Is Manufactured Housing the Answer to America’s Affordable Housing Crisis?

According to the Harvard Joint Center for Housing Studies, the national homeownership rate in the United States has experienced an historic decline in recent years. After peaking at 69.2 percent in 2004, it had fallen to 63.7 percent in 2015. During the second quarter of this year, only 62.9 percent of U.S. households were owner occupied residences—the lowest level since the Census Bureau began tracking it in 1965.  But why? And could manufactured housing be the solution?

Recently, news commentator Chris Reed penned an op-ed in the San Diego Union Tribune in an attempt to answer this question. In it, Reed offers what he feels is the obvious solution to the housing crisis in his home state of California. Both question and answer are similarly applicable to other states and regions of the country. We have highlighted his opinions below:

Answer To Housing Crisis Is In Plain Sight — Manufactured Homes

This may be remembered as the year California’s leaders finally grasped that a lack of housing was an enormous problem, driving up the cost of homes and rent to an extent that the Golden State has become the epicenter of U.S. poverty, with more than one in five households living paycheck to paycheck. The realization spurred state lawmakers to propose dozens of bills meant to promote housing construction. However, none of the legislation will significantly increase the availability of affordable housing stock in California.

Reed suggests there is an obvious answer to the affordable housing crisis hiding in plain sight—manufactured homes—if Californians can do the following:

  • manufactured housing community californiaGet past harsh stereotypes about “trailer parks.” While many are perfectly fine communities, some older parks look and feel shabby, and smug put-downs of their residents have been common for many decades. But the manufactured homes of 2017 are not like the mobile homes of 1957. Today’s manufactured housing is durable and attractive, and remains vastly cheaper than conventional site built homes. Manufactured homes are the only form of unsubsidized affordable housing in the nation.
  • They’re as ready to embrace new thinking as officials in Great Britain and Japan. An article in the London Independent that discussed “trailer trash” stereotypes went on to tout the promise of prefab houses, and to applaud the British government for making such homes a central part of its plan to build one million new manufactured housing units by 2020. In Japan, the embrace of manufactured housing came decades ago. Toyota builds semi-detached modular homes (pictured bottom right) guaranteed to last 60 years for about $90,000. About one-sixth of new homes in Japan are manufactured homes.
  • manufactured housing toyotaLearn from history’s greatest investor, Warren Buffett, and take a clue from one of the world’s most successful and disruptive companies, Google. The potential of manufactured homes was grasped long ago by legendary investor Buffett. His company, Berkshire Hathaway, bought Clayton Homes for $1.7 billion in 2003. Berkshire Hathaway now controls about 50 percent of the U.S. market—and 70 percent of homes sold under $150,000. The second richest person in the world, per Forbes, looks to have yet another gold mine on his hands—at least if manufactured homes really take off. But Buffett isn’t the only mega-billionaire who appreciates this valuable alternative to conventional home building. Google plans to buy 300 units of modular housing to serve as temporary employee accommodations in the ultra-expensive Silicon Valley. Experts heralded the move as not only good for Google, but as a potential template for others to follow as the high cost of construction, combined with expensive real estate, make affordable housing hard to come by.

Manufactured Housing Is Ready To Help — Now, State Officials Must Help, Too

Will Google inspire California officials to embrace manufactured housing? That very much depends on whether California officials actually, you know, want to solve the housing crisis by sharply adding stock—or if they’d rather send the message that they’re trying by endorsing affordable housing bonds and approving minor regulatory reforms.

manufactured housing california legislatureUnless Californians are convinced of the benefits of a significant increase in home building—targeted at meeting housing demands at every income level —no state intervention is likely to make significant progress on addressing the state’s housing challenges.

Nationally, it’s going to be exciting to watch manufactured housing’s explosive growth, and see if Warren Buffett or his heir beat Amazon’s Jeff Bezos in the race to be the world’s first trillionaire! Either way, Californians are far more likely to be reading about the phenomenon on their phones than witnessing it in their backyards.

Note: In his full commentary Reed references information from recent writing in USA Today by rural investment activist Suzanne Anarde, which was co-opted here at Click “I Celebrated Holidays In A Mobile Home” to read the blog.

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