Home prices are rising. The built-housing industry sees an opening

Late last year, they visited a house they found on Zillow and were surprised to learn that it was built in a factory. He liked the big backyard and it was in a new 21-home subdivision on the San Antonio outskirts of Seguin. First-time home buyers closed in February.

“We were very impressed with having a manufactured home,” said Mrs. Guerra, a housewife. She lives in a three-bedroom house with her 18-month-old daughter. Welder Mr. Guerra died of COVID-19 in August.

Housing lenders, developers and advocates seem to have found a winning formula by building homes in factories that look like site-built homes but cost less. They say more developments like Seguin could help ease America’s housing-affordable crisis.

“We have a lot of teachers, first-time home buyers, and the number of people in retirement is declining,” said Dustin Earp, managing partner at Spark Homes LLC. This developed the Cordell Oaks, where the Guerraes bought their home. “Maybe they used to qualify for site-built housing but no longer do.”

According to government data, a new single-family home sold for an average of $392,000 in 2020, or about $309,000 excluding the cost of the underlying land. Newly built homes cost $87,000, not including land.

According to the Census Bureau, the industry is on pace to deliver more than 100,000 newly built homes this year for the first time since 2006. The Biden administration has pointed to manufactured housing as a solution to the lack of affordable homes.

Still, manufactured-home manufacturers face a battle with reassuring potential buyers that their homes have solid construction and secure financing options. The industry boomed in the 1990s, when dealers increased sales by offering unrealistic loan terms to those who could not afford them. Home shipments grew to about 400,000 in a year. Many borrowers defaulted and lost their homes, and many lenders closed.

During the pandemic, homes living in all types of manufactured homes are nearly twice as likely to fall behind on rent or mortgage payments as the wider population, according to an analysis of census data by Harvard University’s Joint Center senior research analyst Alexander Hermann. has been for housing studies. In the third quarter of this year, nearly 19 percent were behind.

Those occupants of manufactured homes compared to other homes were also more likely to report losing income during the pandemic, Mr Harman said.

In many ways, manufactured housing remains a world apart from the site-built housing market. Homes are built in factories and shipped to their destinations. They are traditionally sold at dealerships that may offer limited financing options. In those cases, a person can purchase a manufactured home as a piece of personal property, like a car, rather than obtaining a mortgage that links the home to the underlying land.

According to the Consumer Financial Protection Bureau, about 42% of manufactured homes are purchased with a home-secured loan, but not a plot of land. Those loans generally have far higher interest rates. Owners may also be at greater risk of losing their homes if they do not have land.

In recent years, Fannie Mae and Freddie Mac have made it easier for lenders to extend traditional mortgages on some manufactured homes that have features such as an on-site porch or garage. In Cordell Oaks, buyers get this type of mortgage, which is secured by both the house and the land.

Missy and Mike Campbell walk down the street from Mrs. Guerra this spring. He had camped in his recreational vehicle for months in search of a new home. He obtained a Fannie Mae-backed loan through the Guild Mortgage Company, where Mr. Earp is also the local branch manager.

The Campbells paid about $238,000 for their home, and the mortgage interest rate is less than 3%, Mrs. Campbell said. A friendly competition is going on between the two families for the best holiday decorations.

Skyline Champion Corp., the builder that supplies homes in Cordell Oaks, is also working on subdivision projects in California and Colorado for these high-end manufactured homes, according to Dave Bush, a business development director at the company for traditional mortgages. are eligible. , Cordell Oaks developer Spark Homes is starting out on another 51-unit subdivision called Clara Ridge Ranch. Clayton Homes Inc., a unit of Warren Buffett’s Berkshire Hathaway Inc. and the nation’s largest built-home maker, said it is working with seven developers on similar subdivision projects.

These high-end homes still account for a small proportion of newly built homes. According to the National Association of Home Builders, manufactured homes have long accounted for about 9% of new single-family construction. Manufacturers say that many local zoning codes do not allow manufactured homes, and that local officials 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 out of home ownership. New starter homes are rare. Only 21% of new site-built homes sold in September were priced under $300,000, according to the Census Bureau, down from 35% of sales a year earlier.

Guild Mortgage, a large built-housing lender, recently purchased four plots of land in Paradise, Calif., which is in the process of rebuilding from a wildfire.

The company plans to install manufactured homes built by Clayton. It will then open them up for visits by residents and policymakers. Eventually, the guild will sell them to the inhabitants of Paradise.