Less expensive housing, like manufactured homes, has the potential to alleviate the affordable supply shortage

Over the past few decades, the inventory of affordable homes has been in sharp decline while the prices of homes for sale have risen dramatically. In fact, since 2012, the average price of a home has risen by almost 47%. As a result, housing solutions like manufactured homes, which are less expensive than site-built homes on average, may be more suitable for homebuyers looking for a starter home or seeking to downsize. Although a common perception among homebuyers is that manufactured homes aren’t as nice as site-built houses, most buyers are unaware that there’s a new generation of manufactured homes that are built to HUD Code, constructed with quality materials, and designed to specifications meeting or exceeding that of site-built homes.

22% of new site-built homes created were under 1,800 square feet in 2018.

Research shows that Millennial and Gen Z homebuyers have significantly less buying power than previous generations did, due to high amounts of debt and a marginal rise in average salary that hasn’t kept up with soaring home prices. And, many of the site-built homes being created today are not doing much to address this problem. In 2018, only 22% of new homes built were under 1,800 square feet. Larger homes often are unaffordable and may not meet the needs of empty nesters looking to downsize, or of younger homebuyers who may be more likely to be single or married with no children.

The average price of a manufactured home is $49 per square foot, compared with $107 for site-built homes.

Manufactured housing, especially the newest generation of homes, has moved far beyond the double-wides and trailers of yesterday. While considered moveable, in fact most manufactured homes, once placed on land, never move. Excluding land cost, the average price of a manufactured home today is $49 per square foot, compared with $107 for site-built homes. Fannie Mae research shows consumers spend $1,000 less per month, on average, on their mortgage loan by placing a manufactured home on their land. And production of these homes is growing. Over the past five years, shipments of new manufactured homes have increased more than 50%.

39% of Millennail and Gen Z homebuyer are aware of the manufactured housing as a potential option.

Manufactured housing offers new opportunity to prospective homebuyers and the market that serves them. However, awareness remains the primary hurdle to wider adoption. In our recent survey, only 39% of Millennial and Gen Z homebuyers were aware of manufactured housing as a potential option. But once the definition of manufactured homes was clarified for respondents, and they were shown images or video of what the manufactured homes looked like, their interest increased by 31%.

Fannie Mae research suggests that when it comes to promoting manufactured housing, seeing is believing.

Once sited, these newly constructed manufactured homes can be indistinguishable from traditional site-built homes on the same street. Low profile foundations, high-pitched roofs, front porches, driveways, energy efficiency elements, and garages or carports are just a few of the attractive design features that can be found in today’s manufactured homes. And with Fannie Mae’s MH Advantage® financing for qualifying manufactured homes is available with as little as 3% down on a land-home, 30-year mortgage.

Beyond manufactured housing, several other affordable housing alternatives have the potential to change the marketplace once buyers are made aware of and educated about them. For instance, among future homebuyers surveyed by Fannie Mae, only 9% showed awareness of accessory dwelling units (ADUs). But, when these same future homebuyers were educated about ADUs, their interest rose by 29%. Other affordable alternatives like 3-D printed homes, tiny homes, and mixed-use spaces also showed similarly low awareness among future homebuyers, but interest spiked once the awareness bridge was crossed. In fact, 24% of those surveyed who said homeownership is not a current goal said they were more likely to consider it upon seeing potentially affordable options.

As an industry, we need to expand our definition of what housing is an what it could be.

We remain committed to providing financing that helps make all types of housing more affordable. And, to make housing more attainable for prospective homebuyers, we need to expand our definition of what housing is and what it could be. There are many types of housing available for those who are finding themselves priced out of the traditional market. If we work together to generate awareness of and interest in solutions beyond site-built homes, we can create more opportunities for more people.

Together, let’s make housing more affordable for all. Share this story and help spread the word.