Michelle Kaufmann Designs, which had hoped to build communities with modular homes and passive design techniques, has shut its doors and is figuring out what to do next.

Kaufmann, in an interview, said the decision came after a factory partner – where the homes are actually constructed – shut its doors after some buyers had to cancel orders. Although the company has stopped producing homes, it will start to talk to large builders about selling or licensing its designs and intellectual property and/or acting as a consultant. Like in the solar business, large builders can get access to capital and have far larger sales channels than start-ups. Although large builders have historically not focused much on green homes, the uptick in LEED construction in the commercial segment has prompted some to begin to incorporate solar panels and look at other green options for residences.

The company in five years erected 40 homes and was working on two green housing developments. Scaling up, however, was going to be tough, she admitted.

The company was one of the first in the U.S. to tout modular homes – homes built in factories – as an upscale option. For decades, modular homes in the U.S. mean mobile homes. In Europe and Japan, however, modular homes and condominiums are found in various price brackets. Panasonic, for instance, produces homes and plans to start selling a model eco-home with TVs disguised as mirrors and air conditoners equipped with occupancy sensors in Japan and maybe Europe in the next few years. With modular homes, builders can get a tighter seal, and keep out mold than builders can get by building a home on site.

The plumbers and electricians are also employees, so you don't have to worry about subcontractors disappearing.

The new wave of modular homes also emphasized design techniques such as opposing, open-able windows (to cool passively and reduce air conditioning), countertops from recycled paper, and daylighting. Other green modular home builders include Zeta Communities and Living Homes while Project Frog specializes in schools and commercial buildings from factory-made components. Kaufmann, however, has built more than most. Click here for a video of one a Kaufmann's homes shows at West Coast Green in 2007.

"We kind of had to do it as a proof of concept," she said. "A big company wasn't going to do it."

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