Are Manufactured Homes the $129,000 Solution to America’s Housing Crisis?
High mortgage rates, lack of supply and elevated prices of traditional site-built homes have made the dream of owning a home for a lot of first-time buyers out of reach. But some experts suggest that one option that could help to ameliorate the challenge of affordability in the housing market – manufactured homes, which cost $129,000 on average.
These homes, which are built in a factory and then placed on a lot, cost less to build, according to a recent study from researchers at Harvard University’s Joint Center for Housing Studies, which could also mean that they’d be less expensive to buy than traditional homes. The researchers point out that building a basic manufactured home could cost 36 percent less than a typical home.
“Although adding the cost of land to these homes reduces the magnitude of the cost savings, the advantage can remain substantial – particularly in areas where land costs are low,” the study said.
The average cost of a manufactured home costs about $129,000 as of August 2023, according to the U.S. Census Bureau.
Mortgage rates hit their peak of 8 percent- the highest level they have reached since the beginning of the century. The high cost of home loans has hurt the supply of homes as it led to a freezing of the used home market, where sellers became reluctant to put their homes on the market out of concern that they would be forced to replace them with more expensive mortgages. This, in turn, helped push up prices.
The median sale price of a site-built home costs more than $361,000, a 5.5 percent increase in a year in what is the biggest price jump since October 2022, according to Redfin. This makes monthly payments a new homeowner will have to pay up to about $250 to nearly $2600 a month for the four weeks ending December 2023, Redfin pointed out.
In the past, manufactured homes proved a useful alternative, according to the Harvard researchers.
“A 2001 analysis of the gains in homeownership among low-income households during that period identified manufactured housing as a particularly important pathway into homeownership, accounting for more than a quarter of all low-income homebuyers in 1997,” they wrote.
They looked at monthly median costs of these homes, and found that a manufactured home would mean outlays of nearly $600. Those who own the land where the the homes are built would pay monthly payments of nearly $500 less than the $750 those who do not own the land their homes sit in.
One of the challenges in the scaling up of manufactured homes is that regulations have made it tough to locate such homes within or near traditional neighborhoods.
These zoning restrictions are motivated, in large part, by the negative perceptions of the quality of manufactured homes that lead jurisdictions to segregate and limit this form of housing,” the Harvard researchers point out.
Sources: Newsweek– Harvard University’s Joint Center for Housing Studies – Redfin – US Census Bureau
