Improvements in Credit Availability for Manufactured Homes Could Result in 700,000 More Homes During the Next Decade

The sales of traditional site-built homes are slowing down and the market is changing due to high prices, mortgage rates, and inflation. Examples: 

  • Existing home sales are down for the 5th straight month. June sales are down 5.4%. – Year over year sales were down 14.2%.
  • The average price of a pre-owned site-built home is $416,000.  
  •  High-interest rates push home buyers out of the market. The average mortgage interest rate is 5.5% and rising for the third month in a row, a full 2% higher than one year ago. Mortgage applications are at their lowest level since the year 2000.

The following are excerpts from an analysis by Housing Wire (HW Media), titled:  Manufactured Housing’s Trek Toward Acceptance

In policymakers’ hunt for a scalable, quick solution to the affordability crisis, one model has attracted more attention of late: manufactured housing.

Manufactured housing received a prominent shout in the Biden”s administration’s affordable housing plan, which touted the potential role Freddie Mac could play in that market.

Now the government-sponsored enterprises are each weighing whether to finance the most deeply affordable segment of the manufactured housing market. Freddie Mac has a plan – pending its regulatory approval – to roll out a test program to provide liquidity for loans on manufactured homes titled as personal property. Fannie Mae also is considering whether to provide liquidity to the segment.

But the manufactured home market faces hurdles it must clear before it can be viably viewed as a sustainable source of affordable housing. Homes titled separately from the land on which they sit are depreciating assets, meaning it’s riskier to finance them. Loans on manufactured homes often have shorter terms and higher rates than on single-family homes. And those buyers rarely refinance their loans – allowing the refinance boom, which gave site-built homeowners a chance to grow equity, to largely passing by manufactured homeowners.

Proponents of manufactured housing say the industry has made great strides in the past several decades. They argue the federal government, by providing GSE financing, can help smooth over some of the remaining rough patches and encourage a more equitable market.

In a recent report, researchers at the Urban Institute argued for the viability of manufactured homes as an affordable housing solution; in it, Karan Kaul and Daniel Pang estimated during the next decade, improvements to credit availability for manufactured homes could result in 700,000 more homes!

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