Op-Ed By L.A. “Tony” Kovach
Albert Sawano’s Newsweek op-ed: “America’s housing crisis is a failure of economics“ raised timely issues and factual points that deserve more detail and clarity. The National Association of Home Builders (NAHB) said most people are “priced out” of buying a conventional ‘site-built’ house. Per the NAHB: “74.9% of U.S. households are unable to afford a median-priced new [conventional site-built] home in 2025…” Sawano mentioned the need for more modular and manufactured homes. Per the Modular Home Builders Association (MHBA) Executive Director Tom Hardiman, the number of modulars built in a recent year was about 20,000. Manufactured homes were called the “Ugly Duckling” of affordable housing by the Niskanen Center, yet that nonprofit supported more manufactured home production. Only about 100,000 new HUD Code manufactured homes (sometimes called “mobile homes” or “trailer houses“) were built annually in recent years. The need is in the millions of affordable housing units.
National Association of Realtors (NAR) research and the Urban Institute pointed out that manufactured homes were about 25 percent of U.S. housing starts in the mid-to-late 1990s. Today, manufactured homes hover around 9-10 percent of housing starts.
Yet manufactured housing production was supposed to grow after the enactment of the Manufactured Housing Improvement Act of 2000 (a.k.a.: MHIA or 2000 Reform Law) and the Duty to Serve Manufactured Housing under HERA 2008. The 2000 Reform Law included a provision known as “enhanced preemption” to overcome zoning barriers. What happened? As former Prosperity Now official Doug Ryan said about the Duty to Serve (DTS) in “Time to End the Monopoly Over Manufactured Housing,” that law wasn’t being properly enforced.
As ex-HUD/FHFA economist Scott Susin wrote: “I’m not surprised that successive HUD Secretaries have refused to take on federal preemption: it’s very controversial and above their pay grade.” Meaning, neither has widely bipartisan federal law been properly enforced.
The FHFA, via the Federal Register, recently admitted that DTS for chattel manufactured home lending wasn’t properly enforced.
So, federal regulators aren’t correctly enforcing federal laws meant to boost affordable housing. That has been true regardless of which of the two major political parties are in office.
Will the much-ballyhooed bipartisan 21st Century ROAD to Housing Act fix the problem? Short answer: no. The Senate’s own brief under Myth 5 said: “By design, the 21st Century ROAD to Housing Act does not preempt local or state zoning.” Why is that important?
HUD researchers, Pamela Blumenthal and Regina Gray, explained well before the ROAD bill was enacted that local zoning and regulatory barriers are near the heart of the housing crisis problem.
Quoting Gray and Blumenthal: “Without significant new supply, cost burdens are likely to increase as current home prices reach all-time highs…”
HUD’s duo elaborated: “The regulatory environment — federal, state, and local — that contributes to the extensive mismatch between supply and need has worsened over time. Federally sponsored commissions, task forces, and councils under both Democratic and Republican administrations have examined the effects of land use regulations on affordable housing for more than 50 years. Numerous studies find land use regulations that limit the number of new units that can be built or impose significant costs on development through fees and long approval processes drive up housing costs.”
Look again at what HUD’s Blumenthal and Gray wrote. For “more than 50 years” “Federally sponsored commissions, task forces, and councils under both Democratic and Republican administrations have examined the effects of land use regulations on affordable housing…”
Meaning, for over half a century, the root cause of the U.S. housing crisis was known, yet neither major party had the political will to properly address the issues of zoning and regulation.
For example. President Barack Obama and Vice President Joe Biden era HUD research detailed that even though manufactured homes defied common stigmas and were documented to appreciate side-by-side with conventional housing in urban settings, they were nevertheless routinely ‘zoned out.’ Before rushing to point the finger at those or other Democrats, ex-HUD official Susin wrote: “I remember [HUD Secretary Ben] Carson in particular began his tenure talking about overriding local zoning to get more housing built but then never did much.”
Be it Democrat or Republican, neither party had the political will to enforce solutions that are already federal law even though they apparently knew it was necessary. That is based on statements of current and former HUD staff as well as an array of others cited and linked from this evidence-backed introductory article.
HUD and others have known for decades that without more “inherently affordable” manufactured homes – meaning new homes built without taxpayer subsidies – the U.S. housing crisis can’t be solved.
It was the NAHB that said that nearly 75 percent of the population can’t afford their product. The math and costs don’t support more subsidies.
Congressional politicians have what is known as “perverse incentives” to posture a claimed ‘solution’ to the housing crisis, so they can pat themselves on the back during a campaign/election season.
Pew and others touted the enactment of state-level legislation meant to reduce barriers to more much-needed manufactured homes. Be it appreciation or other concerns, decades of research by Harvard, Freddie Mac, and others demonstrated that negative perceptions true during the trailer house or mobile home era are no longer true about manufactured homes today. Nevertheless, former HUD and FHFA economist Scott Susin’s research via Governing asserted that a post-implementation review of those state laws revealed they haven’t ‘moved the needle’ on manufactured home placement.
