Amidst ongoing concerns about affordability in 2023, mobile homes are emerging as a potential solution, but Lendingtree research indicates that they are becoming increasingly costly. According to an analysis of government surveys conducted by the online loan market platform, the price growth of manufactured towable mobile home units has surged by 77.1% between 2017 and 2022. Presently, a new mobile unit in the U.S. commands an average price of $127,300.
In contrast, the cost of a single-family property constructed on a permanent site, which may encompass various forms of prefabricated housing, increased by 46.7% over the same five-year period, averaging $430,808.
The average cost of a mobile home now exceeds $100,000 across all 47 states considered in Lendingtree’s analysis, with Alaska, Hawaii, and Rhode Island excluded due to insufficient data. Wyoming experienced the highest surge in average prices at 127.6%, while Massachusetts was the sole state to record a decrease in costs, with a decline of 5%.
In Lendingtree’s examination of mobile home prices, Kansas emerged as the most affordable state. In 2022, the average property cost stood at $100,800 in the Sunflower State, marking a 58.5% increase from $63,600 in 2017. Following closely were Ohio and Nebraska, with average prices of $101,200 and $101,900, respectively.
Conversely, the West saw the highest prices for mobile homes in 2022. Idaho claimed the top spot with an average cost of $168,500, witnessing an 82.6% surge from $92,300 five years prior. Montana secured the second position at $160,600, trailed by Arizona at $160,500.
Despite the notable price hike, mobile homes still remain over $300,000 more affordable than permanent dwellings. Jacob Channel, Lendingtree’s senior economist, suggested that while there may be challenges for buyers of towable homes, including land-access fees and resale difficulties, a mobile home could be a worthwhile investment based on the buyer’s needs.
However, financing a mobile home loan presents potential challenges for both buyers and lenders. Channel noted that securing a loan for a mobile home can be demanding and costly, particularly for borrowers with poor credit scores or those aiming to purchase on land they do not own.
The funding landscape for mobile homes has also hindered growth. The majority (70%) of financing for mobile homes comes in the form of personal-property, or chattel, loans. Surprisingly, neither the Federal Housing Administration nor the U.S. Department of Agriculture insured any chattel loans in 2022, while government-sponsored enterprises have not backed one in the past 15 years. This lack of support has made offering such loans unappealing to many lenders. The USDA only insured 146 manufactured homes in 2022.
Given the minimal progress in addressing the shortage of affordable housing over the past two years, there is mounting pressure for policy updates. This includes revisiting the FHA’s Title 1 regulations governing manufactured and mobile homes. Earlier this year, the U.S. Department of Housing and Urban Development established a new independent office for manufactured housing programs, overseen by FHA Commissioner Julia Gordon.
In an October letter directed to the USDA’s Rural Housing Service, leaders of the Manufactured Housing Institute, Community Home Lenders of America, and Mortgage Bankers Association proposed reforms to its program aimed at increasing the issuance and securitization of loans.
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Reference article:
https://www.nationalmortgagenews.com/news/mobile-home-prices-surged-by-77-in-5-years
