At the end of last year, they went to see a house they found on Zillow and were surprised to learn that it had been built in a factory. They liked the large backyard and the fact that it was in a new 21-house subdivision in the San Antonio de Seguin suburb. First-time buyers closed in February.
“We were very impressed that it was a prefabricated house,” said Ms. Guerra, a housewife. She lives in the three bedroom house with her 18 month old daughter. Mr. Guerra, a welder, died of Covid-19 in August.
Real estate lenders, developers and advocates believe they have found a winning formula by building homes in factories that look like homes built in place but cost less. Other developments like Seguin’s could help ease the housing affordability crisis in the United States, they say.
“We have a lot of teachers, first-time home buyers, and people downsizing after they retire,” said Dustin Arp, managing partner of Spark Homes LLC. He developed Cordell Oaks, where the Guerras bought their home. “Maybe they used to qualify for homes built on site, but they don’t.”
A new, on-site single-family home sold on average for about $ 392,000 in 2020, or about $ 309,000 excluding the cost of the underlying land, according to government data. The new manufactured homes cost $ 87,000, not including the land.
The industry is on track to deliver more than 100,000 new manufactured homes this year for the first time since 2006, according to the Census Bureau. The Biden administration has indicated that prefabricated housing is a solution to the affordable housing shortage.
Yet manufacturers of manufactured homes must struggle to convince potential buyers that their homes have solid construction and secure financing options. The industry boomed in the 1990s, when dealers boosted sales by offering unrealistic loan terms to people who couldn’t afford it. Home deliveries have reached nearly 400,000 per year. Many borrowers have defaulted and lost their homes, and many lenders have closed their doors.
During the pandemic, households living in manufactured homes of all types were about twice as likely to fall behind on rent or mortgage payments as the general population, according to an analysis of census data by Alexander Hermann , senior research analyst at the Harvard University Joint Center. for housing studies. About 19% were late in the third quarter of this year.
People living in manufactured homes were also more likely to report loss of income during the pandemic than other households, Hermann said.
In many ways, manufactured homes remain a world apart from the built-in-place home market. Houses are built in factories and shipped to their destinations. They are traditionally sold in dealerships which may offer limited financing options. In these cases, a person may buy a manufactured home as personal property, like a car, rather than getting a mortgage that attaches the house to the underlying land.
According to the Consumer Financial Protection Bureau, 42% of manufactured homes are purchased with loans secured by the home but not by the land. These loans usually have much higher interest rates. Homeowners may also be at greater risk of losing their home if they do not own the land.
In recent years, Fannie Mae and Freddie Mac have made it easier for lenders to extend conventional mortgages on some manufactured homes with features like porches or on-site garages. Cordell Oaks buyers get mortgages like these, secured by both home and land.
Missy and Mike Campbell moved to Ms. Guerra Street this spring. They had camped in their RV for months as they searched for a new home. They got a loan guaranteed by Fannie Mae through Guild Mortgage Co., where Mr. Arp is also the manager of the local branch.
The Campbells paid about $ 238,000 for their house, and the mortgage has an interest rate of less than 3%, Ms. Campbell said. The two families have a friendly fight over the best holiday decorations.
Skyline Champion Corp., the builder that supplies the Cordell Oaks homes, is also working on subdivision projects in California and Colorado for these high-end manufactured homes eligible for conventional mortgages, according to Dave Busche, director of business development for the company. . Spark Homes, the developer of Cordell Oaks, is starting another nearby 51-unit subdivision called Clara Ridge Ranch. Clayton Homes Inc., a unit of Warren Buffett’s Berkshire Hathaway Inc. and the nation’s largest manufactured home maker, said it was working with seven developers on similar subdivision projects.
These high-end homes still represent a tiny fraction of the new manufactured homes. And manufactured homes have long accounted for about 9% of new single-family construction, according to the National Association of Home Builders. Manufacturers say many local zoning codes do not allow manufactured homes and local authorities may misinterpret them as trailer parks. Supply chain bottlenecks and labor shortages have also slowed production across the industry.
Builders and developers say they are helping people who might otherwise be excluded from homeownership. New starting houses are rare. According to the Census Bureau, only about 21% of new built-in-place homes sold in September were for less than $ 300,000, up from 35% of sales a year earlier.
Guild Mortgage, a large prefabricated housing lender, recently purchased four plots of land in Paradise, Calif., Which is rebuilding itself after wildfires.
The company plans to install prefabricated houses built by Clayton. Then it will open them to residents and policy makers to visit. Eventually, Guild will sell them to the residents of Paradise.
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