Building smarter: How prefabs and SIPs are reshaping housing

In San Diego and across California, where housing demand outpaces supply and buildable land is limited, innovation is taking root in unexpected places—including residential backyards. Prefabricated homes and high-performance materials like Structural Insulated Panels (SIPs) are increasingly used to construct Accessory Dwelling Units (ADUs), also known as in-law units or “granny flats.” These small, flexible units have emerged as one of the state’s most promising strategies to add housing where it's needed most.

‍

For those exploring ADUs, from homeowners to designers and policymakers, these technologies offer faster build times, superior energy performance, and in some cases, lower lifetime costs. But they also raise broader questions about quality, aesthetics, and how new forms of construction can reflect California’s environmental and social values.

What Is prefab, really?

"Prefab" is short for prefabricated, but the term covers a range of construction methods. Some systems rely on factory-built, three-dimensional modules that are transported to the site and craned into place. Others use “panelized” construction, where walls, floors, and roofs are manufactured in flat sections and assembled onsite like a large kit of parts.

‍

What unites these approaches is a shift in how and where buildings are constructed. Instead of traditional on-site framing, much of the work happens in a controlled environment using precision tools and standardized processes. This reduces weather delays and material waste while improving build quality. Though the concept isn’t new, it’s gaining momentum thanks to advances in digital design, building science, and code requirements.

‍

For ADU developers, prefab often translates into fewer construction delays and more predictable budgets. It also opens the door to high-performance building systems that meet California’s increasingly rigorous energy and climate standards.

Inside the walls: The rise of SIPs

One technology gaining traction in the prefab space is the Structural Insulated Panel (SIP). SIPs are made by sandwiching a rigid foam core between two structural boards, creating a solid panel that serves both as insulation and framing.

‍

Compared to traditional stud-and-drywall construction, SIPs can dramatically reduce heat loss. A study by Oak Ridge National Laboratory found that SIP wall assemblies can outperform conventional wood framing by 40–60% in thermal resistance (R-value), largely because they reduce gaps in the building envelope where heat escapes and ensure a more continuous layer of insulation. (ORNL, 2022)

‍

That level of performance aligns with California’s long-term push toward “net-zero energy” buildings. Under the state’s “Title 24” energy code, homes are expected to use energy more efficiently and be capable of generating as much energy as they consume over the course of a year, typically with the help of solar panels and electric systems. (CEC Title 24)

‍

Because SIPs create highly insulated, airtight shells, they pair well with all-electric homes, which are houses that don’t rely on natural gas. Instead, they use electric or induction cooktops, high-efficiency heat pumps for heating and cooling, and electric water heaters. This approach supports California’s efforts to decarbonize buildings, which currently account for about 25% of statewide greenhouse gas emissions.

‍

SIPs also align with the principles of Passive House design, an international building standard focused on minimizing energy demand through airtight construction, solar orientation, and high-performance materials. Though not widely adopted yet in the ADU market, these principles are increasingly influential in California’s high-performance building movement. (Passive House Institute US)

Not just tech: Design still matters

While performance is a major selling point, prefab and SIP construction still demand strong architectural thinking. Some modular designs have a stark, boxy aesthetic that may not blend easily with traditional neighborhood character. Others offer limited flexibility for customizing floor plans, rooflines, or finishes.

‍

SIPs, for their part, require early design decisions and highly accurate construction drawings. Because wall panels are manufactured off-site, changes mid-project can be costly or even unfeasible. Poor detailing, especially around windows, roofs, or mechanical penetrations, can also undermine the energy benefits these systems are known for.

‍

But when well-executed, prefabs and SIPs can deliver buildings that feel solid, quiet, and thermally stable, qualities often lacking in conventionally framed homes built under tight timelines or budget constraints.

San Diego’s role and the State’s ambitions

‍

San Diego has emerged as a leader in ADU-friendly policy. In 2021, the city launched its ADU Standard Plan Program, which offers pre-reviewed, code-compliant designs that streamline permitting and reduce architectural costs. According to the City of San Diego’s Planning Department, the goal was to make it easier for homeowners to add ADUs without navigating a complex approval process. Many of the approved plans are compatible with panelized and modular construction, allowing developers to pair permitting shortcuts with faster building methods. (City of San Diego)

‍

Since 2020, the city has issued over 3,000 ADU permits. Officials say demand remains high, especially among multigenerational families and those looking to offset rising housing costs.

‍

At the state level, California’s housing and climate goals are closely linked. The state must permit 2.5 million new homes by 2031, more than 1 million of which must be affordable, and reach carbon neutrality by 2045. To meet these targets, housing must be not only more plentiful but also lower in carbon emissions and resilient to climate stressors like extreme heat and wildfires. (California HCD, California Air Resources Board)

‍

In response, agencies like the California Energy Commission and the California Strategic Growth Council have backed studies and pilot programs exploring how prefab and panelized construction can support climate-aligned housing goals. A 2022 report by the Growth Council noted that high-performance prefabs, especially those made with low-carbon materials, could play a "critical role" in reducing embodied emissions and improving access to affordable housing when paired with zoning reform and financial incentives. (SGC Modular Housing Report)

Smarter housing, lot by lot

For policymakers, the real potential of prefab and SIP systems lies in scale, meaning the ability to deploy well-designed, low-emission housing quickly and efficiently across entire neighborhoods. For builders and residents, the benefits are more immediate: shorter construction timelines, more predictable costs, and homes that use significantly less energy.

‍

Still, these solutions are not a one-size-fits-all fix. They require integrated planning, thoughtful design, and a clear understanding of local conditions, from lot sizes and setbacks to architectural context and grid infrastructure.

‍

As San Diego continues to refine its approach to ADU construction and infill housing, prefabs and SIPs are likely to become more common. The challenge—and the opportunity—is to combine the best of building science with responsive, site-sensitive design that contributes meaningfully to California’s housing and climate future.

‍