Identifying the Opportunities to Expand Manufactured Housing

Freddie Mac recently published a report on the impact of zoning restrictions related to opportunities for manufactured housing.  Freddie Mac engaged in this effort at the bequest of the industry for information that could, “assist industry participants in designing strategies and tactics to advance the acceptance, placement, and ownership of manufactured housing in metropolitan areas.”

Some of the key takeaways confirmed many long-held industry assumptions, such as, the more zoning and land use restrictions a jurisdiction has, the fewer manufactured homes are located or shipped. 

However, the report also identified opportunities, by quantifying estimates of “mortgage ready” and low to moderate income mortgage ready individuals broken out by metro areas.  These areas were further subdivided based on the degree, or lack thereof, to which a metro area was “MH friendly.”

From a national perspective, Freddie Mac estimates, “Close to 25 million people living in MH-friendly jurisdictions are ‘mortgage ready’ today. If zoning were less stringent, more than a million more individuals in those jurisdictions might be able to achieve homeownership with manufactured housing.”

Freddie Mace defined consumers as “mortgage ready” if: the do not currently have a mortgage; are 45 years old or younger; have a credit score of at least 660; a debt-to-income ratio not exceeding 25%; have no foreclosures or bankruptcies in the past 84 months; and have no severe delinquencies in the past 12 months.  A LMI “mortgage ready” individual is a person whose income is 100% of the area median income (AMI) or less.

For Texas the totals are both informative and optimistic.  Combining the large metro areas of the state – Dallas, Houston, Austin, and San Antonio – there are more than 2.2 million “mortgage ready” Texan’s, and of that the subset those who are LMI “mortgage ready” is over 1.7 million.  This is based on an average median income for these areas of approximately $59,000/year.

The zoning restrictions focused on minimum lot size requirements (i.e. density), the larger the minimums the least affordable, and placement restrictions for manufactured homes.  The report stated, “Manufactured housing is attracting more and more attention as a potential remedy to issues related to housing affordability and sustainable homeownership. However, as our analysis revealed, states and local governments by means of zoning hinder the use and acceptance of manufactured housing.”

TMHA plans to leverage this recent report by Freddie Mac, along with other data sources and our own internal analytics and research to advance policies at the state level to try and improve the zoning treatment of manufactured homes in Texas. 

The most immediate of these efforts is currently underway as TMHA’s team works this summer on both House and Senate interim legislative year “charges” to improve the supply of affordable housing in Texas by scrutinizing the policies of overly restrictive local land use regulations.