Reality Check on the Manufactured Housing Myth

Attitudes about manufactured homes are starting to catch up to today’s reality.

Longstanding misperceptions are being dispelled as an increasing number of potential homebuyers, as well as real estate developers and lenders, recognize that these homes are attractive, well-constructed and sound investments. They’re also comparatively more affordable to buy than site-built homes.

“As an affordable entry point to the housing market, manufactured housing is finally getting the attention it deserves,” says Danny Gardner, Senior Vice President, Mission and Community Engagement, Freddie Mac Single-Family. “And more potential homebuyers are taking notice.”

Illustrating Community

Take, for example, Kilpatrick Woods, a new development in Hagerstown, MD being completed in phases and which will be seamlessly integrated with the area around it. The neighborhood will comprise a total of more than 230 manufactured single-family homes.

The houses in Kilpatrick Woods boast characteristics typically seen in site-built homes. homeowners enjoy high-end finishes to fit modern tastes for kitchens and baths; energy-efficient, eco-friendly lighting, cooling and heating systems; higher-pitched roofs; two, three and four bedrooms; front porches positioned to encourage neighbors to interact with each other; and playgrounds and nature trails.

Streamlining Construction

Manufactured home construction takes place in a factory, in a controlled environment. Each home is built to a national building code from durable construction materials and delivered straight to the home site. There, the house is installed on a permanent foundation to exact specifications for the soil type and location.

Creating and assembling the home’s components in a factory ahead of placement on land the borrower owns or leases makes construction more precise and efficient than on-site construction. That keeps costs down, reduces construction errors and waste, meets high quality standards and makes the home available faster.

Once the house has been designed and assembled to the selected specifications and is ready for move-in, it’s hard to tell the difference from a site-built home. Except that a manufactured home costs about 45-50% less per square foot before the cost of the land is factored in.

Overcoming Barriers

Two significant barriers to U.S. homeownership are the lack of available supply of starter homes (typically defined as 1,400 square feet or smaller) and continually rising home prices. Construction of new entry-level homes is at a 50-year low and, when it comes to existing housing stock, many potential homebuyers are priced out of the market.

These economic realities contribute to the potential for manufactured housing to lower barriers to homeownership. Since they can be constructed at a lower cost and much more quickly, manufactured homes offer a way to boost the supply of affordable housing and bring sustainable homeownership within the reach of more households. Manufactured homes built since 2000 average about 1,400 square feet in size.¹

Simplifying Financing

Freddie Mac has made it easier for lenders to increase access to credit for homebuyers looking to purchase a manufactured home. For example, between 2018 and 2023, Freddie Mac evolved our manufactured housing policies and financed more than 46,000 manufactured homes titled as real property, providing more than $6.7 billion in market liquidity to support affordable homeownership for households earning very low, low, and moderate incomes. For lenders, manufactured housing represents a sound business opportunity.

Freddie Mac manufactured housing financing options include CHOICEHome^® for Crossover Modern Homes, or CrossMod^® homes, like those in Kilpatrick Woods. CHOICEHome offers a conventional 30-year, fixed-rate mortgage or an adjustable-rate mortgage (ARM), comparable to site-built home financing.

When CHOICEHome is combined with Home Possible^®, our flagship affordable mortgage offering, very low- to low-income borrowers in various stages of life – from first-time homebuyers, to move-up borrowers, to retirees looking to downsize – can get a fixed-rate mortgage with a down payment as low as 3% of the home sale price. First-time homebuyers also can combine a CHOICEHome mortgage with Freddie Mac’s HomeOne^® fixed-rate mortgage offering, which has no income restriction.

When Home Possible is used for standard (non-CHOICEHome) manufactured home financing, the mortgage requires 5% down, but still offers significant cost savings to eligible borrowers.

Modeling the Future

While there are millions of manufactured homes across the U.S. already in place, this housing segment still makes up only around 7.5% of existing homes and just 9% of new homes, according to the Census Bureau.²

There’s ample room for manufactured housing to become a larger portion of the affordable housing supply.

Kilpatrick Woods is a model for other communities across the country, says Freddie Mac’s Danny Gardner. “The experience of buying a manufactured home is like that for buying any other type of home,” he notes. “A buyer can check out the homes online, engage a real estate agent, tour the neighborhood and see the homes on-site and landscaped. 

“The concept might seem simple and straightforward,” he adds, “but because we’re talking about manufactured homes rather than site-built homes, it’s groundbreaking. ”

Working Together

Through our commitment to manufactured housing as an affordable housing solution that can make a difference across the U.S., Freddie Mac works with all the players in the housing ecosystem: lenders, developers, manufactured housing retailers, construction companies, financial services firms, housing counseling agencies and educational organizations.

This ongoing collaboration is helping to overcome market challenges and meet housing demand – putting more families in homes and enabling them to build equity for a more secure, confident future.

References: 

¹ “A Review of Barriers to Greater Use of Manufactured Housing for Entry-Level Homeownership,” Joint Center for Housing Studies, Christopher Herbert, Alexander Hermann, Daniel McCue, Chadwick Reed 

² “In the Zone” How Manufactured Housing Can Help the Supply Gap,” Freddie Mac^®