Building Assets for the Rural Future

Increase Asset-Building Potential of Manufactured Housing

Increase the Asset-Building Potential of Manufactured Housing

The Opportunity

Manufactured housing is the most widely-available source of affordable housing in North Carolina. One analysis estimates that manufactured housing represents more than 30% of the occupied housing stock in 20 of the state’s counties, with the majority of those counties in rural areas.[1] This is hardly surprising, as manufactured homes are affordable even to households on the economic margin. According to the U.S. Census Bureau’s Manufactured Homes Survey, in 2008, the national average sales price of a new manufactured home was $64,900 compared to $292,600 for a site-built home.[2]

There are, however, well-documented drawbacks associated with manufactured housing, particularly as it relates to asset-building.  Those drawbacks include health issues connected with older manufactured homes; shady sales and financing practices employed by dealers; high energy consumption and related utility costs; and its unsuitability as a wealth-building asset due to its common categorization as personal property rather than as real estate.[3]

While the debate will continue over the utility of manufactured homes as an asset-building tool,[4] its importance to households on the economic margin cannot be denied. Some practitioners have therefore moved past the debate in search of ways to improve the manufactured housing industry and to maximize its asset-building potential.[5]

How the Tactic Is Applied

  • Organize manufactured home community cooperatives
  • Replace substandard manufactured housing

Organize Manufactured Home Community Cooperatives

New Hampshire Community Loan Fund (New Hampshire)
ROC USA (New Hampshire)

In manufactured home communities, sometimes called “mobile home” or “land-lease” communities, homeowners typically own their homes but lease the land on which their homes are placed.  Homeowners in land-lease communities therefore do not have control over the rents they pay for the land.[6]  As a result, the possibility of unpredictable rent increases makes asset-building more difficult for manufactured home owners. To address this concern, the New Hampshire Community Loan Fund (NHCLF) works with manufactured homeowners in land-lease communities who are interested in collectively purchasing the land under their homes when it is offered for sale.  NCHLF first determines whether purchasing the land is feasible given available financing. If financing is available, NHCLF secures financing for the purchase and creates a legal structure for the management of the land.[7]

Since 1984, NHCLF has assisted more than 90 communities with purchasing and managing their communities.[8]  A recent study of the land purchase program found that resident-owned communities result in rent stabilization for homeowners. Because homeowners participate in collective ownership of the land, financial institutions are more willing to offer conventional mortgage financing for home purchases. Additionally, manufactured home values are higher in resident-owned communities as compared to home values in land-lease communities.[9]

The most challenging aspect of the program is securing financing for the initial land purchase. To address that issue, NCHLF created ROC USA[10] to train nonprofits around the country and to provide land purchase financing to supported communities.[11]

The land purchase approach has not gained traction in North Carolina.  Reportedly, only one land-lease community in the state, located in Burnsville, has become a resident-owned community.[12]  However, the approach may see wider application in the future, thanks to the enactment of a state law providing a tax advantage to park owners who sell their property to manufactured home leaseholders or to a nonprofit representing the leaseholders.[13]

Replace Substandard Manufactured Housing

Frontier Housing (Kentucky)

Substandard manufactured housing—particularly homes built before 1976 when the manufactured housing industry first became regulated[14]—impedes asset-building because the older homes may cause health problems, are often structurally unsound, and require high energy consumption to heat or cool.[15]  In rural northeastern Kentucky, the nonprofit Frontier Housing initiated a campaign called Manufactured Housing Done Right to replace older manufactured homes and improve owners’ prospects for asset-building. 

