Comparison of the Costs of Manufactured and Site-Built Housing

(The following contains excerpts from a comprehensive report authored by the Joint Center For Housing Studies of Harvard University JCHS).

Manufactured housing holds promise as an affordable form of housing that could expand homeownership opportunities for low – and moderate-income households at a time when house value growth is outpacing income gains in markets across the country. Simple comparisons of the cost of manufactured housing to site-built housing find that manufactured housing offers significant cost advantages, derived in large part from the greater efficiency in purchasing, production, and installation. However, recent comparisons are relatively simplistic, comparing the average cost of homes built without considering difference in size, amenities, or cost of transporting and siting manufactured homes.

The goal of the JCHS study is to document  the cost of comparable site-built homes and manufactured homes such that these differences are accounted for.To achieve this, we analyze three common types of manufactured homes; single section, double section, and CrossMODTM, While single-and-double section homes have been staples of the manufactured housing industry, CrossMODTM is relatively new type of home developed by the industry to make manufactured homes more comparable to site-built homes in their physical appearance, thus broadening consumer appeal, appraised value, and financing opportunities, and reducing community opposition to the siting of these homes.

The results of analysis find that all three types of manufactured homes continue to offer significant cost advantages over site-built-housing. These findings suggest that efforts to expand access to manufactured homes hold the potential to increase homeownership opportunities for low-and moderate income households.

JCHS outlined 5 key barriers that are limiting production of manufactured homes.

1. Negative Perceptions of Manufactured Home Quality: Older manufactured homes (aka “mobile homes”) built before the HUD standards in 1974, were of poor quality and limited aesthetic appeal and serve as the basis of popular misconception of today’s manufactured housing.
2. Restrictive Zoning and Land Use Regulation: Manufactured homes are often prohibited in zones set aside for single-family housing absent a special permit. State laws preventing the outright exclusion of manufactured housing can help.
3. Market Conditions: The same study that found a strong association with strict regulation and lower levels of manufactured homes also concluded that market conditions—including lower land costs, lower density development, and lower household income—were equally important in explaining where these homes were more prevalent.
4. A Unique and Limited Supply Chain: The same HUD study also noted how the unique supply chain for manufactured homes, in which homebuyers purchase a home from a retailer but are required to find land on their own, complicates matters. The location of factories can also be an issue; the number of factories has declined from more than 300 to about 140 today and factories need to be located within 500 miles of the home site to manage transportation costs.
5. Access to Mortgage Financing: A final constraint is the difficulty homebuyers face in accessing mortgage financing. Manufactured homes are generally considered personal property unless owners take steps to change the legal designation to real property. In order to be eligible for mortgage financing. 

While these barriers represent a formidable obstacle to greater use of manufactured homes, they should nonetheless be addressed, and with greater urgency as these homes have the potential to significantly expand homeownership opportunities in markets across the country.

Given the cost advantages and affordable homeownership offered by manufactured housing, there is a strong case to be made that public and nonprofit sectors could help overcome some of these barriers.