Why Arent We Building More Mobile Homes?

People in West Virginia accepted delivery of a little more than 1,000 mobile homes last year, according to census data. Over the same period, homebuilders obtained permits to build about 2,000 single-family homes. In other words, roughly 1 one in three homes added to the states housing stock last year was a mobile home.

Surprised? That probably depends on how much money you build, what part of the country you live in, and how old you are. The average sale price of a new mobile home was $67,800 in April, compared with an average sales price of $380,000 for a site-built home. Three-quarters of mobile home residents have household incomes of less than $40,000. Mobile home, which actually arent very mobile, are most highly concentrated in the South. More than 500,000 of them are in California, the most in the country, but in recent years new mobile home marketings have made up a larger share of the housing marketplace in Southern countries, as the chart above proves.

Age matters because mobile home sales peaked in the mid-1 990 s, when the structures made up one in three new homes sold nationwide. 2 Those hefty sales volumes were largely a product of loose lending practices, said Doug Ryan, director of affordable home ownership at the Corporation for Enterprise Development, a Washington-based nonprofit group. The loans started going baddriving one major lender, a unit of the insurer Conseco, into bankruptcyflooding the market with foreclosed mobile homes and restriction demand for new product.

Thats likely not the whole story. Mobile home shipments averaged out at around 250,000 a year throughout the 1980 s, before the bubble inflated. Other reasons for declining sales include easier access to mortgages for site-built homes, an emerging wariness of mobile home loans on Wall street, and the stigma attached to the product, which has been cycling through verbiage from “trailer homes” to the more current “mobile” or “manufactured” housing.

Why have mobile homes held on in some states? They tend to do well in rural areas, as well as in parts of the country where they have a longer track record, said Jenny Hodge, vice president of research at the Manufactured Home Institute, an industry trade group.

A better question may be whether the waning prominence of mobile home is a good thing or a bad thing.

The mobile home industry has a controversial past, with a reputation for selling poor clients shoddy products and expensive loans. In many cases, mobile home owners buy the structure they live in but lease the land on which it lies. Theres a cottage industry to be given to teaching investors to buy mobile home parks, who juice their earnings by cutting operating costs and creating rents, Ryan said. Despite their name, modern mobile home arent easy( or cheap) to move, leaving owneds with little room to negotiate with their landlords.

The flip side is that mobile homes are inexpensive at a time when the home ownership rate is at a record low and a dwindling inventory of starter homes is driving up costs for first-time purchasers. While mobile homes often construct the most sense in sparsely populated areas, theres no reason they cant be used to increase the stock of affordable housing in U.S. cities.

You can put them anywhere you have the land, Ryan said. What youre up against is the stigma. Youd have people coming to the planning sessions and saying that youre killing their home value.

Maybe its day for another rebrand. The homes vary in sizing and price, but they’re generally smaller than the typical site-built home. Instead of “mobile” or “manufactured, ” why not borrow the name for another kind of often prefabricated abode: the tiny house.

Read more: www.bloomberg.com

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