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Volume 3 Number 7
July/August 2006
In this Issue
Outcomes of Permanent Housing Programs for the Homeless
Fair Housing: What the Public Knows and Supports
Exploring Subprime Mortgage Lending and Alternative Financial Services
Does Owning a Manufactured Home Make Sense?
In the next issue of ResearchWorks
Does Owning a Manufactured Home Make Sense?
Manufactured homes, commonly (and often erroneously) referred to as mobile homes, do not loom large on the nation's housing landscape. The latest American Housing Survey (AHS) reports that just 6.5 percent of all occupied housing units are manufactured homes. According to the 2005 final edition of U.S. Housing Market Conditions:
"Manufactured housing shipments increased for the first time in 7 years, although they continue to be very low. For 2005, manufacturers shipped 147,000 housing units, up 12.5 percent from 2004. Demand for replacement housing for units lost to Hurricane Katrina drove the increased shipments."
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Manufactured homes can provide an affordable alternative for low-income families.
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Yet when faced with falling real incomes, increasing rents, rising interest rates, and an overheated housing market, manufactured housing could make homeownership a real possibility for more American families.
The question, then, is whether manufactured housing constitutes a good alternative for low-income families? To explore the possibility, HUD commissioned a team of researchers who used AHS data from 1993 to 2001 to compare three residential options: rental housing, owned manufactured housing, and owned stick-built housing. The research team compared these housing options along several dimensions, including structural quality, neighborhood characteristics, cost, affordability, and price appreciation. The researchers used the responses of a subsample of AHS participants from low-income households who were at or below 80 percent of the median income.
The Quality of Structures and Neighborhoods
Participants in every AHS survey rank the structural quality of their homes on a scale of 1 to 10. The low-income subsample of AHS respondents consistently
gave the highest structural satisfaction rankings to owned stick-built homes. Manufactured homes ranked second, and rented homes were third. Regardless of whether one owned a stick-built home, owned a manufactured home, or rented a home, satisfaction
with structural features hinged on the age and condition of the home and its equipment. Leaks and structural problems were especially important contributors
to satisfaction in all three living arrangements.
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Increasing rents and rising prices for stick-built houses make manufactured housing an increasingly affordable option.
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Rankings of the quality of neighborhoods were similar. Crime, noise, litter, open space, and parks mattered equally to the residents of all three neighborhood types. On the basis of these characteristics, owners of manufactured housing expressed greater satisfaction with their neighborhood than did renters, but less satisfaction than that of owners of stick-built housing. Researchers found no evidence that owned manufactured
housing deteriorated any differently than owned stick-built housing. Nor did they find that owned manufactured housing was inherently associated with neighborhood instability.
Cost, Affordability, and Price Appreciation
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A Roadmap for the Future of Factory-Built Housing
Where should factory-built housing be headed, and what research is required to reach that destination? Recently, fifty-six business, industry, and government leaders have helped shape the future of factory-built, housing by discussing this question at length. Their discussion forms the basis of recommendations
outlined by the Partnership for Advancing Technology in Housing (PATH) and the Manufactured Housing Research Alliance (MHRA) in a new publication from HUD titled Factory-Built Housing Roadmap (Including Recommendations for Energy Research). The recommended research agenda focuses on the quality and performance of factory-built,
single-family detached homes; production, delivery, and installation; the factory-built housing market; the interests and needs of consumers; and strategies for improving energy efficiency. This report is available at no charge online at http://www.huduser.org/publications/
destech/roadmapping.html.
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Cost comparisons among the three housing options show that living in an owned manufactured home was the least expensive option in 1993, 1997, and 2001. The average monthly cost for low-income households in 2001 was $408 for owned manufactured housing, $613 for rentals, and $622 for owned stick-built homes.
Using their analysis of price appreciation data, the researchers concluded that owned stick-built housing is the best investment. They found that an owned manufactured home located on the owner’s property also offers a return on investment, but the rate of appreciation varies widely and is usually smaller. Though an owned manufactured home does not appear to be a good investment if the land is not owned by the resident, it remains an option that might mitigate the effects of rent inflation.
All in all, owned manufactured homes seem to be a reasonable housing alternative that low-income families and their communities might find attractive. The full report on this research, Is Manufactured Housing a Good Alternative for Low-Income Families? Evidence from the American Housing Survey,
is available as a free download at http://www.huduser.org/publications/HOMEOWN/IsManufactHousingGoodAlt4LIFam.html or in print for a nominal charge from HUD USER by calling 800.245.2691, option 1. Current and past issues of U.S. Housing Market Conditions,
published quarterly by HUD’s Office of Policy Development and Research, can be found on the HUD USER website at http://www.huduser.org/periodicals/ushmc.html or can be ordered from the Clearinghouse at the telephone number above.
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