Just 9 States Are Zoning More Manufactured Homes, a Potential Fix for the Housing Shortage

America needs millions more entry-level homes. Yet so far, only nine states are amending their laws to permit zoning more manufactured homes (once called mobile homes or trailers), says a report published last week by the Pew Charitable Trusts.

Manufactured homes are typically less than half the cost per square foot of traditional, stick-built houses, says Pew, and have monthly housing costs of 40% of the norm. And they're built to federally mandated codes that make them safe, durable, comfortable and fit for purpose.

Their wider use could take a big bite out of America's current shortfall of 4 million to 7 million homes. Yet manufacturers are currently shipping only 100,000 units annually, one quarter of the number in 1998.

Prejudice Is a Major Barrier to Zoning More Manufactured Homes

For decades, "trailer parks" were a staple of Hollywood movies and TV dramas. They provided a squalid backdrop with their junk-strewn yards, crumbling structures, and residents who were often either criminal or inadequate. Thirty or 40 years ago, the term "trailer trash" was a common pejorative for those who lived in these homes.

So, maybe it's an understandable prejudice that many suburban Americans don't want a manufactured home park anywhere near their streets. However, it's a misplaced one.

Today's landscaped parks with their modern homes no longer house society's failures and are every bit as attractive as most streets of stick-built homes. Unfortunately, it can take a while for perceptions to catch up with reality.

"Local zoning barriers often rule out manufactured housing as a viable option for prospective homeowners, despite its affordability and its quality, which is now on par with site-built housing," says Pew. "Zoning laws and other factors — such as limited access to affordable loans with interest rates and consumer protections similar to those of mortgages — have contributed to persistently low manufactured home shipments in the past two decades."

The nine states that have already changed zoning laws to make manufactured home development easier are Connecticut, Kentucky, Maine, Maryland, Montana, New Hampshire, Oregon, Rhode Island and Texas. That blend of red and blue states suggests this is seen as a welcome practical step rather than a partisan issue of the left or right.

Breaking Down the Financing Barrier

Both Fannie Mae and Freddie Mac have been working to make it easier to finance a manufactured home with one of their mortgages. They still have a way to go.

However, last year, the Federal Housing Finance Agency (FHFA), which regulates both Fannie and Freddie, said it was developing initiatives that would see those organizations better serve manufactured home (MH) owners across a range of scenarios (we quote):

• Financing of MH titled as real property (MHRP) (i.e., loans secured by both the home and the underlying land);
• Financing of MH titled as personal property (MHPP) (i.e., loans secured only by the home, exclusive of the underlying land);
• Financing of MH communities (MHCs) owned by a non-profit organization, governmental entity, or the residents; and
• Financing of MHCs that provide, at a minimum. certain tenant pad lease protections.

That FHFA document was published during the Biden era, and we have yet to receive clarity on the current Trump administration's view of these initiatives. However, Fannie and Freddie began much of their work on MH mortgage accessibility in 2018, during President Donald Trump's first term. So, there are grounds for hope that further progress might be made.

It's a Start

No matter who does what, it's likely to take decades to bridge the gap between America's housing supply and demand. And, too often, governments at all levels seem to favor tinkering around the edges rather than addressing central issues.

Manufactured housing is different. Just restoring their output growth to 1998 levels could see 1.6 million new homes delivered within a single presidential term — 4 million in a decade. And that could provide affordable options across the population, from young first-time buyers desperate to get a foot on the housing ladder to retirees wishing to downsize.