US manufactured housing shipments expected to reach 85,000 units by 2020

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In 2020, US manufactured housing shipments are expected to reach 85,000 units, declining as a share of total single-family housing starts and manufactured housing placements.

Manufactured housing’s share of all single-family housing units was elevated in the 1990s due to very accessible credit, but declined through 2005 as the industry became more wary of its former easy credit policies, while lower interest rates and new financial instruments for subprime borrowers made conventional housing a more attractive option for many home buyers, according to a new study released by Freedonia Group.

However, faced with higher mortgage interest rates when their adjustable-rate loans were reset, amplified when the Federal Reserve tightened its monetary policy in 2005, many borrowers defaulted on their mortgages.

This created tremendous volatility in financial markets and forced many lenders to change their practices. Furthermore, this led to a glut of repossessed houses in the market and limited any demand gains in manufactured housing.

The manufactured housing industry is impacted by a variety of regulatory issues on both local and federal levels, both positively and negatively.

According to analyst Mariel Behnke, “Among the most significant of the many regulatory issues facing the manufactured housing industry is the HUD Code.”

This federal set of standards allows many manufactured housing producers to operate across state lines disregarding a plethora of local codes. Other regulatory issues facing the industry include local zoning and transportation regulations, manufactured housing community ownership, and financing concerns.

Manufactured homes appeal to a wide range of individuals, particularly due to their affordability relative to site-built housing. In 2015, the median household income of manufactured home owners was approximately $28,400, with over three-fourths having annual incomes below $50,000.

As prices for comparable site-built homes rise, manufactured housing will attract more first time home buyers and other consumers seeking an affordable alternative. However, new trends in design, additional value-added features, and increasing availability of multi-section units will attract higher-income customers.

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