Michigan's manufactured home sales beginning to rebound
When Drake and Kim Olson bought 40 acres in Van Buren County a few years ago, they initially considered bulldozing the 15-year-old manufactured home on the property.
The Kalamazoo couple wanted the land for hunting, and didn't need a second home.
But the house was in decent shape, and they decided to keep it.
Now they're glad they did, Kim Olson says. The three-bedroom, two-bath double-wide structure has proved to be a great weekend home, and is currently occupied full time by a relative going through a divorce.
While the Olsons were "worried about quality," Kim Olson said, the manufactured home has proved as every bit as durable as a conventional house.
"It's been a really good alternative to a stick-built home," she said. "If we were to build a home like that on the site, it would cost three times as much, and that wasn't an option for us."
Michigan has an estimated 239,000 manufactured homes, defined as prefabricated housing largely assembled in factories and then transported to sites of use. Those residences comprise about 5% of the state's housing stock, according to the U.S. Census Bureau. The highest concentration is in rural, northern Michigan.
But the number of manufactured homes in Michigan has shrunk about 14% since 2000, the Census data shows,
Indeed, the past two decades have been tumultuous for the industry, both in Michigan and nationally.
In 1999, 12,545 new manufactured homes were shipped to Michigan, a record number. In 2009, it was 325, a 97% drop in 10 years, according to data from the Manufactured Housing Institute.
Experts point to a variety of factors for the boom and bust.
Manufactured homes took off in popularity in the 1980s and 1990s as the quality improved and prices of conventional houses increased.
Manufactured housing in Michigan has decreased since 2000, according to U.S. Census Bureau estimates.
But the affordability of manufactured homes was offset by some downsides. Most manufactured homes in Michigan end up on a rented lot in a mobile home park. The fact that homeowner doesn't own the land has several implications. It means the homes typically have to be financed with a personal loan vs. a mortgage, which means a higher interest rate and shorter payoff schedule, making for higher monthly payments. In addition, manufactured homes on rented lots typically depreciate in value vs. appreciate in the manner of traditional homes.
Those downsides can be avoided by putting a manufactured home on a private lot. If the homeowner also owns the land and the residence is attached to a foundation, it qualifies for a conventional mortgage and the property is likely to appreciate in value. But the issues there can be the cost of the land, the foundation and the hookups to water, sewer and electricity, as well as finding a lot where zoning laws will allow a manufactured home.
All these factors contributed to a major slump in sales that began in the early 2000s, when the easy availability of credit meant more low-income buyers could purchase a conventional house. Then when the housing bubble burst, the market became flooded with foreclosed homes and condos at bargain-basement prices, providing even more competition for manufactured home sellers.
In the past few years, sales of new manufactured homes are moving up again, although they were still well below peak levels of the 1990s. Almost 4,500 manufactured homes were shipped to Michigan in 2018, according to the Manufactured Housing Institute. The 2018 number is 64% below the 1999 peak, but the recent numbers are the strongest in 15 years.
Sales of new manufactured homes are beginning to rebound after plunging in the early 2000s.
Today, the biggest barriers for the industry are the shortage of manufactured home communities — i.e., mobile home parks — and local zoning regulations and/or access to utilities that make it hard to put a manufactured home on private property, said BIll Sheffer, executive director of the Michigan Manufactured Housing Association.
"There haven't been a lot of new sites" to put a manufactured home, Sheffer said. "You can't sell (manufactured homes) if you have no place to put them. That's been a struggle."
Certainly part of that is the stigma of manufactured homes, which helps explain why cities and townships aren't eager to create new manufactured home communities or even retain those that already exist.
That's too bad, Sheffer said, because affordable housing remains an issue in Michigan and nationwide, and manufactured homes are a great option in that regard.
In 2017, the average cost of new U.S. single-wide manufactured home was $48,300 for 1,087 square feet of interior space, and the average cost of a double-wide was $92,800 for 1,733 square feet. That's $44 and $54 a square foot respectively compared to an average of $111 a square foot for a site-built house, according to the Manufactured Housing Institute.
"You can get so many amenities in a manufactured home these days, it's really like a custom-built home," Sheffer said.
Moreover, Shaffer said, manufactured homes these days have comparable quality if not better than site-built homes. That's because manufactured homes are built in a factory setting with better quality controls, and the materials are less likely to be damaged by sitting out in the weather.
The big cost-saving comes from volume pricing on construction materials, exterior features and appliances. In addition, there's much less waste in the production of manufactured homes, as well as costs associated with delays, damaged materials, vandalism and theft.
The current surge in manufactured homes sales is being partially driven by retiring baby boomers, who see manufactured homes as an affordable option for either a primary residence or as a vacation home, experts say.
That's because older buyers are more focused on affordability vs. long-term appreciation, and downsizing homebuyers can likely purchase a manufactured home outright, bypassing the financing issues.
Kim Olson has experienced the various trends of the manufactured home industry first hand.
Her parents lived in a mobile home in the early years of their marriage, and Olson spent in her first few years there.
That was the 1970s, when young couples were drawn to mobile homes because of their affordability, she said. Her family left the trailer park when she was a toddler.
Then after her mother died, Olson said, her father moved back to a manufactured home community. "He said it was less expensive and less maintenance," Olson said. "It was just overall easier."
She said she's been impressed by the spaciousness and quality of the house on their hunting property, saying it's given her new appreciation for manufactured homes.
"It's less expensive, and it's a apples-to-apples comparison" with a site-built home, she said. "It's been great."