February 20 2014

Funding a Revolution: The Rise of Fabricated Housing in Kansas City, Missouri

Due to higher efficiency and better performances of factory production and assembly lines, manufactured homes are increasingly becoming more popular due to affordability in urban design and housing contexts. Local organizations such as the Legal Aid of Western Missouri, are exploring the option of building manufactured homes on lots in the area as part of their Economic Development Unit. Environmentally minimal impact technologies are to be incorporated to reduce the footprint further and improve performance while reducing operating or facilities costs in the four regions of the nation, according to International Energy Conservation Code. The 18Broadway project and the KCP&L SmartGrid Innovation Park in Kansas City, MO are being considered viable benchmark initiatives to gather primary information and baseline data.

Empty lots in mid-town Kansas City, Missouri

With construction costs per square foot for a new manufactured home averaging around 10% to 20% less than costs for a comparable site-built home, independent appraisal studies confirm that manufactured homes can appreciate in value just like other forms of housing. Financial institutions offer different lending programs and houses can be financed as personal property, on leased land, in a manufactured home community or on a privately owned site. Manufactured homes can be financed as personal property. Even when the home and land are financed together, the home is often secured as personal property and the land as real property. So appreciation or depreciation value schedules are to be ascertained from an appraisal perspective based on the circumstances.

Homebuyers may also finance their home and land together as real property using conventional mortgage financing obtained through a traditional mortgage lender. Qualified home-buyers may also obtain loans insured by the United States Department of Housing and Urban Development’s (HUD’s), Federal Housing Administration (FHA). For example, typical terms range from 10% to 20% down payment for terms of fifteen to thirty years, depending on credit profile, size of home, and type of loan for new homes, while for existing homes, it can be 10% to 20% down payment on terms up to twenty years. Actual terms will vary from lender to lender, and terms and conditions on FHA and VA loans are similar to those on conventional loans. Local HUD offices may have more detailed information on loan terms and conditions that may be worthwhile in exploring.

Traditional apartments in Kansas City, Missouri

On the other side, the decline of manufactured housing appear closely tied to the rising fortunes of traditionally built homes – and to mortgage rates. For example, sales of new homes have spiked over time and hit 368,000 in 2012, well above the 306,000 sold in 2011. Meanwhile, shipments of manufactured homes were declining. In October of 2012, 5,100 new manufactured homes were shipped, down from 5,400 earlier. Interest rates on manufactured homes are higher because they are viewed more as a depreciated asset like a car, refrigerator, or an appliance. There are strong cases for both sides of the argument, and current literature might be translated as making a case for either side. Therefore, KCMO needs to evaluate the local conditions to make a final determination.

As a result, do the mortgages for traditional homes that are running at record-low levels – some rates for thirty-year mortgages, at below 3.5% – cause the buyers of manufactured homes to pay much higher finance charges? Although Kansas City is poised to move in this direction, major momentum has not yet resulted from the initial intent. The revolution is still very much an underground endeavor.

It is a trend to see lenders charge higher mortgage rates on manufactured homes in part because the homes tend to lose value over time and lenders can have a hard time foreclosing. Will this be the untimely death of this up and coming trend?

Credits: Images by Martin Seliger. Data linked to sources.

Sunny Sanwar

Sunny Sanwar originates from Dhaka, Bangladesh, and currently resides in Kansas City, Missouri. He holds a B.S. in Mechanical Engineering from the University of Kansas and a Master of Public Administration from the University of Missouri at Kansas City. Sunny is also a Columnist for the Daily Star, the largest English newspaper in Bangladesh, and is currently working in local government at Jackson County, Missouri. This multicultural and interdisciplinary background gives him a holistic understanding of socially sensitive issues in energy and environment around the world. His graduate dissertation thesis in Public Policy dealt with local level emissions reduction strategies. His 2008 "efficiency over performance" project called the KU Ecohawks, aimed for urban transportation to not rely on conventional fossil fuel sources that pollute the local and global environment, but instead run on local wastes. Completely off grid, the mono-crystalline solar cell powered workspace charged the cars, with no energy taken from the main power lines. He also founded the Sustainable Built Environment Initiative in his native Dhaka, the capital of Bangladesh, which was renamed Bangladesh Green Building Council (BGBC) in 2011, when it became the national representative of Bangladesh, as part of the World Green Building Council in Toronto, Canada. Supported by United Nations Framework Convention on Climate Change (UNFCCC) and Intergovernmental Panel on Climate Change (IPCC) fellows, the council provides a centralized national board for green building certifications, courses and outreach, as well as consultancy services to private construction firms, think tanks and government initiatives.

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This entry was posted on Thursday, February 20th, 2014 at 9:48 am and is filed under Architecture, Education and Careers, Energy, Engineering, Environment, Environmental Design, Housing, Infrastructure, Land Use, Landscape Architecture, Sunny Sanwar, Technology, Urban Development/Real Estate, Urban Planning and Design. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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