The Affordable Housing Collaborative, a housing advocacy organization in Colorado’s most populous county (El Paso), recently shared results of its latest AskCOS survey, in which 72% of respondents said they were dissatisfied with the cost of living and housing. This was more than double the percentage with that negative view five years ago. The causes are not surprising to anyone who keeps up on the news: It’s the double whammy of soaring home values along with high mortgage loan rates.
Older Coloradans seeking to purchase a home feel the effects just like every other age group. The average sales price of a Colorado home in late 2022 stands at just over $500,000. While many seniors already own their homes outright and those with higher-income can afford more expensive homes or alternatives such as buying into retirement communities, those with lesser means have fewer choices. Which is one reason survey respondents expressed interest in a wider variety of housing options as one possible way to address the cost crunch in housing.
Colorado incomes are a factor
An added factor in Colorado is that, according to the U.S. Census Bureau, the number of housing units being built is not increasing as quickly as the population. USA Facts cites the 65 and older age cohort as being the fastest growing in Colorado over the last decade. SeniorLiving reports that persons age 50 and older now make up roughly one-third of the state’s population. The incomes of Coloradans are yet another factor. As a whole they steadily rise as earners move from their 20s (where they average about $40,000) to their 40s (about $80,000) and early 60s (about $90,000). But overall incomes statistically decline after age 65, falling back to an average of about $50,000. The AskCOS survey found that while El Paso County’s average income is about 3% above the U.S. average, the average home price is 40% above the U.S. average. It’s easy to see why there’s a housing affordability problem and people would like to have more options.
What if a house — a brand new house — could be purchased for half or less of the average sales price in the state? It may be possible by way of the alternative of a manufactured home. Manufactured homes occupy their own niche in the spectrum of housing types. They are an option commonly left out of the discussion, partly because the potential buying market is limited and partly because such homes are subject to outdated perceptions. This particular type of housing has had a mixed reputation in the past as far as quality of construction and what had been inconsistent and sometimes confusing regulations and policies governing such housing. But the manufactured housing of the 21st century is not the same as that of a half century ago. Governmental oversight—including quality control measures—have also caught up. As a result, manufactured homes are gaining new popularity, including among those age 55 and older. For many this has become an alternative that is simple as well as cost-effective.
Some basic facts about today’s manufactured homes
Construction is federally regulated.
The U.S. Department of Housing and Urban Development (HUD) now enforces construction standards, commonly referred to as the HUD Code. This Code is designed to ensure the health and safety of homeowners. It sets standards for “design and construction, strength and durability, fire resistance, energy efficiency, transportability, and quality control.” These homes are normally built on solid steel frames, making them unusually sturdy. A 2014 study found that properly installed factory-built manufactured homes are as safe as site-built homes during a storm, and in some cases, perform even better, such as against high winds.
A manufactured home is different from a mobile home.
This historically had been one point of regulatory confusion. But today “mobile home” means a prefabricated home, built on wheels, that was made before 1976. That’s the year the HUD Code went into effect. Anything after became known as a manufactured home. Manufactured homes of today are built safer than the mobiles of yesterday. A manufactured home is factory-built on a steel-framed chassis for towing to its homeowner’s location. In most cases once it’s fitted to its foundation, it is not moved again.
Significantly lower costs of manufactured homes.
According to one national information source (www.manufacturedhomes.com), the average starting price range for the construction of a manufactured home is $85-$125 per square foot. The average starting cost of an 1,800 square-foot prefabricated home is $150,000 to $225,000. (The U.S. Census Bureau reports the average sale price of new manufactured homes is around $120,000.) Remember these are all averages, though, and prices can vary by location, dependent on such variables as land and site preparation costs, utility connections, etc.
Location flexibility of manufactured homes.
Prefabricated homes are not routinely confined to special “home parks.” They can very often be placed on a land plot of your choosing (provided essential services you need, such as utilities, are accessible there.) Older adults looking for a neighborhood living ambiance may choose a manufactured home community, but that is only one option.
Energy efficiency of manufactured homes.
The HUD Code for manufactured homes sets standards for heating and air conditioning, plumbing, thermal, and electrical systems. These promote energy efficiency. Plus you can complement this with additional efficiency measures such solar panels, energy-efficient windows, and the like.
Value appreciation of manufactured homes.
Higher standards in manufacturing mean these homes do most often appreciate in value, although probably not at the same rate as traditional housing.
Additional pros & cons of manufactured homes
It’s important to understand at the outset that just like traditionally constructed houses, often called “stick-built,” come with pros and cons, so do manufactured homes. Paul Esajian, writing on the FortuneBuilders.com website, lays out one of the more thorough pictures on this. In addition to points just mentioned above, Esajian offers the following:
Pros of a manufactured home
Fast construction and installation
Traditional on-site homes can take months or even years to build, depending on building codes, the size of the home, and the features the owners want to include. Manufactured homes can typically be built in as little as a few weeks. A key reason for this advantage is that homes are built within sheltered, climate-controlled factory environments, eliminating weather delays. This factory setting also contributes to construction consistency and quality.
Manufactured homes tend to be more energy efficient than traditional homes, lowering utility bills.
Though many people think manufactured homes must all fit a limited design, they can be customized just like other homes. You can choose the room sizes, the layout, number of bedrooms, etc. You can also add outdoor features like porches and decks. With some manufacturers, you can even get touches like vaulted ceilings and bathroom whirlpools.
Most people who opt for manufactured homes use personal property loans, which may be easier to obtain than mortgages and may also be processed more quickly.
