Quotes of the Day

When Becky LaChance and Jarrett Rice move into their new home in Benbrook, Texas, this fall, it will look like no other house on the block. Designed by renowned architect Michael Graves, who is also known as the creator of teakettles and toilet brushes for Target, it will feature a bold, angled roof, dormer windows and a country-cottage feel reminiscent of 19th century architect Andrew Jackson Downing. Aside from its traditional style, there are several major differences between this and other Graves homes. Designed as a "kit house," it was crafted in a factory owned by Seattle-based Lindal Cedar Homes and shipped to its destination on a truck. Unlike typical Graves houses, which can easily cost $1 million, LaChance and Rice's 2,000-sq.ft. prefabricated abode will be completed for well under $300,000, including the land. "We didn't have a clue what a kit house was when we first heard the news," says LaChance, who won the prototype home in a sweepstakes promotion for Target's bridal registry. "But when we found out it was designed by Michael Graves, we were blown away."

Forget boxes on wheels and tacky subdivisions. Prefab is now just plain fab. Once the poor stepchild of residential construction, so-called systems-built housing is now the province of topflight architects, who are reinventing the genre with innovative designs, new building components and environmentally friendly approaches. In September, Lindal (2003 sales: $50 million) begins offering two versions of the Graves-designed kit house on its website, where it already sells a prefab home created by James Cutler, the architect behind the home of Microsoft chairman Bill Gates. New Jersey architect-cum-performance artist Adam Kalkin is taking orders for his 2,000-sq.-ft. Quik House kit made from steel and shipping containers and priced as low as $76,000, not including land. And Frank Gehry protege Michelle Kaufmann recently debuted Glidehouse, a moderately priced modular home (averaging 1,350 sq. ft.), so named for a series of sliding panels that hide storage spaces and regulate light and airflow. Although prefabs account for less than 30% of new home construction, they are ushering in affordability with style. "Prefab is making good design available to the masses," says Jill Herbers, author of the book Prefab Modern, "and as more people discover it as an option, it will become a competitive force in the marketplace."

Inspired by the Sears, Roebuck mail-order homes that sprang up in the early 1900s, "designer prefab" spans a number of highly nuanced — and often confounding — housing categories. Variously described as systems-built, modular, panelized, kit or manufactured, prefab homes are constructed at least partially in factories before being transported to building sites. There they can be assembled quickly, sometimes in a matter of days. While most of the new-age houses in a box have yet to be mass-produced, an expected rise in interest rates and a public hungry to meld good design with low cost will make them an attractive alternative, says Charles Bevier, editor of Building Systems magazine, a trade publication. The Freedonia Group, an industrial market-research firm, expects the size of the prefabricated-housing market, which includes panelized, manufactured, modular and precut, to rise to roughly $11.8 billion by 2007, up from $9.5 billion in 2003. (And, yes, that includes trailers and double-wides.) Interest is already beginning to grow — among both consumers and investors. Rocio Romero, 32, an architect from Perryville, Mo., has sold five of her Laguna Verde (LV) kit houses, which are priced at $31,050. Andrew Reid, a sales manager for Countrywide Home Loans in Woodinville and Chelan, Wash., says he has been swamped with inquiries since Kaufmann's Glidehouse was featured in Sunset magazine. "I had several hundred calls from potential buyers," he says.

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.

Unlike older prefabs, even the smallest of the new designer models are often highly customizable. Steven Quinones-Colon of Crockett, Calif., added a darkroom and a printmaking studio for himself and a Jacuzzi for his 11-year-old daughter to his Glidehouse. "It's small, but it's designed for the way we live," he says. Graves' two Lindal models offer buyers the choice of several exterior trims and room additions. "Our kit-of-parts approach allows people to make lifestyle choices as well as choices of colors, materials and details," says Graves.

And as these designer prefabs become more popular, the increase in volume could help drive down prices. Kaufmann and her husband Kevin Cullen, a builder, say that day has already arrived, at least on their block. Before Kaufmann began mass-producing her Glidehouse, she and Cullen constructed a custom-designed prototype for use as their residence. The price: well above $500,000, not including land. Recently a neighbor purchased a kit version of the house and built the identical home just across the street — for close to half the price. Says Kaufmann: "Every day we look out the window and think about what a great deal they got. We're still trying to get over it."

• Annetta Miller