Last month, Members of Congress were treated to an on-the-ground look at manufactured housing – the sector of the housing industry that holds the greatest promise for meeting our nation’s affordable homeownership and rental housing challenges.
At the U.S. Department of Housing and Urban Development (HUD) “Innovative Housing Showcase” in early September on the National Mall, several manufactured homes were placed just a few miles from the Capitol. The concept is simple. Manufactured housing uses the significant cost efficiencies of manufacturing a home in a factory and then siting the home on land, instead of building a home from the ground up.
UMH Properties was proud to be a co-sponsor of this event. UMH owns and operates over 140 manufactured housing communities nationwide, where families either own their own manufactured home or rent a home from the community owner. UMH communities are diverse and vibrant, with playgrounds, pools, community facilities, and other desirable amenities.
It is important to keep in mind that manufactured housing is the only homeownership option governed by a national uniform set of rigorous construction and safety standards – the HUD Code.
And, at a time when policymakers lament how difficult it is for young families to buy their first home, manufactured housing is by far the most affordable homeownership option. Last year, the average price for a manufactured home was around $125,000, while the average price for a site-built home was over $400,000. And, the average income for a manufactured home buyer was around $61,000 while the average income for a site-built home buyer was over $136,000.
Over the last few decades, we have seen important innovations in the manufactured housing sector. Manufacturers and mortgage loan sources like FHA and Fannie Mae and Freddie Mac have collaborated to make possible what are referred to as “Cross Mod” homes – new homes with higher-end amenities, but a price point much more affordable than site-built homes.
UMH Properties is proud to be the leader in another innovation – the use of manufactured housing communities to deliver affordable rental homes, either in hybrid communities with both homeownership and rentals, or more recently, in rental-only communities.
But more can be done. And Congress and federal agencies can be partners and catalysts.
The industry was encouraged by inclusion of Section 301 in the “Road to Housing Act”, a bill that was passed by the Senate Banking Committee in July and recently passed by the Senate as part of the “National Defense Authorization Act”. The bill will now go to the House for consideration.
Section 103 of this bill would remove an outdated requirement that a manufactured home must be sited on a permanent chassis, a change that would increase the production of affordable manufactured homes.
This bill also authorizes grants for the preservation of existing manufactured home communities.
UMH Properties is proud to invest tens of millions of dollars in private capital to purchase older communities and fund the repair of streets, sewer and water lines, and other deteriorating infrastructure that the previous owner often lacked the funds to complete.
Federally appropriated funds could further this objective. But if Congress funds such grants, it should not exclude for-profit community owners from the grants or give preferential treatment to so-called “resident owned communities” (ROCs) – which too often are “resident owned” in name only, with residents not even entitled to gains when a community is sold at a profit.
As Congress considers housing legislation, it should also take action to restore HUD as the sole national regulator of manufactured housing construction and safety standards. Because of a rider tucked into a 2007 energy bill without debate, DOE has tried to impose energy standards that conflict with HUD standards, which would add around $5,000 to the cost of each new manufactured home. Congress should restore HUD’s supremacy over energy standards.
Tax policies are also important. The recently passed tax bill included a $25,000 per person deduction for tip income. This will allow lower income restaurant workers to declare their income without paying federal income taxes. This can help them qualify for a mortgage loan to buy a new manufactured home or buy a home they are currently renting.
More can be done with regard to tax policies. The tax bill extended Opportunity Zones, which create incentives for long-term investment to revitalize distressed communities. Affordable, workforce housing is critical to businesses investing in or expanding in Opportunity Zones.
So, Congress should expand the source of eligible investment funds to include some amount of ordinary income when such funds are invested in affordable manufactured home communities located within Opportunity Zones.
Federal mortgage agency loan programs (FHA, RHS, VA, Fannie Mae, and Freddie Mac) can also help. These programs fund 65% of all new mortgages (Page 8, Urban Institute Mortgage Chartbook). But, combined, they did not fund a single personal property manufactured home last year. This disconnect comes even as personal property homes constitute some 70% of the manufactured housing market.
These agencies can also help with loans to manufactured housing communities with affordable rental units. These communities can be harder to finance, due to the complexity of having to perfect a lien on each rental unit. UMH commends Fannie Mae for being an innovator in funding these loans – and we hope other federal agency mortgage programs will follow suit.
Local communities across the nation can also help with affordable manufactured housing. Unfortunately, all too often, communities adopt discriminatory zoning ordinances that unfairly exclude manufactured housing. This needs to change.
For example, UMH has experienced this in Coxsackie, New York, where Village officials repeatedly rejected well-planned designs for a community, and eventually resorted to re-writing the Village zoning code to prevent UMH from building any manufactured home community on the property that it had purchased for that purpose.
The solutions to meeting our nation’s affordable housing lie in fulfilling the promise of manufactured housing. Let’s make this a priority.
Sam Landy is the President and CEO of UMH Properties.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: zeb@hwmedia.com.
