DJ Pendleton, executive director of the Texas Manufactured Housing Association, told the Observer by email that manufactured home rents are generally market-driven for a particular area, so they will trend similarly to all other rents for single-family homes and apartments.
“As housing demand increases and supply doesn’t, the prices go up, and vice versa,” Pendleton said. “In many Texas cities the supply (of all housing types and options) has not kept up with the demand, so prices have gone up quite a bit in recent years. This is also the case for MHCs [manufactured housing communities.]”
Pendleton said the cost of homes has also increased due to inflation and higher interest rates. “This has certainly eroded a lot of the affordability of MHCs compared to respective income/wage growth,” he wrote. “But these are the same macro trends that impact all housing, so as a relative option to other housing which has also gone up substantially, MHCs remain more affordable.”
That’s not to say housing costs and rents for manufactured homes haven't gone up, just not as much as other housing options.
Property tax increases are also affecting the affordability of manufactured housing. Manufactured housing community owners have seen property tax increases from 900% to 1,500% in recent years, Pendleton said.
“These have resulted in lots of tax suits, but for many the tax increase alone required rent increases,” he said. “That can be in the hundreds of dollars per month range. So much so that some owners have started to line item the tax impact so their residents are aware it isn’t a rent increase but a tax pass-through increase.”
Some consider manufactured housing as a potential solution to the affordable housing crisis and wonder why more of these homes aren’t being built. A study by the Urban Institute looked into this question. “Manufactured housing is 35 to 47 percent cheaper per square foot than new or existing site-built housing, yet the number of manufactured homes shipped each year has gone from averaging 242,000 per year between 1977 and 1993 to just 92,500 units in 2017,” the 2018 study said.“This has certainly eroded a lot of the affordability of MHCs compared to respective income/wage growth.” – DJ Pendleton, Texas Manufactured Housing Association
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Manufactured housing production increased to about 300,000 per year between 1994 and 1999, according to the study. However, numbers started to decline in 1999 with an increase of foreclosures and repossessions of these homes. This flooded the market with unsold and used manufactured houses. Tighter credit standards for new borrowers also decreased demand for this housing, crashing production in the 2000s.
In 2023, just 89,169 manufactured homes were shipped in the U.S., according to Census data. Just over 15,000 came to Texas.
The study identified three reasons why manufactured housing production remains low in the U.S. First, there’s restrictive zoning, which has increased land costs and made it difficult to build new manufactured housing communities, particularly in areas with good schools, jobs and public transportation. Some localities have banned this form of housing outright. “These zoning restrictions impede the use of manufactured homes as an affordable housing tool in urban and suburban areas and may help explain why a disproportionate amount of manufactured housing is in rural and unincorporated areas,” the study noted.
In addition, financing opportunities are restrictive or unavailable. These homes can be titled as either personal property or real property. In 2016, most were titled as personal property. Personal property loans tend to have lower balances, shorter terms, higher interest rates and fewer underwriting requirements than real property loans, such as for a mortgage.
The study said that most states require a manufactured home to be affixed to a permanent foundation on land owned by the homeowner in order to get a mortgage loan. However, most people who owned their land and purchased a manufactured home between 2001 and 2010 still took out personal property loans to pay for their housing. The Consumer Financial Protection Bureau identified two reasons for this, according to the study. First, personal property loans are an easier transaction with lower upfront costs and are often arranged in conjunction with the home purchase. Second, manufactured home loans are generally for smaller amounts, and mortgage financing for such a low amount can be difficult to secure.“Manufactured housing offers a proven solution to America’s affordable housing supply crisis.” – Marcia L. Fudge, U.S. Department of Housing and Urban Development
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Another restriction to living in manufactured housing is the lower appreciation of the home. “While manufactured homes have lower initial costs, the homes do not have the same price appreciation of site-built homes,” the study said. “Lower appreciation for manufactured housing may be because of the lack of financing options available for older manufactured homes, which affects resale value.”
In late February, the U.S. Department of Housing and Urban Development (HUD) announced new actions to increase the availability and affordability of manufactured homes. A Feb. 29 HUD press release said that manufactured housing is a central component of the Biden-Harris Administration’s strategy to increase housing supply and lower housing costs.
“Manufactured housing offers a proven solution to America’s affordable housing supply crisis,” HUD Secretary Marcia L. Fudge said in the press release. “Today’s actions bring us one step closer to a future where everyone has access to housing that meets their needs.”
On Feb. 29, HUD launched the Preservation and Reinvestment Initiative for Community Enhancement (PRICE) Program, a $225 million competitive grant program that will provide resources to manufactured housing communities. The resources include repairs and rehabilitation of homes, replacement of dilapidated units and infrastructure upgrades, such as water, sewer, utilities and broadband.
“Across the country, twenty-two million people call manufactured housing their homes,” Marion McFadden, HUD’s principal deputy assistant secretary for community planning and development, said in the press release. “Today, I am delighted to make funding available for their unique needs. PRICE funding will enable manufactured homes and communities to remain affordable, safe, and sustainable for years to come.”
