Manufactured Housing

Manufactured homes are built in factories. They are then transported in their own steel frame with attached wheels. Once they get to the site, the wheels are removed, but the frame stays in place. They are not placed in a traditional foundation. Manufactured homes are not subject to local building codes. Rather, they are subject to federal regulation from the Department of Housing and Urban Development. There is no requirement for structural inspection.

Manufactured housing provides a major source of unsubsidized housing that is affordable for households with low and moderate incomes. This includes many older adults. According to the Census Bureau, 5.1 million older adults lived in a manufactured home in 2022. The Consumer Financial Protection Bureau found that older owners of manufactured homes are more likely to have low and moderate incomes. They are also more likely to have a mobility-related disability than older adults who live in other housing settings.

Manufactured housing, therefore, plays a critical role in serving the housing needs of older adults. Without this option, many would find it difficult to afford housing. Nevertheless, manufactured homeowners face important challenges. One relates to financing. Lenders typically treat manufactured homes differently from site-constructed homes and modular homes.

Property classification: In general, manufactured homes are classified as personal property rather than real estate. This has important implications for finances.

• Financing: Manufactured homes classified as personal property are not eligible for conventional mortgage financing. They are financed through chattel loans, as are vehicle loans. As a result, loans are more expensive and must be repaid over a shorter period. Both of these can substantially increase monthly payments.
• Resale value: Manufactured homes typically have a lower resale value, making it difficult to build equity.
• Taxation: Manufactured homes are typically taxed as personal property. Manufactured homeowners, therefore, often do not pay property taxes.
• Consumer protections: Some consumer protection laws apply to real property but not personal property. For example, state foreclosure prevention laws typically apply to homes that are considered real property. Manufactured homes considered personal property can simply be repossessed if a homeowner falls behind on payments.

The Uniform Law Commission’s Model Manufactured Housing Act would create a simple process to enable manufactured homeowners to classify their homes as real property if they wish to do so.

Manufactured home communities: Eighty percent of manufactured home residents own their homes. However, 40 percent of manufactured homeowners do not own the underlying land. They typically live in manufactured home communities and pay rent. This creates unique challenges that other homeowners don’t face. They may face steep rent increases that create a housing-cost burden. Alternatively, they may have to move when the land is sold or when it changes uses. In areas with high-value housing markets, manufactured home developments can be particularly vulnerable to conversion to other uses. This risks the displacement of current residents, who are often challenged to find equally affordable housing elsewhere in the vicinity.

Unfortunately, manufactured homes are not easy to move. Alternative sites are often hard to come by. And even when they have a place to move, manufactured homeowners must obtain permits and use licensed and bonded professionals for the move. Moving is thus burdensome and expensive, and most manufactured homes do not move from their original site.

Manufactured homeowners who own the underlying land are much more housing secure. Those who rent the land can form resident associations to improve their bargaining power. However, they sometimes fear retaliation from community owners for doing so. Consequences can include eviction.

Policy options: To improve outcomes for owners of manufactured homes, policymakers can:

• classify manufactured homes as real estate,
• provide more favorable financing options,
• support the creation of resident-owned communities,
• change zoning to enable more manufactured home communities to be sited, and
• provide support to manufactured homeowners who are forced to relocate their homes.