Manufactured Homes Give Hope to Homebuyers: 'Price Was a Big Thing' - Newsweek

With mortgage rates elevated and home prices high, owning a home in America is beyond the reach of a large group of households. But researchers suggest that alternatives, such as manufactured homes, could offer some relief and provide an option for those dreaming of owning property.

Manufactured homes, which are built houses that are placed on lots, can cost about 36 percent of the cost to build a typical home, according to researchers from the Harvard University's Joint Center for Housing Studies. An average manufactured home goes for $129,000, much less than a median-sale price of a house at $361,000.

"There's been a lot of hope around manufactured housing being able to improve the speed and quality of construction, and I think those high expectations have translated to reality in some limited cases," Danielle Hale, chief economist at realtor.com, told Newsweek.

A for sale sign is posted in front of a home on February 20, 2023, in San Francisco, California. As affordable homes remain an issue, some researchers suggest that manufactured homes can offer an alternative.... A for sale sign is posted in front of a home on February 20, 2023, in San Francisco, California. As affordable homes remain an issue, some researchers suggest that manufactured homes can offer an alternative. Justin Sullivan/Getty Images

Keith Nohe, a soon-to-be 70-year-old from Georgia, bought a manufactured home in early 2021 after he retired and was looking to downsize from a split, three-level home he owned. Bad knees meant that he was searching for a property that was a single story. He looked around at all the options and he settled on his current property, largely due to cost.

"Price was a big thing," Nohe told Newsweek. "I had seen homes very similar to this online in Florida and I was intrigued by them because they really look appealing to me. So, the idea of having a brand new home and having no mortgage on it was very appealing for retirement."

Nohe said he paid a little under $100,000 plus tax for his three-bedroom, two-bathroom manufactured home. He thought about getting another mortgage, but one-floor properties he was looking at near the Atlanta area were priced in the $300,000 range.

Avoiding a mortgage was compelling and Nohe said that he is happy with his choice.

"The house is wonderful," he said.

Not a silver bullet

One challenge with manufactured homes is that buyers have to pay fees for the land on which the property sits. It points to an issues that housing economists say faces the housing sector in general: a lack of available land to build homes.

"You need the land to become available for that to be viable," Redfin chief economist Daryl Fairweather told Newsweek. "If it's a single-family-zoned neighborhood, the manufactured homes aren't really going to bring down the cost of housing. You need to make those advancements and zoning to make way for these denser, more affordable options."

Fairweather said that some states like California have introduced regulations that give single-family homeowners the option to build additional units in their backyard, and manufactured homes can be used to fill those spaces.

"Putting a manufactured home at a low expense on newly zoned land that can fit a small unit can be a win and a way to increase the supply of affordable housing," she said.

Data shows that homeowners are gravitating to this option. As of August 2023, 2.5 million manufactured homes were sold in America, according to the St. Louis Federal Reserve Economic Data.

While manufactured homes can offer cheaper alternatives for buyers, a shortage of available land may have limited its growth.

"We haven't really seen it at scale," Hale said.

She pointed out that some builders are looking at options, such as using shipping containers to build manufactured homes. But the complexity of producing a manufactured home and making it available to buyers can negate the initial savings of constructing one, Harvard researchers found.

"Homes are distributed from manufacturers to retail dealers, who, in turn, sell to homebuyers, who then must rely on installers to site the home," the researchers noted.

This can work in rural areas where unused, free land, is relatively more available.

"In urban markets, homebuyers are looking for homes that are move-in ready and are not likely to buy a home for which they then must find a lot on which to site it," the Harvard researchers said.

That challenge explains why some builders see manufactured homes as being more costly than a typical home in the end.

"I think that's an option that is going to be the better option in some cases, but I don't think it's a silver bullet solution for the housing shortage," Hale said.

Uncommon Knowledge

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

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