(March 2004) The dream of owning one’s home has come true, nowhere more so than in rural areas of the United States. The homeownership rate in rural America is 74 percent, compared with 65 percent in urban areas, according to the 2000 Census.
But another statistic — the number of residents living in manufactured homes — shows in part why homeownership is so high in rural areas. In nonmetro locations, mobile homes account for 18 percent of all housing units (see figure), compared with 6 percent in metro areas and 8 percent for the nation as a whole.
U.S. Homeownership and Ownership of Manufactured Homes, by Statistical Area, 2000
Note: Metropolitan areas include core areas of 50,000 people or more; micro areas include core areas of 10,000 people or more; nonmetro areas include core areas of fewer than 10,000 people.
Source: 2000 Census Data, adjusted for 2002 Office of Management and Budget demographic definitions.
While some residents of manufactured homes are renters, a 2002 survey by the Foremost Insurance Group found that nationwide about 80 percent of these residents own their homes and live there year-round. Given the high percentage of owner-occupied units, manufactured housing purchases have contributed significantly to homeownership rates in nonmetro counties.
Pro and Cons
The proliferation of mobile homes has some positive aspects. New manufactured homes — which many people still call “mobile homes,” even though few are moved after placement these days — sometimes provide better living conditions than conventional housing in rural areas where older homes have not been maintained or updated with modern amenities. This is especially true in remote locations and in areas such as Appalachia with rugged terrain that makes building new homes a challenge. The prevalence of manufactured housing in that region was a factor in improving housing conditions between 1990 and 2000, Mark Mather, program director for the Rural Families Data Center at the Population Reference Bureau, concluded in his March 2004 study, “Housing and Commuting Patterns in Appalachia.”
Still, the trend has some serious consequences for low-income rural families, who are most likely to buy manufactured homes. Estimates vary on the percentage of owners of manufactured homes who rent the land on which their home sits; industry-funded studies by Foremost Insurance Group put the level at about 50 percent, but consumer advocates say it is higher than that. Renting land in a residential park makes it far more difficult for owners of manufactured homes to recoup their investment when they sell.
In addition, many owners of manufactured homes pay a higher level of interest when purchasing their homes, causing their equity to grow more slowly. Studies by the Consumers Union Southwest Regional Office in Austin, Texas, of 400 complaints filed with the Texas Attorney General and Consumer Credit Commissioner in 1999 and 2000 show that buyers of the homes typically paid a higher annual rate of interest — 9 percent to 13 percent — than did buyers of conventional homes, who paid an average of 7 percent to 8.5 percent. Buyers of manufactured homes who felt they had been misled about the price or features of their home or mortgage filed nearly half of the complaints.
As a result, the Consumers Union and other groups are pushing the manufactured housing industry to meet the same standards as those in the conventional housing market. These include requirements that appraisers, not salespeople, estimate the home’s worth and that loans be structured as a long-term mortgages, instead of personal loans that carry a higher interest rate.
Bruce Savage, the vice president of public affairs for the Manufactured Housing Institute, an industry-funded group located in Arlington, Va., said the industry is committed to increasing “transparency” to help homeowners understand the details of their transactions.
Residents in established communities often oppose the introduction of manufactured housing in their neighborhoods. However, the industry is taking steps — such as fighting restrictive suburban zoning regulations — to remove barriers to locating manufactured housing in popular areas, where resale values are most likely to increase. Savage said appreciation values for manufactured homes operate on the same principles as for other homes. “If the home is maintained properly and it’s in a desirable location, the homes will perform like any other form of housing” in the market, he said.
Kevin Jewell, policy associate at the Consumers Union Manufactured Housing Research Project, said that while manufactured homes placed on the owner’s private land show appreciation levels similar to those of conventional homes, the variance of sale prices is greater because the value of the land plays such a large role in determining the home’s resale price. This factor makes manufactured homes a riskier purchase.
Manufactured Housing: Growing in Size and Popularity
According to the Manufactured Housing Institute’s analysis of U.S. Commerce Department and Census Bureau data, the average square footage of a new manufactured home increased from 1,335 in 1996 to 1,595 in 2002. The average size of a conventional home increased from 2,090 square feet to 2,301 square feet over the same period.
Many customers are now purchasing multisection homes — known in the popular parlance as “doublewides” — or even two-story homes that are erected on site and sell for $85,000 and up, according to Savage.
The average cost of a multisection home was $56,200 in 2002, according to the institute, while single-section homes cost an average of $30,700. In 2000, the median value of manufactured homes was $31,200, according to the latest census, compared with $119,600 for all owner-occupied homes.
Experts from the Harvard University Joint Center for Housing Studies and other institutions say manufactured housing must be considered by groups attempting to provide affordable housing to poor and low-income families. The industry itself has made such a case, working with nonprofit groups and governments in urban areas to place manufactured homes in vacant or underused areas.
While two-story homes and the upscale appliances in many new manufactured homes are meant to diversify the industry’s customer base, the Foremost study shows that low-income families still dominate the market for manufactured homes. In a survey of 21,866 residents of manufactured homes, 70 percent said their annual household income was below $40,000. The mean household income for those in owner-occupied manufactured homes ($28,874) exceeded that of renters ($24,808), according to 2000 Census estimates. The mean income for homeowners nationwide was $66,699 ($36,457 for renters).
The greatest preponderance of manufactured homes is in the South and Southwest. The 10 counties with the highest percentage of manufactured homes in the 2000 Census were La Paz County in Arizona; Dixie, Gilchrist, Glades, and Levy counties in Florida; Brantley, Echols, Long, and Quitman counties in Georgia; Eureka and Lander counties in Nevada; and Torrance County, New Mexico. In each of these counties, at least half of all housing units were mobile homes.
While consumer advocates worry that manufactured homes do not make financial sense for low-income families, such homes are often the only ones within reach for rural residents with low or moderate incomes and a desire for modern amenities. Building affordable conventional homes in many rural areas is difficult because of the geographic isolation and lack of infrastructure such as public water and sewage systems, and because contractors prefer to build homes in established, high-density areas.
Mobile home construction in the United States boomed in the last decade. Nationwide, the number of mobile homes increased by 20 percent during the 1990s, and the rate was even faster in rural areas. While the rapid increase in mobile homes has boosted homeownership rates, policymakers need to consider the potential negative impacts on asset accumulation for low-income families, consumer advocates say. Rural families often have few housing options. Improving access to affordable rental housing near areas of job growth, providing economic assistance to first-time homebuyers, and ensuring fair lending practices are some of the ways to give rural families a fresh start, advocates say.
Lori Nitschke is a freelance writer based in Washington, D.C.