Housing is a simple necessity of life. But the issues putting homeownership out of reach for more Americans are complex. Some of these issues, such as affordability and housing stock shortages, relate directly to housing, but others seep into broader socio-economic problems, like labor shortages and population migration. The industry is tackling these issues with several innovative approaches, and one that is gaining well-earned attention is manufactured housing.

How Manufactured Housing Can Address Affordable Housing Challenges

Manufactured homes are built in a factory on a permanent chassis. They are either attached to a permanent foundation or “skirted” around their underlying chassis. They’re built according to the Manufactured Home Construction and Safety Standards of June 1976 (commonly known as the HUD Code) and, most importantly, cost an average of 45% less per square foot than site-built homes.

A recent National Mortgage News webinar explored how manufactured housing addresses today’s most pressing housing problems in four key ways:

1. Making homeownership more affordable for more people

Even with interest rates at historic lows, owning a home is unattainable for a growing proportion of Americans due to slow income growth and limited housing supply forcing home prices to increase rapidly. When fewer people have the wealth-building power of homeownership in any given region, it affects the region’s ability to attract and expand businesses, along with a slew of other societal issues.

Manufactured housing averages around $55 per square foot versus $114 for site-built homes, primarily because of efficiencies built into the manufacturing process. 

Manufacturers buy materials in bulk at a lower cost and can buy materials pre-cut, which further saves time and money. In the controlled environment of the factory, these homes can be built in a matter of three to four days even with multiple quality inspections taking place, and they avoid the problems of site building, such as weather and materials theft. Cost savings can then be passed along to the buyer—a new manufactured home price averages around $82,000.

2. Adding much-needed housing supply

Even if interest rates start to creep up, demand for housing is expected to stay high as a result of housing stock shortages driven largely by two generations—Baby Boomers and Millennials. More Boomers “aging in place” and not putting their homes on the market combined with the large influx of Millennials reaching “household formation” age exacerbates the housing shortage across the country.

With severe under-building in the entry-level home market, and older Americans looking to downsize, manufactured homes work for these two large demographic groups. Manufactured homes are a good solution for both first-time homebuyers and individuals over 55 years old because they put affordable housing into the supply wherever its needed—urban, suburban, or rural areas. Most markets have a factory within 150-200 miles.

3. Creating good-paying jobs where they’re needed

One of the reasons most commonly cited for the housing shortage is the lack of available construction labor. The Associated General Contractors of America says that 80% of construction firms report having a hard time finding skilled labor to build homes. The shortage of skilled construction labor is nationwide, but most problematic in rural areas.

Expanding the manufacturing sector in rural areas and developing a skilled labor force adds new affordable homes and high-quality jobs in areas where both are needed. The 132 manufactured home facilities across the country attract trained workers who tend to be more satisfied working in a manufacturing plant environment rather than moving from site to site and working in tough physical conditions.

4. Offering an environmentally friendly alternative

Energy efficiency built into the homes themselves and an eco-friendly manufacturing process mean manufactured homes far surpass site-built in terms of their environmental footprint. The factory home building process produces a fraction of the waste compared to a site-built home.

Homes can be enhanced during the manufacturing process to be more energy efficient through upgraded insulation, energy-efficient windows, on-demand water heaters and other energy- and water-saving appliances.

With so much to offer, manufactured housing should be front and center in every community’s plan to reimagine housing so that it’s affordable, available, contributing to the local economy, and reducing our carbon footprint. However, some obstacles exist: Land-use regulations and zoning restrictions stand in the way of getting manufactured homes to where demand is highest, and a “not in my backyard” attitude may exist. As a result, it’s important to clear up misconceptions around the quality of manufactured homes. Also, education and awareness around how manufactured housing works and how it can help is needed across the board.

More mortgage options for manufactured homes are available to lenders through conventional financing products. To fully explore the problem-solving capability of manufactured housing, lenders, policymakers, and community leaders need to take action to expand its acceptance and availability to those who would benefit from it.