A Solution to Lack of Affordable Housing

In towns across the country, workers are struggling to make ends meet – and the high cost of housing is a big part of the problem.

Manufactured housing (also referred to as mobile homes) is already a major part of the solution. More than 22 million people in the U.S. live in manufactured housing — homes that are built to a federal standard in factories and typically placed on land that the homeowner owns, manufactured home subdivisions/communities; or, on rented lots in communities of manufactured homes. In many parts of the U.S., homes like these are the least expensive kind of housing available without a government subsidy.

Manufactured housing could do more to solve the housing shortage, but many communities have created rules that make building and maintaining manufactured housing more difficult. However, the quality of manufactured housing has increased a lot in the last three decades, and the latest generation of homes can look like homes in most neighborhoods. And new manufactured housing communities now often look like subdivisions of conventionally-built single-family homes.

Manufactured Housing Already Provides Housing for Millions of People

There are 8.5 million manufactured homes in the U.S. That’s nearly 10 percent of the nation’s housing stock, according to the Manufactured Housing Institute. Those who live in manufactured housing have a median household income of just under $30,000 per year.  For people interested in buying a home, manufactured homes are the most affordable homeownership option available. Manufactured homes can cost half as much per square foot to build than site-built houses, according to U.S. Census data. The cost to buy a manufactured home averages about $70,600, compared with $286,000 for a single-family site-built home, not including land costs.  The cost to rent a manufactured home with land in a land-lease community averages between $844 and $935 per month in many parts of the country. That’s in line with the monthly housing cost of $852 a month that a full-time worker making the average wage earned by a renter can afford, according to a 2017 National Low-Income Housing Coalition (NLIHC) report. That number assumes that the worker pays 30 percent of their income on housing.  A worker earning the average wage does not have many other housing choices. In comparison, the average rent on a one-bedroom apartment was $892 a month in 2017. Families have even fewer choices. A two-bedroom apartment was $1,103, according to the Fair Market Rents kept by the U.S. Department of Housing and Urban Development.  A person working full-time who earns the federal minimum wage can only afford to pay $377 a month on their housing, according to NLIHC. In only 12 counties in the U.S. can that worker afford to pay the rent on a rental home with one bedroom. Realistically, that means that in most parts of the country, workers either pay more than 30 percent of their income on housing and scrimp on other necessities, or work more than 40 hours a week, or double up with roommates or family members who help pay for their housing.  The problem is getting worse. The cost of housing continues to rise faster than wages. Between 2000 and 2015, the number of people living below the federal poverty line soared from 33.8 million to 47.7 million. The largest and fastest increases in poverty have occurred in medium-density areas outside urban core areas, in low-density areas on the urban fringe and in rural areas, according to the Harvard Joint Center for Housing. Housing costs are rising in part because of simple supply and demand. Single-family residential construction in the past decade has added fewer units to the housing stock than in any 10-year period dating back to 1968. Construction of smaller, less expensive “starter” homes is particularly low.

The inventory of homes for sale hit a record low at the end of 2016 and continues to remain low. Meanwhile, the national rental vacancy averaged 7.2 percent in the first quarter of 2018, according to the Harvard Joint Center for Housing. The manufactured housing industry is building more homes in response to the demand – but nowhere near enough to meet the nation’s affordable housing needs. Manufactured home production has increased for eight straight years. Almost 93,000 new manufactured homes were shipped across the U.S. in 2017, about a 15 percent increase over 2016, according to MHI. 

Some Local Communities Restrict Manufactured Housing

In many parts of the country, local officials have written rules to keep out more affordable types of housing like manufactured housing or apartment buildings.  In many towns, officials now do not allow the owners of manufactured housing communities to replace manufactured homes when someone moves. Other jurisdictions only allow manufactured housing in locations far from the center of town, far from local amenities such as schools, transportation, doctors and jobs. Other jurisdictions are considering banning them altogether.  The most common forms of zoning restrictions include restricting the age of homes in land-lease communities, requiring increased spacing between homes when replacing older homes, requiring larger lot sizes on homes and banning manufactured homes in residential areas.  Part of this bias may be based on the memory of earlier generations of manufactured housing. The quality of manufactured homes is much higher than it was 20 or 40 years ago.Local rules written to keep out manufactured housing may be considered discriminatory under the Fair Housing Act. That’s because the rules often have a disparate impact on protected classes. The Manufactured Housing Improvement Act of 2000 also gives the U.S. Department of Housing and Urban Development the broad authority to pre-empt strict local manufactured housing construction codes.  Given all these facts, it’s time to realize that manufactured housing is quality constructed, allows people to be homeowners at a fraction of the cost of site-built homes, and is a solution to the nation’s lack of affordable housing.

Obtaining a Mortgage When Buying a Manufactured Home

Mortgage loans when purchasing an existing manufactured home already situated on land or in a community on a lot that you would own is available. You can obtain a conventional loan, FHA or VA loan provided you qualify for the loan type.  There are certain requirements that must be met for each loan type and there are some general requirements for all. Because of the variations and it would make this article much longer than tolerable, please reach out to me for more information regarding the financing of manufactured homes.

 David L. Parker is registered with National Mortgage Registry with NMLS ID 461786. All content is the sole responsibility of David Parker and not any other parties or organization with whom David Parker is employed. David Parker Mortgage News is a private publication and exercises good faith in presenting valid information. Any reference to specific interest rates are for illustration purpose and not for solicitation or any representations of mortgage rates and/or annual percentage rate (APR) disclosure. It is recommended that all parties using this information seek proper counsel on any subject or matter contained in any publication of David Parker Mortgage News.