Is a prefabricated home cheaper to build than the traditional stick build house? By cheap I don’t mean lower quality, but, building practically the same house using prefab methods or stick-built process. For many looking to build their new home, the price tag will be the main divider in their decisions.
Generally speaking, a prefab house is cheaper than a stick-built house by about 33 percent. And an average price for the majority of prefabs between 30$-100$ per sq.ft. With that said, it is clear that modular, kit, panelized, or any other type of prefabricated house will be priced differently while having some of its details varying between the different prefab types.
For that reason, prefab home manufacturers that wish to keep their prices lower for the most part than stick-built homes will have several different home layouts and sizes offered and even in a variety of building quality levels.
Some prefab companies will offer materials of a higher standard as part of high-end homes, however, these homes are still expected to be sold at a lower cost than the equivalent house built on-site.
Are all prefabricated home types cheaper than stick-built homes?
The short answer is YES, even though each type of prefab can come at a different price range they all would still be offered at a lower price than the traditional stick-built house.
With that in mind, the higher prices for prefab homes can be found in modular homes and panelized prefab homes which normally offer a higher standard of finishing and are usually fully finished houses.
A fully finished house means a house ready to move into, plugged into all utilities, interior and exterior finishing materials have been applied, and with many companies including the kitchen and bathrooms installations. In other words, the house will not just be a shell that will require more construction work.
The higher price range for a prefab home build is around 80-100$ per sq.ft, which compared to the 250$ per sq.ft for the on-site stick-built house is a real meaningful difference.
However, in some prefab companies, greater flexibility is available with custom designs that can push the prices of modular homes and panelized prefabs higher and no doubt reach 250$ per sq.ft and even more. So at the end of the day, choosing to go with the standard prefab home designs offered for modular homes or panelized prefabs are cheaper while those that wish to get a more unique and custom house will have to pay more.
One thing to bare in mind is that even choosing to go with a custom design and higher-end materials and lots of changes to the original prefab standard will have all the other prefab and modular home benefits such as speed of construction, transparency of pricing and process, and lower environmental impact.
Now on the lower end of our prefab pricing bell curve are kit homes, pre-cut homes like log homes, and manufactured homes. Though they vary in materials, design, and delivery methods they all offer reasonable and convenient pricing and are expected to cost anywhere from 30-60$ per sq.ft, which is an insanely low price to pay for a house.
On that note, it is important to understand what is it that you are paying for as some kit homes and precut companies are not supplying all the finishing systems of the house. For example, in many cases, the house insulation materials are not included as transporting them is just too expensive and could be purchased locally to save costs.
In addition to the insulation and other interior materials that might be missing from these types of prefabricated homes, the actual construction work on-site might not be included as well. This is a favorite “fetcher” for those with DIY aspirations, time, tools, and knowledge. Yet for some, this won’t be as appealing and should avoid it at all costs.
Prefabs, modular, kit, and pre-cut, all give a great option for those that look to reduce their home building costs and still live in a great, comfortable, and affordable home. Additionally, there are many things such as basements that will be equally priced between prefabs and stick built, and yes prefabricated homes can have a basement if you were wondering.
Prefab Homes Have Fixed Price
A fact that makes building a stick-built house so much more expensive compared to prefab homes is the ever-changing rates of materials and labor during construction. Building a house takes anywhere from 6 to 18 months in the US, during this time a lot can change in the markets (as we are all experiencing this 2022 last few months), supply chains can get stuck and prices of many parts of the building process can go up and will go up.
Stick-built home builders will have to protect their contract by raising prices if needed during a project, a fact that makes the building budget hard to control and highly susceptible to inflation rates.
On the other hand, we have the alternative new building system of prefabricated homes, which are being built much faster and using advanced industrial production methodology in the process. For example, better materials inventory management leads to a lower chance of big global or local events changing the company’s building costs which may result in higher costs for the customers.
For that reason and more, prefabricated homes companies can give a quote before starting the job, and keep the price as signed utile the end of the project. Yet, this does not come with a small hurdle that needs to be addressed, a big sum of the total price of the prefab house is due to be paid at the beginning of the project.
Paying such a big chunk of money in advance can be intimidating for most of us and even harder to get proper financing from the bank in many cases. This can become a problem for those that require a mortgage from a bank. However, there is a light at the end of the tunnel, and as the prefab homes market develops many banks are lining up to collaborate with these companies to help each other grow and deliver a better product to the market.
Being able to set a price and control most of the variables in the process is by far what makes the prefab and modular homes industry so much cheaper than the traditional building industry. It acts like other industries that supply goods like the car industry, computers industry, and more.
Moving the homes building industry from a construction mindset into industrial production mindset changes the way these companies build and enables them to improve not only the speed, quality, environmental impact, and sustainability of the homes, but also to give way more value for a lower cost.
This process benefits all sides starting with the customers, continuing with the banks that enjoy a safer housing market to be involved in, and the manufacturers that can improve their process to become more profitable not at the expense of the customers.
Prefabricated Homes Are Cheaper On The Long Run
When considering the building process there are many variables that may harm quality as mentioned above, while the production of a prefabricated home can have a higher quality assurance and as a result better longevity. This can be measured over time with different treatments and renovations each house has to go through and is yet another proof that prefabricated homes are cheaper than stick-built homes.
Many prefabricated homes are built in such a meticulous way that most of the ills in housing are not happening with them. For example, the waterproofing, insulation, and air tightness in prefabs lasting longer, this is thanks to the industrialized and controlled process they go through in the factory.
Protecting the house from water and moisture will help the insulation materials to last longer while protecting the house from mold, and high electricity bills. These systems work together to create a lasting and healthy environment for you to live in.
On the other hand, stick-built homes are susceptible to failure on these systems as the build is happening out in the open. The rain, sun, morning moisture, and other hazards can harm the waterproofing process, the air tightness of joints in the house, and in time the insulation which will lead to unwanted renovations.
Overall higher quality and greater control over the environment help create a better house which over time saves lots of unnecessary costs.
To Sum Up The Issue
Today there are many prefabricated homes sold for less than 100K USD, which is a lot less than the cheapest stick-built house that will most probably be of a lower quality if compared. So it is fairly clear that prefabricated homes are cheaper than stick-built homes.
Prefabricated homes are definitely cheaper and can be way more sustainable as you can read in this post. These two factors in my opinion hold most of the weight when it comes down to deciding between prefabs or stick-built homes.
If you are in the process of choosing a building alternative make sure to make the required due diligence for each builder or manufacturer you consider. I have written a post that might help you pick the right prefab home manufacturer.
And always remember that not all that glitters is gold, and in the housing market this goes a long way. Pick only what is right for you, not for me, not for the neighbors, the price is only one factor out of many, and sometimes (like we discussed above) cheap is expensive, so know where to save and where to spend.
Hope to see you in my next blog post.
Till then, have a good one
My Alternative House