ve noticed a growing trend toward ultra-compact prefabricated homes that prioritize multi-functional spaces,” said Ryan Whitcher, CEO and Founder @Harmony Home Buyers. “These homes are designed with movable walls, built-in furniture, and convertible areas that make the most of every square foot. They’re perfect for urban buyers and eco-conscious clients who value efficiency without sacrificing style or comfort.”
“Energy efficiency is a key trend, with many modular homes now featuring solar panels, energy-efficient windows, and advanced insulation to help lower environmental impact and energy bills,” said Schwartz. “In the future, we can expect more smart home technology integrated into these homes, allowing owners to control features like temperature and security remotely.
“Sustainability is also a growing focus, with builders increasingly using eco-friendly materials like recycled steel and low-carbon concrete. Additionally, today’s modular homes offer more customization options, allowing buyers to personalize designs without compromising on speed or cost.”
“I’ve also seen a surge in demand for off-grid prefabricated homes,” said Whitcher. “These homes come equipped with solar panels, battery storage, composting toilets, and water purification systems, making them ideal for clients who want independence from urban utilities. Whether for a rural retreat or full-time living, these designs appeal to buyers seeking self-sufficiency.”
“As for features, the trend is increasingly toward green and energy-efficient housing,” added Alexei Morgado, CEO and founder of Lexawise Real Estate Exam Preparation. “The homes are being built from better materials, with energy-saving appliances that have larger windows to allow for more natural light. Designs also include modern conveniences such as a full kitchen, fashionable living room, and outdoor areas needed to satisfy the tastes of today's newer homeowners.”
QUICK FIXES
Look for prefab homes to gain momentum in popularity. Sometimes housing developments can take years to build. With an ongoing housing shortage, years to construct a permanent structure won’t solve immediate problems.
“While prefabricated homes still aren’t super common, they are becoming more common for people looking to have short-term rentals on their property,” said Adam Hamilton, CEO, REI Hub. “They can work similarly to ADUs, providing guests with their own independent living space on a person’s property. It is just incredibly important for people considering this route to look into their local zoning laws to make sure it is something they can legally do. They should also be very careful about picking the right prefabricated home to buy, making sure it has everything they need.”
Michelle Gamble is the editor of Rental Housing Magazine
SIDEBAR
Can Prefabs Fix Homelessness and Housing Shortages?
By Denys Schwartz, Civil Engineer
From an infrastructure perspective, prefabricated homes could significantly contribute to solving homelessness by providing quick, affordable and scalable housing solutions. Due to their faster construction times, lower costs, and easier maintenance, these homes can be rapidly deployed in areas with high demand for housing, offering those experiencing homelessness a safe, secure place to live. The modular design also allows for the creation of entire communities, which could address both immediate needs for emergency housing and long-term solutions for affordable living.
However, while prefabricated homes can certainly help from an infrastructure standpoint, homelessness is not solely a housing issue. It’s often tied to complex social and health challenges, including mental health, addiction, and economic instability. Solving homelessness requires a combined effort across multiple areas of government—housing, healthcare, social services, and more. Therefore, while prefabricated homes can provide a critical piece of the puzzle, addressing homelessness in its entirety will require comprehensive, multi-faceted solutions.