Prefab vs site-built ADUs: what you actually save

Prefab ADU companies promise speed and a fixed price. Site builders say prefab is a box that still needs everything a house needs. Both are partly right. Here is what the public record shows.

What prefab actually means

"Prefab" covers several different products, and they are regulated differently.

• Modular or factory-built housing is built in sections in a factory to the same building code as a site-built home, then set on a permanent foundation. In California this is called factory-built housing. The state's handbook says that once assembled, there is no practical difference between factory-built and site-built residential structures. Local planning and building departments handle the foundation and installation.
• Manufactured homes are built to the federal HUD code on a chassis. California's ADU law includes manufactured homes in its definition of an ADU, according to the state ADU handbook.
• Panelized and kit units arrive as wall and roof panels or as a kit, and a crew assembles them on site.
• Units on wheels such as tiny houses are often treated as vehicles or park models, not ADUs. Check locally before you buy one.

Lenders care about the difference too. Fannie Mae says a detached ADU could even be a manufactured home, but its rules change when the main home is manufactured.

The best side-by-side we have found

The San Diego Housing Commission built one manufactured one-bedroom and one site-built one-bedroom, both 499 square feet, as part of a public pilot. The report gives the full cost of each:

• Manufactured: $137,875, or $276 per square foot
• Site-built: $176,333, or $353 per square foot

That is about 22 percent less for the factory unit in this pilot. The manufactured unit also moved faster. Its site plan was approved within six months, while the site-built units took twelve. The manufacturer built and delivered within 90 days of the deposit, and construction and installation took six months overall versus eight to ten for the site-built units.

The report explains why. The architect's role was limited to site plans because the unit design was already done. And site preparation started while the unit was being built in the factory, instead of waiting for it.

Where prefab savings disappear

The same pilot shows the catch. The factory price for the manufactured unit was $49,995. Installation and site prep were $44,500, on-site construction and utilities another $29,000, and delivery $5,000. In other words, most of the money went to work done on the lot.

Watch for these:

• Access. The pilot picked a lot where a truck could reach the backyard. Delivery by truck cost $3,500. A crane would have cost $7,000 to $9,000. On a tight lot with power lines, the crane may be the only option, and the price goes up.
• Foundation. Factory-built units still need a foundation designed to code. Slopes and poor soil cost the same whether the unit came from a factory or not.
• Utilities. Trenching for water, sewer and power is site work. It does not get cheaper with prefab.
• Design limits. A catalog unit is fast because the design is fixed. Change the layout and you start to lose the time savings.

Questions for a prefab company

• What exactly is in the price? Ask for foundation, delivery, crane, utility connections, permits and fees as separate lines.
• Is the unit approved as factory-built housing or modular in my state, or is it a HUD-code manufactured home?
• Have you installed units in my city, and how long did those permits take?
• What happens to my deposit if my permit is delayed?
• Who is responsible for the work at the seam between your scope and the site work?

Questions for a site builder

• Do you have permit-ready plans already approved in my city? Many California cities must now offer preapproved plans, and the state requires a decision within 30 days on a detached ADU that uses one, according to the HCD handbook.
• What is your current schedule from permit to move-in on recent jobs?
• How do you handle change orders?

Before you call a builder: answer six questions to pick a type, rough out a budget, and save builders to My Stack as you go.