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Manufactured Housing for Affordable Housing

Manufactured homes today bear little resemblance to their predecessors, the mobile home or trailer, but unfortunately, mainstream public perception seems deeply rooted in the past. And while the ubiquitous double-wide is still very much a part of the American landscape, many of today’s leading manufacturers are going toe to toe with site-built housing, and are coming out ahead on issues such as speed of delivery, cost, and in some instances, even aesthetic value.

One of the key reasons that affordable housing developers, advocates, and buyers are approaching manufactured homes with renewed interest is that these products are built and assembled under the controlled conditions of a factory. After being constructed, the unit is transported to the site and installed, often in several component parts. Many of the noticeable distinctions between manufactured housing and site-built housing are disappearing, as most manufactured housing today is no longer single units in trailer parks, but double and even two-story multiple units placed on permanent foundations on private land.

Originally an outgrowth of the recreational vehicle industry, mobile homes were initially subject to little or no regulation in terms of their construction and installation. As mobile homes became a permanent housing choice for many people, government officials began to acknowledge this reality, and concerns arose regarding issues of public health and safety. In 1974, Congress passed the National Mobile Home Construction and Safety Standards Act also known as the HUD Code - which directed HUD to develop national building standards and a federal oversight program for the construction of manufactured housing. These regulations went into effect in June of 1976, and preempted any existing state or local construction and safety codes. The underlying effect of federal regulation was to more clearly define mobile homes as buildings, rather than vehicles. The Housing Act of 1980 officially adopted this interpretation, mandating the use of ‘manufactured housing’ to replace ‘mobile homes’ in all federal law and literature for homes built after 1976.

The federal standards in place today regulate manufactured housing design and construction, strength and durability, transportability, fire resistance, energy efficiency, and quality. The HUD Code also sets performance standards for the heating, plumbing, air-conditioning, thermal, and electrical systems that can be used in factory-built homes. On-site additions such as garages, decks, and porches must be built to conform to local, state, or regional building codes.

Every three years, Foremost Insurance Company, a manufactured home insurer, conducts a market study to gauge their clients’ needs so as to tailor their products to better meet those needs. The last survey was conducted in 2002, and it revealed some interesting facts about the manufactured homeowner. For example:

The homeowners’ average age is 54.1;

Forty-seven percent have some college education, and eighteen percent have earned a degree;

At 56 percent, married couples make up the majority of households;

More than half are employed full time, and 30 percent are retired; Household median income is $28,900;

Average household size is 2.3 people;

The median installation year of the homes owned by those surveyed is 1985;

The median market home value is $20,000; and

49 percent of surveyed homeowners have their homes sited on their own private property.

Afordability and sound construction are two of the major draws of manufactured housing. Other positives include speed of on-site assembly (manufactured homes typically can be assembled in days or weeks rather than the weeks or months required for site built-housing), reduced disrupton of existing neighborhoods when used as infill housing, and increased quality assurance made possible by the factory setting. On the flip side, there is still a stigma attached to ths type of housing on the part of local governments, lenders, and community members.

The selling price for a new manufactured home ranges from under $20,000 for a single-section unit with basic features to prices in excess of $100,000 for a deluxe multisection home. Although many manufactured units are still of the single unit variety, increasingly, more are double units and units with two-stories. Today’s units have a life expectancy of 30 to 55 years, depending on the owners’ maintenance of the unit. With per-square-foot costs averaging 10 to 35 percent less than site-built homes, depending on geographic region, today’s manufactured homes provide homebuyers with affordable options in the housing marketplace.

The affordability factor in manufactured housing can be attributed to the efficiencies that are endemic to the factory-built process. A controlled environment and assembly line techniques eliminate many of the problems encountered in on-site construction, such as poor weather, theft, vandalism, and damage to building products and materials stored on site. Also, factory employees are often scheduled and managed more efficiently and effectively in comparison to the system of contracted and subcontracted labor employed by the site-built housing industry. Manufactured home building also benefits from the economies of scale that result from being able to purchase large quantities of building materials and products. As a result, manufactured homebuilders are able to pass some of these savings on to the homebuyer.

