What’s holding back manufactured homes?
The term “manufactured housing” often comes with negative connotations: poorly maintained homes, sub-par quality, and aesthetically unappealing. This unfavorable stereotyping belies the fact that today’s HUD Code manufactured homes are not unlike the ugly duckling flourishing to a refined adulthood. Before the Code’s adoption in 1976, what were then called “mobile homes” were built to lower standards for strength, durability, and efficiency. This saddles modern manufactured homes with a poor reputation inherited from their predecessors, when in fact they offer more diverse configurations and higher-quality housing options. If Congress and other policymakers take appropriate steps to level the playing field, more manufactured homes can make their way onto the market, offering more families and individuals appealing, relatively affordable housing options.
Today there are more than 8.4 million manufactured homes across the country providing affordable, comfortable accommodations. Still, manufactured housing is underrepresented in housing policy discourse, in part because it tends to be “out of sight and out of mind” in expensive coastal cities where many policymakers and thought leaders reside.
HUD Code Manufactured Homes are, as the name implies, regulated nationally by the Department of Housing and Urban Development (HUD). This central regulation is a benefit and a curse. It is a benefit because implementing uniform design standards across the country enables otherwise impossible economies of scale if these homes were required to abide by the national patchwork of state and local codes that regulate site-built homes.
On the flip side, the HUD Code can be a curse because uniform design elements — like roof slopes and a steel chassis beneath all manufactured homes — enable local zoning codes to single out manufactured homes with regulations that may appear neutral. However, these narrowly tailored rules exist to exclude these homes and their residents from areas with site-built housing.
With this context in mind, exploring how the playing field can be leveled is crucial, as it would enable manufactured homes to compete fairly with their site-built counterparts. There are several measures that Congress, state legislators, and even banking regulators can take within their domains to make the marketplace fairer.
As the regulator of interstate commerce and state restrictions, Congress can preempt unreasonable constraints on interstate commerce like New Jersey’s requirement that manufactured homes only go in designated “parks.” Congress can also use its spending power to encourage states or local governments to allow fair competition between HUD Code and site-built homes.
As the building code regulator, HUD can enable more novel designs and other innovations to allow greater flexibility in home design that blurs the distinction between manufactured and site-built homes.
States, which title real and personal property, can reform manufactured home titling practices to allow permanently sited homes to become real property. This will allow landowners to finance manufactured homes similarly to a site-built home and to eventually sell the home with the land.
Finally, financial regulators and mortgage guarantors can offer the same benefits to manufactured homeowners that site-built homeowners enjoy in the form of long mortgage terms and low down payments.
If these and additional reforms are implemented, many in the manufactured housing industry say that additional growth will come when we break out of the traditional setting for manufactured homes — that is, designated communities or “trailer parks.”
Some HUD Code homes are already appearing in places where they were, until recently, relatively scarce. HUD Code accessory dwelling units are a growing, flourishing market in states like California and Texas where state and local laws recently began allowing them. What’s more, the most recent HUD Code revisions allow greater design flexibility, and this may even extend to the possibility of multi-family units.
New developments and regulatory changes demonstrate that manufactured housing has ample room to expand in scope and into previously untapped markets. Still, that growth is contingent on establishing a playing field more level than what exists today. Once this is achieved, prospective American homeowners will have more options that will best accommodate their lifestyles and financial realities, free of the stigma that has historically — and unfairly — burdened manufactured homes and their occupants.
Andrew Justus is a housing policy analyst at the Niskanen Center.