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Reversing the Cycle of the Mobile Home Money Pit

If you’re spending more than 30% of your income on housing, you are officially ‘cost burdened’ according to the Department of Housing and Urban Development.  That means it’s tough to afford other necessities. But People who live in mobile homes can sometimes spend that on utility bills alone. And that means something that seems like an affordable housing option turns out to be a ‘mobile home money pit.’ 

One of the first things to know about mobile homes is, the name is kind of misleading. Mel Jones is a Research Scientist at the Virginia Center for Housing Research at Virginia Tech.

“Mobile homes were built originally to be movable. But then they quickly became something that you simply move into place on a semi permanent foundation.”

Jones did the research for a new study out this month that finds that many people who live in what we used to call mobile homes aren’t going anywhere when it comes to financial upward mobility - not with what they’re paying to heat and cool them.

“They were built before there was a standard for these homes so they were have questionable durability, they were built with questionable quality, some included harmful chemicals like formaldehyde and folks are paying upwards of $400 a month for utilities because—really they’re just completely leaking out the sides.”

In 1976 HUD adopted new safety standards changed the name from ‘mobile’ to ‘manufactured homes. In Virginia, almost a quarter of these homes that exist today were built before 1980.  Aldeen Best’s place was built in 1979.

Best says, “It’s not much to look at but it’s home.”

Her 2 bedroom, 2 bath home is neat and tidy if crowded with the possessions of a lifetime.  The last blooms of autumn peak out from hanging flowerpots and beds at the foundation.

“Well you ought to see those in the summertime, they are just beautiful.”

Other residents here also talked about how they’re glad to be living in this mountainside community and they expressed thoughts similar to Bests’.

“I just feel blessed to have a place to live because a lot of people don’t have a place to live.”

“She’s 79 and doesn’t like to complain. She says she grew up self sufficient.”

“I came in here and I was like a horse I could do anything and well, the longer I went I set I just can’t do those things.”

She recently had a new door put in.  

“(You see) the places they didn’t put it right and the places when it closes.”

She points to the large gaps along side it.

“So I put towels up in the winter time so the air won’t come in.”

And she doesn’t like to admit it, but she can’t afford to fix all the things that need fixing.

“Right now I’m having trouble with my electric and I have to watch carefully and come in here and open this (breaker box ).  I need that (fixed) bad.  But I’m relying on the Lord because, you know, he never lets you down and this house made good when it was made but you know everything gets old after a while.”

Affordable housing advocates are pushing for a plan that would replace the oldest manufactured homes with new ones that meet the Environmental Protection Agency’s ‘Energy Star” efficiency ratings. That could save residents 65 % per cent on their energy bills. With an estimated 2 million older manufactured homes in this country that could amount to billions in energy costs every year.

PART TWO

Mobile homes used to be thought as one of the most affordable housing options in America, but a new study finds the opposite is often true. These houses often have higher relative costs to operate than stick built houses do and that means there’s less money available for basic necessities. Affordable housing advocates are outlining ways to help residents dig out of the mobile home money pit and start building wealth.
 

mobile_home_money_pit_part_2.mp3
Robbie Harris has the second part of this story.

With half the renters in older mobile homes spending more than half their incomes on utility bills alone, the notion of these homes as an affordable option goes right out the window.

And in too many of them, that window is not very well insulated. 

Stacey Epperson founded a non-profit called Next Step, 6 years ago, with a goal of making sustainable affordable housing possible for everyone. 

“So if we look at Appalachia we look at the delta, native lands, we’re going to find a prevalence of mobile homes and what we know about them is that they are they are the most inefficient homes in America today.” 

She says, for many people in these homes it’s a losing enterprise. 

“They may not have the resources to take care of them and the homes have been used past their functional life. And so the best solution is to replace the home.” 

That’s because new energy efficiency and construction techniques make replacing them more cost effective than retro fitting. She’d like to see a federal grant program to help people replace these older models with new, Energy Star rated manufactured homes.  And she’s urging utilities to reinstate incentive programs like the one Appalachian Power has in place for its manufactured home customers.

“Appalachian power is paying $1300 for every Energy Star manufactured home built and they pay it directly to the manufacturer.  So if I’m a consumer and I go to buy a manufactured home and if I tie into their power, basically, when I buy my home I’m getting a free Energy Star upgrade.  And the value on that is anywhere between 2,000 and 4,000 dollars.”

That’s a start toward digging out of the mobile home money pit. But the next step is transforming them into wealth builders.

Mel Jones of the Virginia Housing Research Institute says banks typically treat so called mobile home as personal property, and that means they charge higher interest rates.

And owners of the newer, better built homes looking to refinance their mortgages when rates dropped have been told they can not because mobile homes depreciate too much. 

“Manufactured homes now far exceed HUD standards and really if you put them on a foundation they almost look like stick built homes.  People are saying, well, this doesn’t need to be depreciating in the same way we think about personal property depreciating, this can really be more like real estate, a fixed improvement to land that allows folks to build wealth like we think about when people are getting equity in their home and becomes an investment instead of simply a sort of self owned rent."  

Jones says even though the rules on financing of manufactured housing changed in 2004 many banks are still not up to speed. So it's best to get an appraisal first, then go to government-related lenders, which under the new policy, have a duty to finance manufactured homes. 

“New mobile or manufactured homes can be more efficient than stick built homes because everything is made in a controlled environment. Everything is made to strict standards.  It’s a very energy efficient option.”

These days, high-end manufactured homes are gaining in popularity for those very reasons.

Stacy Epperson says,“Yeah, you know it’s interesting somebody said to med over lunch in a way that just really resonated with me, they said, ‘You know what, tiny homes on HGTV has made your industry cool again. You know, we’re constantly battling image but there’s this whole new dialogue about the right size small home, so yes it can become chic.” 

And more affordable, leaving its occupants more money for other things in life.      

For information on financing for manufactured homes click here.  Andhere.
 
The study on the economics of manufactured housing was led by the Corporation for Enterprise Development (CFED), FAHE and Next Step.