How Prefab Houses Work

Prefab Around the Globe
A prefab home on Block Island, R.I., circa 1967
A prefab home on Block Island, R.I., circa 1967
John G. Zimmerman/Time Life Pictures/Getty Images

In the United States, the Northeast has been the biggest adopter of modern prefab because of the area's lack of land, shorter building season and higher cost of labor. Because of environmental advances (see sidebar) and the high cost of real estate, California has also become a player in the prefab market. Since Hurricane Katrina and the housing slump, the South has also increased its number of prefabricated houses. Many of these are low-cost housing, but some manufacturers have added environmental benefits, like energy efficiency, which increases their value. Plus, these prefabricated houses get positive reviews for aesthetics, durability -- including wind rating of a 150 mph -- and price over the infamous FEMA trailers.

European countries have embraced prefab housing because of land constraints. Companies in England and Germany use cranes to set modular units atop pre-existing buildings. In Sweden, hip home furnisher Ikea has expanded into the homebuilding business. Appealing to a workforce that cannot afford to live in the higher-priced cities, Ikea has sold thousands of its Live Smart ("BoKlok") apartments.

In space-deprived Japan, car maker Toyota has expanded into home-building. Just as its auto assembly plants have gotten a reputation for efficiency, so have its modular housing production centers. And because the housing is made under the strict confines of its factories, Toyota can market it as durable and sturdy enough to endure earthquakes, which are common in Japan.

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