Prefab Rehab

(2 of 3)

Another kind of buyer is financier Warren Buffett, who has planted a cornerstone in the market. Last year Buffett's company, Berkshire Hathaway, spent about $1.7 billion to acquire Clayton Homes, a manufactured-housing company in Tennessee that had sales of $1.2 billion in 2003. This year Clayton, in turn, spent $373 million to acquire Oakwood Homes, which offers a mix of modular and more traditionally manufactured homes. The lower end of the prefab industry is recovering after a wave of defaults resulting from overzealous lending. With interest rates climbing, more customers may now opt for relatively inexpensive manufactured homes. Recently, the damage caused by Hurricane Charley boosted stocks of companies that specialize in manufactured homes.

Except for some modified post-and-beam-style cottages by Cutler and Graves, the architects' houses are not for traditionalists. They're mostly modern structures built with large quantities of glass, steel and environmentally sustainable materials. Kaufmann calls the Glidehouse project an effort to "collaborate with nature." Instead of hardwood floors that stress first-growth forests, she uses fast-growing bamboo. Lighting from the structure's glassy exterior, plus solar panels and a wind generator, reduces electricity use. "It's the housing equivalent of the Prius," says Kaufmann, referring to Toyota's environmentally conscious car. "Clean and green."

As is true in the auto market, not everyone appreciates green. Gary Lapera, who with Graves designed Lindal's more traditional homes, says the public may eschew the stark boxiness of some of the new houses. "They tend to lack what we call domesticity"--a feeling of warmth and home, he says. Even Kalkin, who has already sold a dozen of his shipping-container homes, admits they are not for everyone. "They have a low price hurdle, but they have a very high sophistication hurdle," says Kalkin. "It's hard to imagine them being welcomed with open arms on Main Street U.S.A." Some municipalities still turn up their noses at them, even though only manufactured homes are subject to restrictive zoning laws.

Prefab owners still spend the same amount of money for site development as do owners of custom-built houses. Sometimes prefab homes come prewired and carpeted. But more often, buyers work with a local builder who lays the foundation and installs the plumbing and electrical systems. And while prefabs are cheaper than most custom builts, they generally don't carry the bargain-basement price tags of builders such as Hovnanian Enterprises and Pulte Homes. "You're not going to see these things rolling out like typical subdivisions because even though they're priced less than custom homes from big-name architects, they're still relatively expensive," says J. Robert Hillier, an architect in Princeton, N.J.

The appeal of designer prefab may be strengthened by its surprising durability. Whereas conventional homes are built by nailing or screwing drywall to studs, the new prefabs use both screws and adhesives, making them sturdier, says Bevier. "They're built to withstand the rigors of being trucked down the road and lowered into place with a crane," he says.