Manufactured Housing News

Over the past few years, rental rates have risen faster than predicted. RealtyTrac has released a new report.

It is based on data from HUD and BLS. The report says that rents for three-bedroom houses will rise by 3.5 percent in 2016.

A recent survey asked 500 property managers about rental rates. The survey was conducted by Rent.com. It estimates that rental rates will likely increase by about 8% across the country.

Only time will tell if these alarming figures will become real. However, we cannot deny that the rent increase crisis is getting worse.

Daren Blomquist, Vice President at RealtyTrac, confirms this. He said, “In 2016, rents will be less affordable. They will rise faster than wages.”

Addressing the Root Cause of Rising Rents

Many reasons explain the rise in rental costs. A survey of 500 people found that 64 percent believe the main cause is high demand for affordable rental units and low supply.

However, everyone needs a place to live. A report from the NMHC in September 2015 shows that over 43 million households rent their homes. This is an increase of 9 million households in just 10 years.

As the cost of living rises faster than wages, many people struggle. Nearly 4 million people retire each year. They need affordable housing options. What can we do to help?

The NLIHC’s latest report, Out of Reach (p. 4 and 5), suggests some solutions. One solution is to raise the minimum wage. Another is to increase the supply of affordable housing. A third option is to extend rent control.

However, this will generate additional problems. While raising the minimum wage will result in higher unemployment rates and an exponential increase in demand for affordable housing, rent control will discourage investments, leading to fewer affordable housing options for low-income communities.

Julian Castro, Secretary of HUD, suggested a more viable solution: manufactured housing. Compared to regular site-built construction, a manufactured home is less expensive to build, buy and rent.

The CFPB reports that in 2014, the average price of a manufactured home was between $20,000 and $78,000. New, single-section homes cost about $20,000.

Multi-section homes cost around $78,000. These homes are 10 to 35 percent cheaper than similar traditional homes. The U.S. Census Bureau has also published a report which states that the average sale price of a single-unit manufactured home was $45,000.

Considering that the average sale price for newly manufactured housing units has increased slightly since then, we’ve decided to use official data to calculate the payment for a 30-year fixed-rate mortgage of $40,500 (for a manufactured home costing $45,000), which is $597 per month, including tax and insurance. The full-time minimum wage ($15,080 annually) is 17 percent above the 30-percent limit of gross income a person should spend on housing costs, according to the “Out of Reach” report mentioned above.

But a very important aspect often overlooked is that manufactured homes can be customized to meet different needs and income levels. For instance, a minimum-wage worker could choose a smaller floor plan or buy a used manufactured home and get a mortgage he can afford.

In today’s social and economic context, manufactured housing is a good solution to the rental increase crisis. Supplying more manufactured homes will reduce current rental rates, and these homes allow low—and moderate-income families to buy decent housing, reversing the current downtrend in homeownership.

At Triad Financial Services, we’re very excited about the possibilities manufactured housing can provide to millions of people throughout the country. Our innovative and comprehensive manufactured home lending solutions can help any financial institution interested in enhancing its portfolio with manufactured home loans to become part of the solution to the affordable housing crisis. Contact our manufactured home loan experts today to learn more about our products and services!