Appreciating Manufactured Housing
Updated: Apr 20
Manufactured homes are important source of affordable housing.
At 35-45% lower in cost per square foot compared to a stick-built house, this housing construction method offers many a path to home ownership. And since 1976, HUD (Housing and Urban Development) imposed restrictions on how factory built homes were constructed so we can be assured they are safe, well-constructed and meet reasonable energy targets.
Currently, manufactured homes are only allowed in manufactured/mobile home parks in Williamstown but the Planning Board would like to change that.
Articles 20 and 21 at this year's Town Meeting will first align the definition of manufactured homes with that of the state code and Williamstown's Department of Health regulations. And then, Article 21 will propose that manufactured homes be allowed wherever we allow other types of single family homes, in the center of town and in the more rural areas.
Recently it's been suggested that manufactured homes depreciate over time and that, if we approve these measures we would be committing a homeowner to losing money over the ownership period. Contrary to this view, various studies indicate that while this is a common misconception, manufactured homes appreciate at levels similar to site stick-built homes.
The Federal Housing Finance Agency (FHA) analyzed home prices between 1995 and 2018 and found that the average annual growth rate was 3.8 % for traditional homes compared to 3.4 % for manufactured homes, see New evidence shows manufactured homes appreciate as well as site-built homes. While price volatility seems to be greater than traditional homes and appreciation a little lower, some of this variation may be due to lack of transaction data.
FHA also notes that geography matters. The highest rates of home value appreciation occur in city centers, typically where manufactured homes are not allowed.
Another report, Manufactured Housing Appreciation: Stereotypes and Data, cites: the " ...average appreciation rates of manufactured homes packaged with owned land are statistically in line with the site built market, and there are few inherent reasons that a home built in a factory should perform differently than one built on site. Our analysis suggests that consumers can make decisions which can improve the appreciation of a manufactured home. Land ownership, location, purchase price and maintenance expenditures are among the factors that predict appreciation, and should be considered when attempting to increase appreciation in a particular unit."
The report concludes that while the same appreciation rates are not always seen in manufactured homes compared to conventional, much of the difference is attributable to lower rate of land ownership among manufactured home owners.
The cause of the variation in appreciation within the manufactured home pool can be explained and we can use this information to help improve the appreciation rates. Some of the factors that lead to higher appreciation rates are:
owning the land versus renting,
distance to schools,
distance to other services,
investing in home maintenance, and
By allowing manufactured homes in more neighborhoods on owned land close to schools and services, we will be supporting lower income folks develop home equity in their appreciating asset.