If you need a car, you don’t hire a team to find the parts piecemeal to then assemble it in your driveway from blueprints. That is how we tend to build homes, however.
Manufactured homes — from prefab houses shipped from a factory to double-wide mobile homes — are increasingly getting attention as an attractive, more affordable option to address the nation’s chronic housing shortage. And it’s an option that some who look to rebuild following natural disasters might be weighing.
Marketplace senior economics contributor Chris Farrell looked into this history and potential future of manufactured homes. He joined “Marketplace Morning Report” host David Brancaccio to discuss his findings, and the following is an edited transcript of their conversation.
David Brancaccio: I remember there’s a history of you being able to order a prefab house from Sears — the Sears catalog — from 1908 for a bunch of decades. The concept’s been around. I guess it’s still here.
Chris Farrell: Yes, it is. And what I learned during my research, David, is that factory-built homes, they helped meet the demand for homes after the Second World War. By the early 1970s, mobile homes accounted for one-third of single-family homes produced nationwide. And these figures come from studies by three Federal Reserve economists, and you’d like the title, “Mass Production of Houses in Factories [in the United States]: The First and Only ‘Experiment’ Was a Tremendous Success.” And I looked at this other study, and it found in the latter part of the 1990s — remember that housing boom that went on during that period of time — well, more than a quarter of all lower-income home buyers purchased manufactured homes.
Brancaccio: All right. Folks in California who lost homes in the Palisades and Eaton wildfires want to know, people who have lost homes in tornadoes, other disasters want to know the answer to this three-word question: Are these cheaper?
Above, a prefab modular home is lifted by a crane at Ka Lai Ola, a 57-acre temporary housing project in Lahaina, Hawaii, that will house wildfire survivors for up to five years.
Mengshin Lin for The Washington Post via Getty Images
Farrell: Yes, they are cheaper. Manufactured homes cost buyers up to two-thirds less than building comparable-sized single-family homes with your traditional methods. And this comes from Harvard University’s Joint Center for Housing Studies. So factory-built homes, they can also be produced quickly, in all kinds of weather conditions. That said — and, of course, this will matter a lot for people in Southern California — manufacturing housing is most competitive in areas where land prices are low. So, in many parts of the country, factory-built homes look like an attractive option for increasing the supply of affordable housing and turning homeownership into a realistic option for more renters. Yet manufactured homes, they only make up some 9% of annual new home starts.
Brancaccio: This was all the rage in, say, the early 1970s. If it’s such a good idea, what happened to this trend?
Farrell: Opposition from traditional builders, negative perceptions about the quality of manufactured homes, zoning. Land use regulations excluded manufactured homes from single-family neighborhoods. Mortgage financing is difficult to get while relying on higher interest rate personal property loans. That, David, just swamps the cost advantage of manufactured housing and elite neglect played a role. A study published several years ago, a group of scholars, they learned that planners and housing researchers ignored the industry for decades.
Brancaccio: Any sign, at a time when affordable housing is so hard to find, that this perception of prefab might be changing?
Farrell: You know, nothing like the 1950-1970 experience. But the recognition — it’s broadly stirring — that in an economy that’s hobbled by a severe lack of affordable housing, manufactured homes hold the potential to satisfy the desire among lower-income households to become owners.