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A proposed change to mobile home construction could be one of the biggest boosts to housing affordability in the U.S. ROAD to Housing Act.
Currently, mobile homes must be built on steel chassis for transportation, a restriction builders argue has long held back their production. If the bipartisan ROAD to Housing Act passes, it would eliminate that requirement, cutting construction costs by upwards of $10,000.
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Given that new mobile homes sell for an average $134,500, the reform would make this form of affordable housing even more so. It would certainly motivate the manufacturers to build more of them at a time when demand for new homes in the U.S. outstrips supply by 4 million units, according to Realtor.com.
Every year, mobile home manufacturers churn out 100,000 new units, according to the Niskanen Center think tank. That’s on top of 8.4 million existing mobile homes that house more than 20 million Americans nationwide.
The proposed law opens up a host of other opportunities. Without a chassis, the homes can sit directly on the ground. Here’s why that simple change is such an earth-shattering proposition.
Less trailer park mentality, more permanent homes
For years, mobile homes were designed to be exactly that: mobile. That’s why since 1974, federal law has required that mobile homes be built on chassis so they can be moved.
American families could purchase a prefabricated home, put it on wheels and move it to an affordable plot of land or a mobile home park where they could lease land but own their homes.
But as David Dworkin, president of the National Housing Conference, told the New York Times, things have changed since 1974. Prior to 1974, a lot of mobile homes did not have to meet the same construction standards as are required today. They were designed to be easily moved.
“The law was written for the industry that existed at that time, but the industry has evolved a lot,” he said.
It isn’t just the industry that’s changed. It’s mobile-home owners, who want to put down roots. Their language has changed along with their mindset.
They refer to their houses as “manufactured homes,” not mobile homes. They live in “manufactured housing communities,” not mobile home parks — definitely not “trailer parks.”
“We’re not trailer trash,” Kelly Jensen, who lives in one such community in Colorado, told Moneywise.
But as attractive and permanent as many manufactured home communities can be, the homes are still limited to a “trailer” shape because of the chassis.
Without that limitation, the designs, sizes and locations of manufactured homes could explode. The U.S. Department of Housing and Urban Development (HUD) would allow multi-story manufactured homes and even multiplexes.
Attractive designs could be integrated into suburbs and cities as multi-residential units or single-family homes. A family could purchase a 1,500 sq. ft. manufactured home in an urban setting for under $130,000 compared to a home constructed onsite for $300,000 or more.
Mobile homes would compete with modular homes in cities
These all sound like positives, but one industry is critical of the move.
Like mobile homes, modular homes are built in factories. But unlike mobile homes, they don’t require chassis, so they can be built in modules to create multi-story homes. In cities and suburbs, they have long been the affordable alternative to custom-built homes.
The proposed law would eliminate modular home builders’ competitive advantage over manufactured homes, as manufactured homes make inroads into suburbs and cities.
Modular home builders could no longer say that their products offered more design flexibility than mobile homes. They’d no longer be easier to finance, either.
Traditionally, many mobile home owners have had to get a personal property loan or “chattel mortgage”. These come with higher down payments and interest rates. That would change if mobile homes could be built on permanent foundations in existing communities.
Tom Hardiman, executive director of the Modular Home Builders Association, told the New York Times modular homes still offer superior quality even if it’s not obvious at first glance, built to meet extreme conditions — including heavy storms and even seismic activity — depending on local building standards.
While mobile homes are not necessarily built to local building codes, they must still meet HUD federal construction standards, including building strength, fire safety and energy efficiency.
There’s another equalizer for manufactured and modular homes that buyers might not like so much: the extra costs for land the home sits on, the cost of transportation and installation, maintenance and insurance costs and more. The new law won’t change any of them.
Still, if the ROAD to Housing Act passes and does away with the chassis requirement, mobile homes could be sitting on truly solid ground as an affordable option for would-be homeowners.
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