[CITY] Mortgage News

Affordable Manufactured Housing Best Practices:

November 4th, 2016 1:09 AM by Bob Arabian

That manufactured housing isn?t more widely used by the affordable housing community is especially surprising given the advantages offered by this housing type and the types of development challenges affordable housing faces in rural areas. Manufactured housing promises quality units at lower costs than comparable site-built housing through mass production economies of scale. Further, by constructing the unit at a factory and then transporting a completed unit that is exempt from local building standards to a prepared site for installation offers developers the potential for significant project time savings. These inherent advantages are amplified today by manufactured housing industry advances in unit quality, architectural appeal and increased product customization. Increasingly, market rate developers have recognized the potential cost and time savings and are using manufactured housing in an ever growing number of their developments. Yet affordable housing developers have been much slower than their private sector counterparts to take advantage of the opportunities offered by manufactured housing. The California Coalition for Rural Housing (CCRH), through funding from the Corporation for Enterprise Development?s Innovation in Manufactured Homes (I?M HOME), took up this challenge. CCRH examined the experience with and perceptions of manufactured housing within the affordable housing development community through a survey of affordable housing developers, interviews with affordable housing agencies, and an examination of development experiences with manufactured housing and in-depth research of six exemplary case studies of affordable manufactured housing projects. This guide sought to achieve four aims: ? Assess the extent to which manufactured housing is being used by the affordable housing community. ? Identify the factors that inhibit or encourage the use of manufactured housing. ? Evaluate the effectiveness of manufactured housing for affordable housing applications. ? Identify “best practices” manufactured housing development methods to both encourage and guide affordable housing developers in the use of manufactured housing.

Based on the research activities and aims of this project, CCRH made the following findings: Manufactured housing can deliver substantial cost savings over comparable site-built housing from 5% to 55%. Simply put, the developers of the case studies found that manufactured housing offered significant cost savings over comparable site-built homes. Of the six developers, five reported cost savings over comparable site-built housing ranging from 20% upwards to 55%. The other developer, with a much more customized housing product for a small infill development, still reported a 5% savings, or about $500,000 for the 22-unit development. These savings primarily derive from the scale economies of mass production that allow even small projects to significantly reduce unit production costs. Essentially the developer is purchasing manufactured homes out of a larger mass production run of similar units which benefit from bulk purchasing of materials, assembly line efficiencies and production standardization. Manufactured housing development can be faster and more efficient than comparable site-built housing All six developers of the case study projects reported important development efficiencies in the form of a shorter project completion time, reduced local project review and reductions in project management staff time. Development efficiency especially benefitted from the much smaller number of contractors required to complete the project, insulation from materials price increases and less site security concerns. Manufactured housing is a versatile product capable of performing efficiently and effectively in varied and demanding development settings The case studies show that manufactured housing is a versatile product that can perform competitively in a wide range of affordable housing applications, settings and conditions. Especially important, the case studies showed manufactured housing continued to provide important cost and times over site-built housing even when it had to meet challenging design, architectural and density standards. Even for small projects where units had to be customized and architecturally enhanced, manufactured housing still retained its cost advantages, time savings and other development efficiencies. Overall, the case studies show manufactured housing was successful in the following situations: Replacement housing Scattered site High density Infill Remote rural Smart growth Time sensitive Demanding design and architectural standards Unit customization Upscale communities Customized unit design 6 Manufactured housing cost savings can be the deciding edge in making ownership and asset development possible for very low income populations Two of the case studies, the Haley Ranch and the North Shore developments, demonstrate how the cost savings advantage of manufactured housing over site-built housing provided the edge needed to realize homeownership opportunities to very lowincome populations. In both cases, site-built housing was too costly to make the projects work within tight financial constraints. By using manufactured housing, the North Shore development was able to provide homes at prices very poor farmworker households could afford. With Haley Ranch, manufactured housing savings made possible very low rents that both preserved the assets of the displaced, very poor population residents of an old trailer while simultaneously stabilizing their housing situation. This stability, in turn, allowed residents to undertake asset building activities in employment, education and savings. It also enabled the nonprofit owner to undertake home ownership programs and services that helped families eventually purchase homes. Manufactured housing is effectively ‘purpose built’ for remote rural development and can have a demonstrable advantage over site-built housing in some rural conditions Manufactured housing offers a marked advantage over site-built housing for affordable housing applications in remote rural communities. Three case studies demonstrated an advantage, based on cost and time savings that enabled manufactured housing to surmount many of the development constraints in rural locations. These challenges stem from higher development costs that result from limited infrastructure, smaller scale projects, inclement weather, topographical challenges, environmental constraints and long commuting distances for contractors and construction labor. Cost savings from factory production and the faster project completion time that results from limited local review and quick installation of a factory-delivered unit enabled manufactured housing to overcome these rural conditions more effectively than site-built housing. The manufactured housing industry can work collaboratively with affordable housing developers to produce customized, high quality and attractive projects within tight budget and time constraints The case study developers who procured units directly from the factory point to an emerging business model for affordable housing developers and the manufactured housing industry. The manufacturers in these projects were able to work within a collaborative design-build modality in which housing units have to be customized to meet a variety of project specifications, needs and constraints. These manufacturers collaborated with developers to develop project-specific processes in areas such as unit design, production scheduling, change orders, quality control and installation of the finished housing units. 7 Manufactured housing products can be both attractive and Manufactured housing products can be both attractive and durable The case studies show that manufactured housing products can be quite attractive and architecturally appealing. Further, the Haley Ranch rental development shows that the units are durable, hold up well under rental use conditions, and maintain their visual appeal after nearly twenty years of use. The operational experience is that the units are not more costly to operate than comparable site-built rental units. Unfamiliarity and lack of basic development knowledge is retarding increased use of manufactured housing by the affordable housing sector Most of the developers surveyed for this guide had not used manufactured housing and were unfamiliar with its development process. Developers expressed concerns about the quality of manufactured housing and whether the promised cost savings would actually materialize. In a few cases, prior problematic development experiences led to unfavorable evaluations of manufactured housing. Targeted informational outreach and training activities may be necessary to fill this information gap and encourage affordable housing developers to consider undertaking manufactured housing projects. Get the first project right: developer training and technical assistance The survey of developers suggests that a negative first development experience may sour a developer regarding future use of manufactured housing. Further, a negative impression of manufactured housing may spread through a state or regional affordable housing network as other developers learn of the problem project. Accordingly, manufactured housing advocates should strive to provide the informational resources, training and technical assistance that will increase the chances of a successful first project and avoid development problems that arise from developer inexperience.
Posted by Bob Arabian on November 4th, 2016 1:09 AM