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Monday, December 13, 2021
Builders’ Hope Manufactured Homes Will Find Buyers
Homes largely built in factories and assembled onsite cost notably less, and builders say that option can help solve the affordable-home shortage.
NEW YORK – As home prices surge, more homebuyers show an interest in manufactured housing. Even buyers not looking for manufactured homes may discover that some listings that intrigue them are actually manufactured since they more closely resemble site-built homes nowadays.
The manufactured housing segment has long contended with a reputation of poorly made or cheap products, but companies say the latest designs are modern, often energy-efficient and built to withstand even the most severe weather.
The main difference between a site-built home and a manufactured one focuses on where components, such as walls, are built. With manufactured, they’re built in a factory and then assembled onsite. This technique allows homes to be built faster and cheaper.
Some builders and developers now hope that buyers locked out of homeownership may consider manufactured housing as an option. Some lenders are also showing more interest in manufactured housing, believing it could help with housing inventory and affordability challenges.
“We have a lot of teachers, first-time homebuyers, and folks downsizing after retirement,” says Dustin Arp, managing partner of Spark Homes LLC, which has developed manufactured home communities. “Maybe they used to qualify for site-built housing but no longer do.”
A new single-family built on-site sold for about $392,000, on average, in 2020; subtracting the cost of the land, the house itself cost about $309,000, The Wall Street Journal reports, citing government data. For comparison, a new manufactured home costs $87,000, excluding the land.
More than 100,000 new manufactured homes will be built this year, the highest amount since 2006, according to U.S. Census Bureau data.
But the sector may still need to convince buyers that manufactured housing is a smart, cost-effective alternative. The homes, often sold by dealerships, may 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,” according to The Wall Street Journal.
Further, about 42% of manufactured home purchases use loans secured by the home. Those purchases do not include the plot of land, according to the Consumer Financial Protection Bureau. The non-land loans could come with higher interest rates, and owners may be at greater risk of losing their homes if they don’t own the land as well.
Recently, Fannie Mae and Freddie Mac have adopted new programs that make it easier for lenders to extend conventional mortgages on certain manufactured homes, including those that have features like porches or garages built on site.
Source: “Home Prices Are Surging. The Manufactured-Housing Industry Sees an Opening,” The Wall Street Journal (Nov. 21, 2021) [Log-in required.]