Is It Time for Price Per Square Foot to Die?

Connect:Homes is a pretty cool modular housing company.  They’ve adapted their designs so that that fully prepared units can be shipped anywhere using standard industrial transporting practices. (Shipping containers.) That’s smart.

Unfortunately, the company is using the standard real estate metric of price per square foot to show that its competitive. They’re proud of the fact that $145/sf is their starting point.

I think that’s odd.

To put that number in perspective, in Austin you can buy a nice four bedroom house in one of the best school districts in the country for $80/sf (including land). The Connect:Homes pricing doesn’t include land.

So, if you compete (or market) on pricing per square foot, you’re going to lose. Why?

Because it’s irrelevant to the value you’re providing. The prefab/modular housing world offers: more flexibility, modern aesthetics, faster construction, energy efficient design. I know that if I throw down $X on a prefab house, it may cost more upfront than a traditional home, but there are savings to be had over time. Plus, and this is pure guesswork, but I suspect prefab buyers are more interested in forever homes than temporary (decade interval) housing.

That’s what Connect:Homes should be focusing on. And they can do it in language that makes sense to the real estate market. Call this metric net price per square foot. Use the formula Cost-Savings/Square Feet over a say 10 year timeline. Make the math transparent, let your users punch in their own estimates and compare.

Get other prefab companies to adopt the metric and suddenly you’ve redefined the market.

For a real kicker, use a chart to compare this with the net cost of a traditional property (which would likely increase given energy/maintenance costs etc).

-Shlok
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