Why state has top jobs market but nobody is going there

When the Wall Street Journal reported that Nebraska’s housing shortage was making it nigh on impossible for needed workers to move there, the logical reaction was: Why don’t they just plop down a few manufactured or modular homes and live there until the construction sector catches up? It came up on Twitter, where University of Colorado at Boulder economist Miles Kimball asked, “Aren’t sudden surges in housing needs like this what mobile homes are for?”

It pops up again and again in the comments below the story, where one person asked, “OK, so why isn’t the prefabricated home industry being tapped to place houses in rural areas?”

It’s a critical question for Nebraska, which is facing an unusual quandary.

Employers there seem willing to pay more to attract workers. Average weekly earnings have grown faster in Nebraska since 2014 than in all but two states — Delaware and Washington. Its unemployment rate is fourth-lowest in the United States over the past year — 2.8 percent, compared with a nationwide 4.2 percent over that time — as employers raise wages to compete for scarce workers. But workers aren’t biting. Nebraska job growth ranks 40th in the country since 2014. (All rankings include the District of Columbia.)

What gives?

Here are the three other possible explanations:

Problem one is land prices. The greatest asset of many Nebraska farm towns — that they’re surrounded by what Nebraskan Ron Ratzlaff, owner of Lifetime Modular Homes in York, Nebraska, called the “best land in the world” — is also a secret weakness. It hems them in. Nearby farmland is so valuable that farmers aren’t always willing to sell.

Problem two is the hidden costs of higher standards. In Nebraska, mobile-home retailers say it’s not just land costs that have lifted prices: It’s now more expensive to stick a mobile home into the ground. In December 2015, the Department of Housing and Urban Development began enforcing strict installation standards in Nebraska and other states that lacked local oversight.

Most notably, new homeowners are forced to spend an estimated $3,000 to $8,000 to lay a footing or foundation that will protect the home from being damaged when the ground underneath shifts as it freezes. The cost isn’t always covered by financing, which makes it unattainable to many buyers. On an entry-level home, installation cost could surpass the down payment.

Problem three is financing. Retailers often pointed to lack of financing as a key reason they couldn’t sell more homes. This has been felt acutely in Nebraska, where the out-of-state job hunters small towns hope to attract with affordable housing are often the same individuals who are finding it difficult to secure loans.

“If you’re looking at a $60,000 house, more than likely you don’t have the best job and you don’t have the best credit,” said Daryl Mouw of Swanson Homes in Lincoln, Neb. He added that even with credit scores above 700, manufactured-home purchasers often face unfavorable terms.

Ron Anderson of Lonnie’s Homes in Schuyler, Nebraska, said as many as 4 out of 5 potential customers — including one who had half of the purchase price in cash as a down payment — had failed to be approved for financing at local banks recently.

“They’re turning away customers who could easily afford a home,” Anderson said.

Most manufactured homes are financed with chattel loans that have more in common with a car loan than a traditional mortgage.