Manufactured homes are traditionally classified as personal property and are financed as such. Personal property (or chattel) loans typically have higher interest rates and shorter terms, but are easier to obtain and require little or no downpayments. This type of loan also does not require the buyer to purchase a home site for the unit, and while more expensive than a conventional loan, personal property loans are the most common choice among manufactured homebuyers.

Increasingly, however, manufactured housing units are being placed on permanent foundations and can be classified as real property. Despite this, some lenders still cling to the historic view, considering manufactured housing as personal property rather than real property, and so only provide personal property loans. In addition, many communities still retain outmoded regulatory prohibitions against manufactured housing, and work with their local governments to exclude all types. Some local governments try to limit placements because they believe that manufactured homes will cause property values to decline and will provide limited property taxes to the community.

Several years ago, in an attempt to end discrimination against manufactured homes in communities, the American Planning Association ratified a policy guide on manufactured homes. The policy urges all levels of government to recognize manufactured homes as an acceptable form of housing and a viable alternative to more costly site-built construction, thus allowing for an affordable homeownership alternative to low-and moderate-income families.

Research conducted by several universities, including Harvard, has shown that there is little evidence to support the contention that siting today’s manufactured housing in a given neighborhood impacts surrounding properties by depreciating property values. Research has also found that, when properly maintained and on private land, manufactured housing units hold their value.

Even in light of this research, manufactured housing sales have been suffering, and indeed, sales of new units have fallen steadily. According to U.S. Housing Market Conditions, May 2004, not since the fourth quarter of 1959 — 45 years ago — have quarterly shipments of new manufactured housing units been so low. With so many middle-income households able to afford site-built homes, the manufactured home market was left to those with poor credit ratings and little cash. The industry is struggling to work through the excess inventory of repossessed homes competing with new production.

Despite this setback, the industry is forging ahead in several areas to meet consumers’ needs. To serve the growing market of senior homebuyers, manufacturers are offering a range of ‘Universal Design’ plans that can accommodate wheelchairs and walkers. Floorplans include larger hallways and bathrooms, variable counter heights, and Lazy Susans in the kitchen. Attention to aesthetic features is also injecting new life into the market. Tilt-up roofs are now offered, which allow for attic space and increase the square footage. Two-story models are becoming more common, and many of these are virtually indistinguishable from their site-built neighbors. Other features, such as garages, decks, and porches, are helping manufactured homes blend into existing neighborhoods. Inside the home, vaulted ceilings, working fireplaces, and state-of-the-art appliances offer homebuyers the opportunity to customize a home to fit the family’s particular lifestyle and needs, at a price they can afford. Greater focus on energy efficiency within the manufactured housing industry has resulted in a significant jump in the numbers of manufacturers building Energy Star®-labeled manufactured homes.

Implementation of the Manufactured Home Improvement Act of 2000, enacted in December of that year, should facilitate greater public acceptance and more opportunities for the placement of manufactured housing. The Act establishes a consensus committee composed of members from the industry, users, general interest groups, and public officials selected by procedures advanced by the American National Standards Institute. The committee is empowered to recommend to the HUD Secretary the adoption, revision, and promote the use of new technologies by ensuring that their benefits are well understood and accepted. The New Hampshire Community Loan Fund (NHCLF) is finalizing the design of this 44-lot, HUD Code, land-lease community, which is located in one of the ten areas of the country identified as having the greatest need for affordable housing. Working with PATH and local environmental groups, NHCLF is working to promote high standards of environmental responsibility and construction, while working within a very tight budget. PATH proposes to place all the ranch-style homes on floating slabs with foundation anchorage that meets the lending agency’s criteria for a ‘permanent foundation,’ and to devise a form of solid and permanent skirting to replace the usual vinyl. Depending on budget, it is hoped that a number of the homes will be produced using the Next Generation style Cape Cod design, and be placed on full basements.

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