FORTUNE — Steve Glenn, a successful Silicon Valley entrepreneur and former Apple marketing exec, thinks he’s found a new twist on the world’s second-oldest industry. His Santa Monica construction company, LivingHomes, designs and builds high-quality, modern, superefficient glass-filled abodes that are prefabs — which makes them extremely affordable.
Launched in 2006, LivingHomes started building high-end prefab green residences, including the nation’s first house to earn a Platinum LEED (Leadership in Energy and Environmental Design) rating, the top standard of the U.S. Green Building Council. Much of the home’s material is recycled, and thanks to heavy insulation, smart appliances, and solar power (not included), the monthly utility bills can add up to a mere pittance.
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While LivingHomes first focused on the luxury business, about two years ago Glenn decided that more affordable green housing would be a way to add an additional, fast-growing line. When the mortgage meltdown hit, the luxury line slowed, but the private company is now profitable, according to one of his investors.
Glenn’s first affordable house, called the C6, was assembled in Van Nuys, Calif., in early August. Inspired by the 1950s and 1960s California ranch style, the three-bedroom, two-bath dwelling comes with cork floors, 12-foot ceilings, floor-to-ceiling glass, no-VOC (volatile organic compound) paint, and a lighting system that can be controlled from an iPhone. The LEED Platinum C6 is 1,232 square feet — well below the average of 2,380 square feet for new construction. Thanks to the economies of scale of prefab building, the price tag (not including land and site prep) is $179,000, or $145 a square foot — about 30% less than a site-built home of similar quality. Says Glenn: “Our target market is the cultural creative who likes value, drives a Prius, shops at Whole Foods, and uses Apple products.”
Glenn’s challenge is to get his customers to overcome the stigma of prefab houses. (Think doublewides with pink-flamingo lawn ornaments.) Is the quality high enough? Will it last? Glenn’s solution: His houses come with an almost unheard-of 10-year guarantee.
This story is from the September 3, 2012 issue of Fortune.