Don't Call Them Mobile — Manufactured Housing Might Be The Answer To U.S. Housing Crisis
In the first half of last year, more than 50,000 manufactured homes were shipped across the country — a 31% year-over-year increase, according to the latest numbers from the U.S. Census Bureau.
The average sale price was $124,900, and while that number represents a two-year increase of nearly $40,000, manufactured homes remain an affordable option for an inventory-depleted U.S. housing market.
While 22 million Americans live in manufactured homes, according to the Manufactured Housing Institute, there remains a stigma nationally, as many people revert to memories of ill-kept mobile home parks. Mobile homes, legally defined as such because they are moveable, are also built in a factory — with wheels included before 1976. While most conventional homes in the U.S. are built on site from the ground up, manufactured homes are built in factories and assembled at a location determined by the owner — not in a mobile home park.
Some also see manufactured homes as the answer to the national housing crisis.
“Quality improvements in construction and installation practices have increased durability so that the life expectancy of factory-built housing is increasingly comparable with that of site-built housing,” Urban Institute researcher Karen Kaul wrote last year.
From an investment perspective, the higher mortgage interest rates and U.S. inflation will still play a role. But for those looking for longer-term investments, those willing to ride the economic roller coaster may get back in, Northmarq Vice President Don Vedeen told Multi-Housing News. Northmarq is a capital markets resource for commercial real estate investors.
“Investors need to plan for the long term,” Vedeen said. “I envision the market to continue to cool down in the first and the second quarter, but I think at some point, a domino will fall, and investors will begin buying again and compressing cap rates despite the interest rates.”
On the whole, the manufactured housing industry, with an increase in solid and stable manufactured home communities in the past decade, has seen a rise in institutional investors and owner-operators.
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Government Intervention Is Hurting Growth
Government help is also needed to keep manufactured home prices low, UMH Properties President and CEO Sam Landy wrote in an opinion piece for Housing Wire. UMH owns and operates 134 manufactured home communities in the U.S.
“Federal policymakers should take note of the fact that manufactured housing is the most affordable homeownership option available for low- and moderate-income families in America. Manufactured homes are often less expensive to own than it is to rent. Last May, the Department of Energy (DOE) released manufactured home energy standards that would add thousands of dollars to the average price of each new home when they are scheduled to take effect this May. These standards were not developed with any real input from Housing and Urban Development (HUD), which has exclusive statutory authority for manufactured home construction and safety standards nationwide, through the HUD Code.”
Landy added that the actual homeownership costs of the new DOE requirements far exceed any annual energy savings, and the HUD Manufactured Housing Consensus Committee found that portions of the standards could be more workable.
The National Association of Realtors (NAR) also points to local government regulation as a detriment to manufactured home ownership, claiming city and county governments often impose zoning restrictions making it difficult to find a viable location for a manufactured home to be placed. The NAR complains many are relegated to very specific areas. NAR believes that much of manufactured housing defies the run-down trailer park stereotype when they can be “downright posh.”
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