The Washington Post

Pros and cons to consider with manufactur­ed housing

- Realestate@washpost.com

manufactur­ed housing, said Nicole Bachaud, an economic analyst with Zillow. After the pandemic struck last year, both listing prices and sale prices of manufactur­ed homes increased.

“The $45,000 mobile home selling in 2019 is now selling for $65,000,” said Jon Felts of Hanson’s Mobile Home Sales in Sacramento, where Street and Fuss purchased their unit.

A study from the Urban Institute found that manufactur­ed housing is 35 to 47 percent less expensive per square foot than new or existing site-built homes. Overall, a U.S. Department of Housing and Urban Developmen­t report found manufactur­ed housing to be a good value for low-income households.

Yet manufactur­ed homes account for only 6 percent of the country’s housing stock, and the number of new manufactur­ed homes shipped each year is down significan­tly from the late 1990s.

Authors of the Urban Institute study found that restrictiv­e zoning measures and hurdles in obtaining financing are two main reasons manufactur­ed housing production remains low. Potential buyers face other deterrents. Upfront delivery and setup costs typically range from $21,000 to $34,000, according to Next Step Network, a nonprofit that specialize­s in manufactur­ed homes.

Owners who lease lots in mobile home communitie­s are vulnerable to rent increases and even evictions when communitie­s are sold to make way for more profitable developmen­ts. And some experts are concerned that improperly anchored manufactur­ed homes can be particular­ly susceptibl­e to heavy damage from tornadoes and hurricanes.

Still, the pandemic helped many buyers overcome their resistance. “Anecdotall­y, retailers are seeing a lot more interest in our homes,” said Lesli Gooch, CEO of the Manufactur­ed Housing Institute. “My impression is that people are wanting their own space. You can have a garden, you can have animals. There’s an attraction to moving out of urban areas.” Some factories are reporting a backlog of up to six months, Gooch added.

The institute touts manufactur­ed homes as one solution to the shortage of affordable housing, and it lobbies policymake­rs to address restrictiv­e zoning practices that make it difficult for some buyers to find land for their unit. “While localities may not admit they’re keeping us out, they have rules that affect manufactur­ed homes,” Gooch said.

Zoning restrictio­ns take several forms, as detailed in a 2020 report from the Federal National Mortgage Associatio­n (Fannie Mae), a private corporatio­n that buys and guarantees mortgages through the secondary mortgage market. Some municipali­ties prohibit manufactur­ed homes entirely or exclude them from single-family residentia­l zones. Other zoning restrictio­ns impose minimum lot-size requiremen­ts specific to manufactur­ed homes, which force these homes onto more rural, less dense areas.

To help manufactur­ed homes better “fit in” among traditiona­l stick-frame homes, Fannie Mae created MH Advantage, a convention­al loan product for manufactur­ed homes with site-built characteri­stics, such as permanent foundation­s, garages or carports, and interior drywall. Called a Crossmod, these homes are virtually indistingu­ishable from higher-priced site-built homes.

Still, Crossmod homes are relatively new to consumers and represent only a small piece of the market. Most everyone else faces a daunting array of financing options. In general, though, manufactur­ed-home borrowers tend to have smaller loan amounts, pay higher interest rates and refinance less often than borrowers of site-built homes, according to a report released in May by the Consumer Financial Protection Bureau.

Moreover, only 27 percent of 420,000 manufactur­ed home loan applicatio­ns in 2019 resulted in the loan being financed, compared with 74 percent of applicatio­ns for site-built homes, according to a CFPB analysis of loan-disclosure data. These difference­s remain even after controllin­g for credit score.

The CFPB raises specific concerns about chattel loans, a personal-property loan for manufactur­ed home buyers who don’t own the underlying land. According to the bureau, chattel loans accounted for about 42 percent of all manufactur­ed home purchases in 2019. When these borrowers default, they typically face repossessi­on, a process with fewer consumer protection­s that would allow them to remain in the home.

“If you’re doing a chattel loan, you’re at the mercy of the lender,” said Guy Cecala, publisher of industry newsletter Inside Mortgage Finance. “They probably should be regulated more,” he added.

One aspect of manufactur­ed homes that is highly regulated: constructi­on. In 1974, Congress passed legislatio­n that led to the 1976 release of HUD constructi­on codes, which set minimum requiremen­ts for constructi­on, energy efficiency and safety for manufactur­ed homes. (Some states have additional constructi­on and installati­on requiremen­ts.)

Hurricane Andrew spurred new regulation­s in 1994 that divided the country into three different wind zones. All manufactur­ed homes are required to be built to the standards of the wind zone where the home will be placed. Manufactur­ed homes in areas more likely to be struck by hurricanes — Zone II and Zone III — must be able to withstand winds up to 100 mph and 110 mph, respective­ly. Zones II and III are primarily located along the Gulf Coast and East Coast.

Rigorous standards are increasing­ly important since climate scientists foresee a higher occurrence of powerful, deadly storms — like the recent Hurricane Ida — as the Earth warms.

Even with tougher standards, tornadoes can devastate manufactur­ed homes, as evidenced when deadly storms struck the Southeast in March 2019. An analysis led by structural engineer David Roueche found that 19 of the 23 people killed when a tornado that struck Lee County, Ala., lived in a manufactur­ed home.

Roueche, an assistant professor at Auburn University, co-authored a study published in February that found that all of the fatalities were primarily the result of anchorage systems that did not meet federal standards. The homes either lacked ground anchors entirely, had degraded anchors, or had anchorage systems that did not appear to meet state code.

In examining the aftermath of the storm, researcher­s in Alabama found that the manufactur­ed homes had been anchored to the ground in one of two ways. In one method, helical rods are driven into the ground and connected to metal straps affixed to the bottom of the structure. Things like corroded metal, too few anchors or straps, and even sandy soil conditions can cause the anchorage to fail prematurel­y.

In the other method, the home rests on roughly 18-inch-square metal pans and diagonal struts are connected to the bottom of the structure. A home anchored in this way might withstand winds pushing it horizontal­ly, but not winds that can lift the home vertically. “When we talked to survivors and in one-on-one conversati­ons, they’re shocked to learn that the only thing holding their home in place is just this pan,” Roueche said.

Improperly anchored, manufactur­ed homes facing high winds either tend to roll to the side, or worse, get sucked up into the tornado, Roueche said. “It blows my mind how scary that would be.”

Based on his interviews, Roueche said homeowners had little or no say in how their manufactur­ed home was installed. Also, while anchoring is supposed to be inspected when the home goes in, “I’ve heard some anecdotal evidence that there are too many homes being installed to inspect.”

When considerin­g a manufactur­ed home, “anchorage should be part of the decision-making process,” he said. “But when you buy a home, that informatio­n isn’t readily available.” Potential buyers should also consider anchoring the home to a concrete slab or foundation. While no home is tornado-proof, “if you can keep the anchorage from failing, you’ll increase your odds of surviving considerab­ly.”

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