Amid Housing Shortage, Manufactured Housing Sees an Opportunity
New York, NY, November 22, 2021-"Housing lenders, developers and advocates think they have found a winning formula by building homes in factories that look like site-built homes but cost less. More developments like the one in Seguin [Texas] could help alleviate America’s housing-affordability crisis, they say,” reports the Wall Street Journal.
“‘We have a lot of teachers, first-time home buyers and folks downsizing after retirement,’ said Dustin Arp, managing partner of Spark Homes LLC. It developed Cordell Oaks, where the Guerras bought their home. ‘Maybe they used to qualify for site-built housing but no longer do.’
“A new single-family home built on-site sold for an average of about $392,000 in 2020, or about $309,000 excluding the cost of the underlying land, according to government data. New manufactured homes cost $87,000, not including land.
“The industry is on pace to deliver more than 100,000 new manufactured homes this year for the first time since 2006, according to the Census Bureau. The Biden administration has pointed to manufactured housing as one solution to the shortage of affordable homes.
“Still, manufactured-home makers face a battle convincing prospective buyers that their homes have solid construction and safe financing choices. The industry boomed in the 1990s, when dealers pumped up sales by offering unrealistic loan terms to people who couldn’t afford them. Home shipments spiked to nearly 400,000 a year. Many borrowers defaulted and lost their homes, and many lenders shut down.
“During the pandemic, households living in manufactured homes of all types have been about twice as likely to fall behind on rent or mortgage payments as the broader population, according to an analysis of census data by Alexander Hermann, senior research analyst at Harvard University’s Joint Center for Housing Studies. About 19% were behind in the third quarter of this year.
“Those occupying manufactured homes were also more likely to report losing incomes during the pandemic than other households, Mr. Hermann said.
“In many ways, manufactured housing remains a world apart from the site-built housing market. The homes are constructed in factories and shipped to their destinations. They are traditionally sold in dealerships that might offer limited financing options. In those cases, a person might buy a manufactured house as a piece of personal property, like a car, rather than getting a mortgage that tethers the house to underlying land.”