Manufactured Home Industry Faces Hurdles

November 30, 2011

Manufactured or modular homes are facing a bleak outlook as demand continues to plummet, several of the industry’s insiders testified to the House Financial Services Committee recently.

Since 2005, the pace of new manufactured homes sales has dropped by 65 percent. Since 2000, sales have dropped by nearly 80 percent, Kevin Clayton, head of the Manufactured Housing Institute, testified to the committee.

Clayton blamed the drastic drop in business on subprime lending during the housing boom, which led more financially limited families into buying traditional site-built homes instead of the more traditionally affordable manufactured or modular homes.

The housing experts who testified to the committee also urged for greater support in the secondary mortgage market for manufactured and modular homes.

"Over 60 percent of manufactured home buyers finance their purchase using a personal property loan where the dwelling alone is financed," Clayton testified. "The ability for lenders to securitize manufactured home loans in the secondary market, particularly those secured by personal property, has been very limited. ...  Any secondary market — particularly if it is supported by a government backstop — should provide equal and open access to manufactured home loans secured by either real or personal property."

Source: “Bleak Outlook for Manufactured Housing as Secondary Market Shuns Sector,” HousingWire (Nov. 29, 2011)

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