Mobile homes' affordability just one of their attractions


WHEN THE newspapers talk about strong housing sales, they're reporting on traditional homes. In the 12 months ending in January, sales of existing homes rose a confident 5.9 percent.

But for something even better, look at what's happening to the nation's most affordable housing: mobile homes, a k a manufactured homes. Sales last year jumped 7 percent. Social and demographic trends suggest that you're going to see more mobiles (oops, "manuhomes") in the neighborhood.

The average single unit (the one that occupies half a road) sold for $26,700 in 1995, according to the industry's most recent survey. The average double-wide (two units joined together) sold for $45,900. Typical setup costs -- for utilities hookups, a concrete pad, the driveway and so on -- come to $1,000 to $2,000.

In a mobile home park, you pay monthly rent for the land beneath your home. Alternatively, you might own the land yourself. In either case, you'll pay a lot less than the $120,500 average for traditional homes today.

The low price for mobiles appeals not only to first-home buyers with moderate incomes (the traditional market). These homes also look good to divorced parents who can no longer afford traditional homes, and to the growing army of retirees.

The industry says it's pushing into the white-collar family market, too. Partly, that's because mobiles are getting better looking, especially at the pricier end of the market.

They're also available in units of various sizes, not just double-wides. Assembled on site, perhaps with a basement below, they can be indistinguishable from some traditional homes.

Many communities, especially in the North, zone out mobile homes because they don't like the way they look. But "a lot of states have passed legislation to make it more difficult for localities to completely eliminate the homes," says William Apgar, head of Harvard's Joint Center for Housing Studies.

He cites California, Oregon and Washington as states that are especially active on behalf of manufactured housing.

bTC For many cities, the key appears to be whether the unit is affixed to the site. Seattle, for example, designates manuhomes as acceptable single-family residences if they meet certain quality standards and local building codes, and are placed on permanent foundations.

The Manufactured Housing Institute (MHI) in Arlington, Va., the industry's trade association, is hoping to enter downtown neighborhoods through what it calls "urban infill."

It's expensive to build affordable center-city housing or to rehab groups of rundown homes, says Joe Owens, MHI's vice president of finance.

There's a big risk of theft if building materials are left at the site, he adds.

Manufactured homes, however, can be built on a vacant lot in a day. Experiments in urban infill are now under way in the Pittsburgh area, Denver, Birmingham, Louisville, Milwaukee and Washington, D.C.

"If these demonstrations go well, the zoning issue should be less of a problem," Owens says.

You run a risk, however, if you move to a mobile home park where you have to rent your lot rather than own it. The park's owner may charge a low rent at the start but then raise it rapidly, warns George Gaberlavage of the American Association of Retired Persons.

Parks can be pleasant places to live, with swimming pools and good landscaping. But renters should check out the lease and talk with several other people who live there.

You want to know how fast rents go up, whether there's a community association, and whether you have to buy services such as heating oil through the park, at a markup in price.

New manufactured homes, not affixed to foundations, are generally financed on installment-sale contracts, says Richard Faulk, president of the manufactured housing division of the Independent National Mortgage Corp. (Indy Mac) in San Diego. Current interest rate: in the 10 percent to 11 percent range, for a 20- to 30-year term. Down payments run 5 percent to 10 percent with minimal upfront costs.

If the home is affixed to the property, however, buyers can get a regular mortgage. Current rate: around 9 percent to 10 percent for a 30-year term.

Rates are typically higher than they are for site-built homes because borrowers tend to have lower incomes and riskier credit profiles.

Mobile homes tend to depreciate in value -- although that may not be true of fancy ones, in good locations, well kept up. But investment isn't the attraction.

The market for mobiles is growing because they're affordable, comfortable places to live.

Pub Date: 3/31/97

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