Frontier partners with a for-profit manufactured home builder to offer single-section manufactured homes that are energy efficient and affordable to households earning less than 50% of the area median income.[16] That equates to about $12,000 annual income in the rural areas where Frontier operates. Frontier requires that owners entering its program place their homes on a foundation. This qualifies the home as real property and therefore makes it eligible for more conventional (and therefore more affordable) financing, as opposed to using high-cost personal loans that are commonly used to finance manufactured homes.[17]  Energy-saving features in the homes significantly reduce utility costs, in theory making it possible for owners to shift their expenditures from energy costs to mortgage payments for the new manufactured home—without requiring additional income and perhaps at an overall savings.[18]

Frontier has identified several different financing sources for the program—tapping into various federal loan programs, local banks, and other public and private funders—and it provides technical assistance to nonprofits that are interested in developing similar programs.[19]

Learn More

Paul Bradley
Concord, NH

On the Internet

Frontier Housing – Manufactured Housing Done Right Program

CFED – Manufactured Housing Program

[1] Peter Skillern & Tanya Wolfram, Transforming Trailers into Assets, 70 Popular Government 4, 5-6 (2005).

[2] U.S. Census Bureau, Cost and Size Comparison for Manufactured and Site Built Homes 3 (2007-2013), https://www.census.gov/construction/mhs/pdf/sitebuiltvsmh.pdf

[3] William Apgar, et al., An Examination of Manufactured Housing as a Community and Asset-Building Strategy 5-15 (2002), available at http://www.jchs.harvard.edu/research/publications/examination-manufactured-housing-community-and-asset-building-strategy (providing overview of manufactured housing industry and problems associated with manufactured homes); but see Kevin Jewell, Manufactured Housing Appreciation: Stereotypes and Data 12 (2003), available at http://www.consumersunion.org/pdf/mh/Appreciation.pdf.  (“Our data shows that the average appreciation rate of manufactured homes on owner owned land is not consistently statistically different than the appreciation rate of site built homes.  Yet…manufactured homes on owned land appreciate less than the site built homes.”).

[4] Ibid. at 25-26 (grouping the attitudes of community development practitioners towards manufactured housing, as “advocates,” “skeptics,” and “antagonists”).

[5] See Richard Genz, Why Advocates Need to Rethink Manufactured Housing, 12 Housing Policy Debate 393 (2001).

[6] Ibid. at 404-405.  See also Skillern and Wolfram, above note 1, at 8-9.

[7] Interview with Paul Bradley, President, ROC USA (Oct. 2, 2009).

[8] Ibid.

[9] Charlie French, Kelly Giraud, and Sally Ward, Building Wealth through Ownership: Resident-Owned Manufactured Housing Communities in New Hampshire, 46 J. Extension (2008) (also listing social benefits from the conversion to resident-owned, including an increased sense of ownership and control that affect the culture and upkeep of the community). 

[10] “ROC” stands for “Resident-Owned Community.”

[11] Interview with Paul Bradley, President, ROC USA (Oct. 2, 2009).

[12] N.C. Housing Coalition, Housing Matters 8.3.10, available at http://nchousing.blogspot.com/ (last visited August 18, 2010).

[13] N.C. Gen. Stat. §§ 105-130.5(b)(24), 105-134.6(b)(19) (2009).

[14] Genz, above note 5, at 405-406 (estimating that as many as 3 million homes of the country’s manufactured housing stock were built before 1976).

[15] Edna O. Schack, Not Your Grandfather’s Trailer: Energy Efficient Manufactured Housing, 13 Rural Voices 11, 13 (2008); Anne B. Gass, Frontier Housing: Replacement Housing with “Manufactured Housing Done Right”™ 1, 4 (2009).

[16] Schack, above note 15, at 11.

[17] Ibid.

[18] Gass, above note 15, at 2, 4.  See also Frontier Housing, Eliminate the Worst Housing Stock in Appalachia 4 (2009), available at http://www.frontierhousing.org/mhdr/docs/EliminateWorstHousingUShandout0909b.pdf  (providing example of one customer whose monthly utility costs in her old home were more than her mortgage and utility bills after replacing her home with one from Frontier).

[19] Ibid.

Public Officials - Local and State Government Roles
Topics - Local and State Government