Housing crisis

Prefab houses could help solve the housing crisis

Erika Bolstad

Stateline

EUGENE, Ore. – As a boy in the late 1950s, Terry McDonald watched workers build an 80,000 square foot manufacturing plant in an industrial neighborhood on the west side of Eugene. Long after his childhood, McDonald felt an affinity for the factory, where American Steel once made heavy-duty logging equipment until the lumber industry in Oregon declined.

Today, as executive director of the local St. Vincent de Paul Society, McDonald’s has made a career out of turning other people’s scraps into cash to support public housing and the organization’s other anti-poverty initiatives. charitable. He easily envisioned a creative reuse for the mid-century factory, a space flooded with natural light from paned windows above the manufacturing floor.

“I looked at this building and said, ‘One day I would like to own this building,'” McDonald said. “Old industrial buildings are just fun.”

Over the next year, McDonald and his team will transform the huge space into a non-profit prefabricated home factory capable of producing up to 80 homes per month. Known as the HOPE Community Corporation, it is a one-time non-profit enterprise, backed by $15 million in housing funds from the Oregon Legislature. Once the group is operational in 2023, HOPE could employ more than 100 people to build prefab homes for low-income families at a time when many states are facing severe housing shortages.

Nationally, there is an estimated shortage of approximately 3.8 million housing units. The shortfall has many causes, including growing investor ownership of homes, but it stems largely from a construction slowdown that began in 2008 during the Great Recession and never regained momentum. necessary to meet current needs.

There are repercussions not just for the homeless, but for almost anyone looking for a home – buyers cannot afford ever higher prices and tenants face rising rents. Apartments are also scarce, especially those aimed at low-income renters, according to a recent study by the National Council on Multifamily Housing and the National Apartment Association. Three states alone, California, Florida and Texas, will need 1.5 million new apartments by 2035, according to the study. As supply chain bottlenecks persist and interest rates and borrowing costs rise, the housing shortage could worsen without intervention.

Because prefab homes are built on an assembly line, they are cheaper and faster to build. They are seen as essential to providing new housing, especially for low-income buyers who may have been excluded from the price of locally built homes or expensive rental markets. Many housing experts consider manufactured homes to be an effective way to meet today’s housing needs, especially in rural areas.

“The importance of prefab housing in addressing our current affordability crisis is simply immense, as prefab housing is half the construction cost of traditional site-built construction,” said Esther Sullivan, Professor in sociology at the University of Colorado at Denver and the author. of “Manufactured Insecurity”, a book that examines the challenges faced by residents of American mobile home parks. “I’m not trying to say it’s perfect…but there’s just a lot of opportunity to capitalize on the cost savings that come with factory production.”

The average manufactured home costs $106,000 to build, compared to $351,000 for homes built on site, said Lesli Gooch, chief executive of the Manufactured Housing Institute, a trade organization that showcased some of the newest home designs in June. industry on the National. Mall in Washington, DC

The techniques used in manufactured homes account for the difference between $72 and $140 per square foot in construction costs, Gooch said, although some of those estimates, as with all construction, may have increased recently due to inflation. and supply chain issues.

Cheaper doesn’t mean it’s poor quality, Gooch said. Manufactured homes are built on an assembly line with the precision and quality that comes from a controlled construction environment, she said. They must also meet national building and safety standards from the US Department of Housing and Urban Development, which has building inspectors on site at factories..

“Sometimes people have preconceived ideas about what a manufactured home is,” she said. “That notion is not what is being produced today.”

Manufactured homes are prefabricated structures built after 1976 according to HUD codes. Prior to that, they were called mobile homes or trailers, terms that are no longer part of federal law or common usage. Manufactured homes come in one piece, unlike modular homes, which are also built primarily in a factory, but assembled from multiple components on site and subject to local building codes.

The Biden administration’s housing supply action plan released in May specifically supports the production of new prefab housing and new ways to finance that housing. States like Oregon have started to respond, with zoning rules that allow more types of mobile homes, in more places. The same is true for many cities, Gooch said, including some in Tennessee that have begun allowing so-called CrossMod homes that look more like site-built homes but are made in factories.

Yet barriers to owning a manufactured home remain nationwide. Many low-income buyers do not have access to traditional mortgages to buy new homes and instead rely on personal home loans. These loans can have higher interest rates, as well as fewer protections than federally backed mortgages, including forbearance when homeowners fail to make payments.

Manufactured homes can also have a complicated ownership structure. In mobile home parks, people can rent the land but own their own home; outside of parks, they are more likely to own both the house and the land it sits on.

As important as building new homes is, maintaining the existing prefab housing stock is also a priority, said Heather Way, a law professor at the University of Texas School of Law and an expert in disaster prevention. displacements. This can be done with zoning, she said.

In Austin, Texas, a city facing rapid gentrification in some neighborhoods, the city has rezoned mobile home parks in a way that prohibits them from being demolished and converted to other uses. Way also worked on statewide legislation passed in 2019 that made it easier for people who inherit manufactured homes with obscure titles to get the same kind of property tax exemptions as those who inherit. houses of more traditional construction.

Legislation passed in Colorado this year provides more protections for tenants who own manufactured homes in mobile home parks, Sullivan said. If owners of mobile home parks put them up for sale, tenants have 120 days to purchase the parks. The law also gives local governments more scope to step in and buy the parks. And if mobile home park owners convert their parks to other uses, they must compensate people who rent land for the cost of moving their homes. It costs an average of $7,000 to move a manufactured home to a new site, and most remain once in place.

Some simple approaches can help communities maintain or add to existing manufactured homes, Sullivan said. Cities can add language to their comprehensive growth plans that recognizes the importance of manufactured homes in their communities. States and nonprofit housing organizations can also support tenants’ efforts to organize themselves into resident-owned communities, providing low-interest loans to purchase land and legal and financial support.

That’s what’s happening in the fire-stricken Southern Oregon Talent community. There, the nonprofit CASA of Oregon is helping future residents acquire and manage a mobile home park where all but 10 of the 98 homes were destroyed by fire in 2020. If the time is right, CASA hopes provide the park with houses purchased at HOPE. factory run by McDonald’s.

After fires destroyed thousands of manufactured homes in southern Oregon in 2020, regional HUD officials “heard loud and clear from community members” about their housing needs and their hopes for the future. future, said Margaret Salazar, the federal agency’s North West regional administrator. People are hungry for opportunities to own their own home, she said. Many of the people who lost their homes in the 2020 fires are Latin American.

“It’s a big part of our strategic plan to expand homeownership opportunities that are sustainable, and that’s also really grounded in our work on racial equity and addressing racial disparities in home ownership,” Salazar said. “Low-income people, working people are really looking for creative opportunities to be able to become owners. And so, I see that as another opportunity.”

As the homes roll out of the HOPE factory, McDonald said it was not yet certain of their price. St. Vincent de Paul already has eight mobile home parks in Oregon for low-income residents, which helped provide the impetus for a factory start, McDonald said. He couldn’t find enough homes to replace some of the aging stock in their existing parks.

Their goal is to provide affordable homes that are built sustainably and with fire-resistant materials. Homes will also be equipped with energy-efficient appliances and features that will keep utility costs low for their future owners. McDonald’s is already working with the Federal Home Loan Bank of Des Moines to design loans to help people buy the homes the Eugene plant will produce.

“So the goal is to try and hit a home run at the same time,” he said. “It’s a model where we can actually succeed in helping solve a slice of the problem, but it’s a significant slice.”

Stateline is a nonpartisan, nonprofit news service of Pew Charitable Trusts that provides daily reports and analysis on trends in state politics.

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