Look out for a boom in the 'Toyota Camry of housing' that could make starter homes cheaper

• The Senate is poised to pass a major set of policy reforms aiming to boost the supply of housing.
• The bill includes a long-sought provision that would cut costs for manufactured homes.
• Manufactured housing is a key source of affordable housing, especially in rural areas.

Homeownership feels like an ever more distant dream these days. But if a bipartisan group of senators has its way, a key type of affordable housing could become cheaper and more abundant.

In late July, all 24 members of the Senate Banking Committee voted for the biggest federal housing policy reform package in a decade.

Housing policy wonks are particularly excited about one long-sought provision that would end a burdensome and outdated requirement that manufactured homes have a permanent steel trailer frame, called a chassis. That requirement adds cost, limits functionality, and isn't necessary for the transportation of these mostly non-mobile homes that have evolved from trailers.

As much of the country suffers from a steep housing shortage and affordability crisis, manufactured homes offer some of the most affordable options on the market, particularly in rural and exurban contexts. They're often starter homes for young families and accessible housing for older people, and they're increasingly a lucrative, appreciating investment.

Reforming the 50-year-old rule would cut costs and save homebuyers money, make it easier to build multi-story manufactured homes, and expand where the homes can be built, industry leaders and researchers say.

"On day one, chassis reform cuts $10,000 off a type of home that is already sold in the market in the hundreds of thousands," Alex Armlovich, a housing policy analyst at the libertarian think tank Niskanen, said. "There's not a lot else that Congress can do in one fell swoop to cut 10% off the price of any home."

The full Senate is poised to pass the bipartisan package, so it's just a matter of the House getting on board to bring it into effect, Armlovich said.

Ending the chassis requirement would mean "there's a little bit more room for innovation in what could be built, and less wasted steel, and lower cost, ultimately, to build the things," said Sean Roberts, CEO of Villa Homes, which builds manufactured housing in California and Colorado. "It's arguably better for the environment, as well, because you're using timber frame construction rather than steel."

Roberts calls his manufactured homes the "Toyota Camry of housing" — affordable, "high-performance," and "very good quality." And, he joked, they're probably not going to win any design awards.

Clayton, one of the country's biggest producers of manufactured homes, also celebrated the move.

"Enabling the option of building homes without a permanent chassis drives innovative design and leverages efficiencies which can lower costs for home buyers," the company said in a statement.

Factory-made housing is a small but important part of the solution

Since 1974, the federal government has regulated manufactured homes under a set of rules known as the HUD code, which overrides state and local building codes. The idea was to modernize and standardize trailers and mobile homes across the country.

The permanent chassis, which is part of the HUD code, has dramatically shrunk the manufactured housing industry since the 1970s. There's evidence the chassis requirement was pushed by traditional homebuilders to suppress the booming manufactured housing industry, as Vox's Rachel Cohen recently reported. Today, about 100,000 manufactured homes are produced a year — down from a peak of nearly 580,000 in 1973 — and make up less than 10% of all new construction each year.

While we build cars, planes, and boats much more efficiently than ever before, American home-building productivity has stagnated. That's in part because the industry still does so much on-site, custom construction, forgoing the benefits of standardization, climate control, and speed that factories offer. Pre-fabricated buildings —or parts of them —can be produced more cheaply and efficiently. While workers prepare the foundation, the home can simultaneously be constructed indoors without weather and other interruptions slowing down the process.

A bipartisan consensus around deregulating HUD-code housing has been building for years. In a major change to the regulations, the Biden administration last year reformed the code to allow up to four dwelling units per manufactured structure.

Still, it will take more than just federal deregulation to fully unleash the industry and disrupt traditional homebuilding. Manufactured housing faces other challenges, including a lack of consistent demand and investment, high costs of transporting a finished product to the building site, the decentralized nature of construction, and insufficient financing, according to Mark Erlich, a former officer of the New England Regional Council of Carpenters and the author of "The Way We Build: Restoring Dignity to Construction Work."

Manufactured housing has also long been dogged by stigma. There's a widespread perception that single-wides and double-wides are inferior to traditional so-called "stick-built" housing that's constructed piece by piece on the site. The design, functionality, marketing, and perception of manufactured homes would need to improve before they become more popular, Erlich said.

While chassis reform is a big deal for the world of manufactured housing, that sector is still a small part of the broader housing landscape.

"We've got a housing crisis in this country, and this feels sort of like nibbling at the edges," Erlich said.

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