Cons of a manufactured home
Availability and unique costs
Depending on where you prefer to live, there might not be great choices for land, or its cost may be too high. Not surprisingly, land purchases in major metro areas are the priciest. This could upend your housing plan. There’s also the possibility that materials delays or worker shortages could delay getting your home built. Purchase of a manufactured home typically does not include setup and delivery, so you need to negotiate that or at least be aware of it. You also want to clearly understand how your state taxes such homes. Bear in mind that foundations can be expensive to lay if you’re going that route (but having such a base does better protect your home.)
Depending on how you choose to finance your home, it may be a challenge to find lending for it. Note that you might be more likely to secure a loan if the house is on a foundation. This is often a requirement for mortgages. Otherwise, you need a personal property loan with potentially higher interest costs compared to traditional mortgages.
Many people still think that manufactured homes and mobile homes are the same things, and not much has changed about either one over the past few decades. For a long time, manufactured homes were associated only with very-low-income families. The physical character of such homes built today, and the wide variety of people choosing such homes, often quickly dispel these perceptions.
Colorado specifics on quality control
For anyone unsure about quality control in manufactured homes in Colorado, the Colorado Department of Local Affairs (www.cdola.gov) has formal Building Codes and Standards (BCS) in place. CDOLA states that these Codes and Standards “protect Colorado citizens by regulating diverse and unique aspects of the state’s residential and nonresidential construction industry,” working in partnership with local governments, the federal government, other state agencies, and the private sector. Specifically, the BCS regulates the:
1. Construction of factory-built homes, including electrical, mechanical, or plumbing components to be installed or completed onsite in Colorado.
2. Sales (sellers, dealers, retailers) of manufactured homes.
3. Installation of manufactured homes in our state, which means the placement of a manufactured home on a permanent or temporary foundation system, and includes supporting, blocking, leveling, securing and anchoring of the home.
4. Accessible housing standards for factory-built residential structures where the residential structures are designed to serve persons with disabilities, including those related to aging.
The BCS also registers/certifies manufacturers, sellers, installers, and independent installation inspectors. It reviews and approves design/construction plans of factory-built structures and certifies installation of manufactured homes before occupancy. Also note that the state Codes and Standards prohibit a local government from adopting less stringent standards for the installation of a manufactured home. However a local government may, within certain limits, enact unique standards for manufactured homes concerning area-specific public safety requirements related to geographic or climatic conditions, such as weight restrictions for roof snow loads or wind shear factors.
If and when you’re ready for a manufactured home in Colorado
The Rocky Mountain Home Association (RMHA) (www.coloradohome.org) offers the following information for anyone considering a manufactured home.
How to start
Just like a car, you cannot purchase a new home directly from the manufacturer. New manufactured homes can be purchased only through licensed retailers (Disclosure: RMHA is one such retailer.) You browse through the websites of the Association’s members or visit their on-site sales locations. A manufactured home retailer will have model homes and a sales center for you to look at examples and choose which one might be right for you. Be thinking about your housing needs—number of bedrooms and bathrooms, desired amenities, upgrades, and finishes, etc. Professional sales teams can help you when you’re ready.
Fading West Development (www.fadingwestdevelopment.com) is a Colorado-based builder of manufactured homes with a construction facility in Buena Vista. FWD works with property developers across Colorado to provide what it calls “pre-built housing options at sensible prices,” producing homes that “are manufactured in the Rocky Mountains, delivered efficiently and are built mountain strong.” The company collaborates with clients from the initial planning stage to completion of a home when it arrives onsite.
ManufacturedHomes.com is a resource to facilitate shopping for manufactured homes. This site https://www.manufacturedhomes.com/dealers/Colorado/ offers more than a dozen Colorado-based retailers of manufactured homes. You can compare home size/layout options, take virtual 3D tours, view photos, and receive specialized price quotes on selected floor plans.
How to finance
Once you know what sort of home you want, you have a few financing options available to you. There are two common ways of financing. When you are financing the land on which you’re placing the home along with the home itself, you’re likely to use a conventional land or land construction loan. If you’re financing just the home itself, you might use what’s called a chattel loan or chattel mortgage. (“Chattel” is the property—the home itself—that serves as collateral for the loan.) Chattel loan repayments can be fixed-rate or structured to a borrower’s monthly cash flow. RMHA says, “Our member business housing professionals can further explain the differences between the two types of loans and how things like a stronger credit score may help in your ability to find the right loan for you.”
Here again, you have choices:
- You can place your home in a manufactured home community, where you own the home, but rent the land underneath. These communities may offer lifestyle amenities and location preferences that suit your needs. A big advantage of moving your new home to a manufactured home community is that the site work is already done. But make sure to check the terms of any lease and the community’s rules and regulations before you sign on the dotted line.
- Or, you can place your home on land you already own or are looking to purchase. Before you buy a home to place on your own land, make sure to check things like local zoning ordinances, utility access, deed restrictions, and the slope and grade of the land.
Let’s say you’ve signed a contract to purchase a home from one of the retailers. If it is a new home, the manufacturer will give the retailer and you an approximate delivery date. If there are any changes in that date, you will be notified promptly. Whether the home is new or preowned, the site where it will be installed has to be prepared for its placement. Vegetation might have to be cleared. Land slope may need to be graded. If you’re going to use a septic tank, that has to be installed. If you’re putting in a foundation, there are footers to be poured. Once the site is ready, the home is shipped and installed on the site. After a final inspection is completed, you’re ready to move in.
Final note on pre-owned homes
There are always a large number of pre–owned manufactured homes available on the market. In many cases, real estate agents list these and handle buyer-seller negotiations just as they do with all their other listings. You can also find manufactured homes for sale by owner. If you find a pre-owned home that meets all your needs and preferences (location, size, age, condition, amenities, price, etc.), this can streamline the process of getting into your manufactured home. Take care to have such homes inspected as you would with any home purchase and give attention to the unique aspects of manufactured homes as described in this article, including appropriate certifications for such homes.