Manufactured Homes: A Solution To America’s Housing Affordability Crisis
(Source) The following contains excerpts from a research report by the Urban Institute, titled: The Role of Manufactured Housing in Increasing the Supply of Affordable Housing.
While the majority of America’s homes are built on site from ground up, a far more budget-friendly option exists that’s growing in popularity: manufactured homes, which are built in factories, then assembled on site.
Because manufactured housing is inherently low-cost housing, it could be a part of the solution to the affordability crisis. Manufactured homes cost significantly less than site-built housing. Some 22 million Americans live in manufactured homes, according to data from the Manufactured Housing Institute. These residences cost a mere $122,500, on average–about one-quarter to one-half of the national median cost of existing single-family, site-built homes in November 2022, of $416,000.
The affordability advantage of manufactured housing creates opportunities for households with low incomes to become homeowners. In 2021, the median income for manufactured home buyers stood at $57,000 compared with $93,000 for site-built borrowers, according to the Home Mortgage Disclosure Act data. More than 70 percent of manufactured home borrowers had annual incomes under $75,000 in 2021 compared with $93,000 for site-built borrowers with only 36 percent of borrowers who purchased site-built homes in 2021.
Manufactured homes can mitigate the impact of the aging housing stock. More than half of the US housing stock of 140 million units is more than 42 years old. Although home preservation plays a crucial role in extending useful life, manufactured homes could be a viable solution for very old or unsafe homes that are uneconomical to repair. Jurisdictions with a large stock of such homes could improve housing quality for their residents through zoning reforms that permit manufactured housing.
New manufactured home shipments in 2021 and 2022 were at the highest levels in over two decades, despite Covid, building supply shortages and inflation pressures. The steady increase in the number of manufactured housing units shipped since 2010 indicates that demands for manufactured housing remain healthy. Further, as prices for site-built homes rise beyond what middle income families can afford, manufactured housing could play an increasingly larger role in the market. The quality of newly built manufactured homes has improved substantially, owing to HUD Code updates and the industry’s focus on improving quality.
Due to their low price tag, many real estate experts see manufactured homes as “absolutely” a solution for America’s housing crisis, says Karan Kaul, a researcher with the Urban Institute who’s studied them extensively over the years. In fact, Kaul and a colleague wrote in 2022, “Quality improvements in construction and installation practices have increased durability so that life expectancy of factory-built housing is increasingly comparable with that of site-built housing.”
