As Delaware begins to grapple with the affordable housing crisis recently identified by the 2023 Delaware Housing Needs Assessment, one crucial tool has garnered less discussion despite offering an opportunity for homeownership: manufactured housing.
Manufactured homes, which were previously referred to as mobile homes, are constructed off-site on a permanent chassis before being transported in one or more sections and assembled on-site. They are typically built as two- or three-bedroom units ranging from 1,000 to 2,000 square feet, and benefit from faster production and cheaper cost than many single-family homes.
The average construction and purchase time for manufactured homes is about three to four months, compared to four to six months typically required for a traditional on-site home, and the sale prices for 470 Delaware manufactured homes on leased land sold through real estate agents last year ranged from $14,900 to $520,000, with the majority around $250,000 – far less than the median single-family home sale price of about $378,000 in Delaware, as of July.
Despite those advantages, manufactured homes have been growing as a percentage of housing stock in Delaware, as developers focus on more lucrative projects. In 2010, manufactured homes made up about 10% of Delaware homes, but in 2021 it made up just 7% after losing about 6,800 units in the decade, according to the 2023 Delaware Housing Needs Assessment.
Delaware Manufactured Home Owners Association Executive Director Stacy Shelton explained to Delaware Business Times that the homes can be an important part of the affordable housing equation in the First State, but it too is facing challenges.
“Manufactured homes on leased land had been an affordable housing option, but as lot rents increase, and homeowners face the costs to maintain the home, it is becoming a less affordable option,” she said.
One of the most challenging pitfalls of manufactured housing is that owners rarely own the land on which they live. More than half of Delaware’s manufactured homes are currently on leased land, with rents ranging from $300 to over $1,600 – higher rents are more commonly found at locations closer to the beaches. Residents are often required to pay thousands of dollars to extend needed utilities like water, wastewater, electric, gas and internet to their homes as well on owned land.
Manufactured homes on rented land are vulnerable to community sale or closure, lot rent increases and higher homeowner insurance prices. Manufactured homes on leased land can also be subject to personal property loans, which face higher interest rates and shorter term lengths than traditional 30-year mortgages.
Another prevalent concern with manufactured housing is its diminished potential for appreciation in value. According to LendingTree analysis of the U.S. Census Bureau’s 2021 American Community Survey, the five-year median value appreciation of a manufactured home in Delaware is 18.98% versus a single-family home at 23.46%.
J O’Neal, a manufactured homeowner in Long Neck, has seen some of the challenges of leased land firsthand. Her family bought a manufactured home in 2000 as an affordable second home for weekend getaways, paying $5,000 a year in lot rent along with a mortgage. They enjoyed the lifestyle so much that they moved there permanently in 2004.
“Little did we know at the time that we would be held hostage to an ever-increasing lot rent. Now in 2023, our lot rent has more than tripled,” she said. “As a veteran and senior citizen, I have had to put off buying major purchases like a car and home repairs in order to pay the lot rent. I continue to live here now because we cannot find an adequate home with the same amenities, same price, in the area that is not on leased land.”
The 2003 Delaware Manufactured Home Owners and Community Owners Act has improved the vulnerabilities homeowners in communities face by allowing residents to purchase their community and increase financial security measures. The act also states that landlords cannot raise lot rent more than once in a 12-month period and must provide a 60-day notice of any rent increases to tenants.
Manufactured homes on owned land, often underestimated and dismissed, play a vital role in providing affordable housing and have been a key factor in expanding homeownership, especially for low-income families in Delaware, Shelton said.
“My hope is that in the next five years, the focus of the state will be on preserving manufactured homes on leased land. Residents invest money into homes that cannot be moved from the land. If the land was preserved as a manufactured home community coupled with a lower yearly lot rent increase, affordable housing may continue to exist,” she added.
