Will New Decade Bring New Manufactured Home Buyers?
“Hope springs eternal” – as we put the last decade behind us and we enter a new one. The traditional site-built home industry is still struggling with a shortage of affordable housing to meet the dreams and needs of first-time homeowners, but are hopeful the new decade will see more millennials become homebuyers, for the first time.
“Meanwhile” – fortunately, there have been thousands of first-time buyers that have discovered manufactured housing that meets all their wishes and aspirations for high-quality affordable homeownership.
While first-time traditional homeownership mortgage rates have been in decline over the last few years, there is a sense of optimism that some of the challenges associated with the decline may be improving as we enter into the new decade.
“While we’ve recently seen a boom in refinance activity, actual homeownership rates are down. Challenges have included high home prices, sluggish wage growth, and limited housing inventory,” said Joe Mellman, senior vice-president and mortgage leader at TransUnion. (reported online by HousingWire)
‘But we may be starting to see daylight as slowing home price appreciation, low unemployment, increased wage growth and low-interest rates are helping affordability, Mellman added. “As a result, we are optimistic that first-time homebuyers will contribute more to homeownership than at any time since the start of the Great Recession.”
MANUFACTURED HOUSING EXPERIENCING CONSISTENT GROWTH
Meanwhile, the manufactured housing industry since the beginning of the Great Recession recovery in 2011 has posted year-over-year growth in production of manufactured homes and modular housing for eight consecutive years of the last decade.
The consistent growth of manufactured housing has been buoyed by first-time home buyers discovering that a manufactured home “is everything a home should be,” and will have a cost up to 50% less than a comparable traditional site-built home, including quality of construction, appearance, safety, and value retention.
Contrary to the general narrative surrounding the Millennials (ages 23 to 38) and home buying (they would rather rent because they don’t want to be tied down by a mortgage), Millennials are responsible for more home mortgages than any other generation, especially manufactured home financing.
In a Transunion survey of 943 U.S. residents who have never owned a home and express interest in buying one in the next three years. Of those 943 surveyed, 45% said they were seeking more privacy when buying a home, and 44% said building equity /wealth was important when seeking a home.
Little Known Fact: When properly maintained, manufactured homes will appreciate (or depreciate) like any other form of housing in the surrounding area, and will not have a negative impact on the value of those homes.
Recent data by the Urban Institute, released by the Federal Housing Agency concluded the price index for manufactured homes performed at an annual rate of 3.4% versus 3.8% for site-built homes.
The TransUnion study indicates that respondents are delaying home purchase due to not having enough money for a downpayment is why 58% said they are delaying their home buying, and 51% said they thought they would need between 10 and 20% for a down payment, which is why they are delaying buying a home.
Little Known Fact: A manufactured home affixed to real estate will qualify for mortgage financing similar to a site-built home, including FHA, VA, with a down payment as low as 3%
A manufactured home not attached to real property or located within a land-lease community is financed as a chattel (personal property without encumbering the land). “Home only” financing typically requires a minimum 5% down payment. Because total consideration is considerably lower, the required down payment will be proportionately less.
“There has been a lot of discussion in the marketplace that younger people today may not be as interested as prior generations in buying a home and being tied down to one location. Our survey results say that is not the case at all,” Mellman said. Rather, younger people may have in fact been deterred from home purchase by challenges they face in the financially difficult times of the last decade.”