Official HUD production data published by the Manufactured Housing Association for Regulatory Reform (MHARR) supports Susin’s finding without citing him.
NAR said manufactured homes are appreciating at a similar or faster rate as conventional site-built housing. So, what’s the holdup?
AmeRegCorp – The Iron Triangle and Perverse Incentives
Lurking in the backdrop: researchers exploring ‘perverse incentives’ for organizations, politicians, or officials who may prioritize maintenance of a problem over the solution.
While that iron triangle of perverse incentives operates under numerous terms, per Gemini: “AmeRegCorp (n.): The symbiotic consolidation of American regulatory agencies and dominant corporate entities, resulting in a market structure that favors established players while suppressing independent competition through legislative and financial bottlenecks.”
According to the American Economic Liberties Project: “Capital Crunch: How the Fall of Local Finance and the Rise of Shareholder Primacy Warped Single-Family Homebuilding in America — And What to Do About It” “Manufactured Housing Used to Spread Mass Homeownership Through Mass Production.”
Their “Capital Crunch” report also stated: “Policymakers Gave Big Homebuilders Advantages That Favored Their Recovery Over Local Homebuilders” and “Publicly Traded Homebuilders Are Now Ubiquitous Nationwide; They Attribute Much of Their Growth to Superior Financing.” That sounds suspiciously like what MHARR has said for years.
Consolidation of manufactured housing and other sectors of the American economy is a troubling economic reality. From the federal site: “For decades, corporate consolidation has been accelerating. In over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did twenty years ago. This is true across healthcare, financial services, agriculture, and more.” And: “Barriers to competition are also driving down wages for workers. When there are only a few employers in town, workers have less opportunity to bargain for a higher wage and to demand dignity and respect in the workplace. In fact, research shows that industry consolidation is decreasing advertised wages by as much as 17%.”
So, fewer competitors tend to mean higher prices and lower pay.
But when politicians, corporate, nonprofits, or other officials make what may seem like an evidence-based statement, that may be merely posturing or mere lip service, a form of paltering. Half-truths aren’t the whole truth.
Returning to Sawano’s evidence via Newsweek, he was arguably correct about many of the figures he cited.
However, the National Association of Realtors (NAR) reported that an estimated 25 million adult children live with their parents, and 70 percent are employed. So, estimates of how many affordable housing units are needed may be understated.
The National Low Income Housing Coalition (NLIHC) estimated some 7.1 million affordable housing units are needed. Others estimate some 10 million units. Meaning, even if the Trump-Vance stance that removing millions of foreign nationals illegally in the U.S. magically ramped up, that still won’t be enough to reduce the supply/demand pressure on the housing market.
Per Polk County, Florida Commissioner Bill Braswell and here:
“Americans…demanded a solution to the affordable housing crisis…What is government going to do about it? My view is simple. Government is not capable of solving this problem and history proves it.
…Unfortunately, manufactured housing, commonly referred to as mobile homes, has been stigmatized for decades. Local governments across the country have…regulated them out of existence, based on outdated perceptions…
Today’s manufactured homes are built to dramatically higher standards…They are safer, more energy-efficient, more storm-resistant, and far more attractive than older models. They…remain one of the only truly affordable paths to homeownership.”
The 21st Century ROAD to Housing Act didn’t include language to strengthen the federal “enhanced preemption” provision of the 2000 Reform Law or DTS.
The Manufactured Housing Institute (MHI) apparently has perverse incentives to favor the status quo because their dominating board of director members have often said that they want to consolidate the industry rather than organically expand it. MHI oddly didn’t join MHARR’s call for strengthening existing federal laws even though a collection of 15 years of MHI testimony to Congress revealed that – at least on paper – MHI appears to want what MHARR stresses.
Academic research by:
- Amy Schmitz, J.D. and third-party AI plus expert human fact-checking here;
- Maris Jensen, Ph.D., here and facts-evidence-analysis (FEA) checked here;
- Samuel Strommen, J.D. on “The Monopolization of Manufactured Housing A Rube Goldberg Machine of Human Suffering” and here with other manufactured housing researchers;
- James Schmitz Jr. and his colleagues on ‘sabotage monopoly tactics‘ including: “Solving the Housing Crisis will Require Fighting Monopolies in Construction.”
are examples of third-party researchers pointing to deliberate suppression of the manufactured housing industry.
The Manufactured Housing Institute (MHI) has repeatedly failed to directly and publicly respond to such well-documented concerns.
Prior HUD Secretary Ben Carson, perhaps seeing the pattern of HUD failing to properly support the industry HUD regulates, stated: “…HUD was in position to usher in a “new era of cooperation and collaboration between our Department and the manufactured housing industry.”
Per Carson: “Manufactured housing is a priority…I want to do all I can to try to reduce regulatory burdens on the industry while maintaining the quality, safety, durability and affordability of manufactured homes.” Really?
Again, HUD’s Blumenthal and Gray wrote: “The regulatory environment — federal, state, and local — that contributes to the extensive mismatch between supply and need has worsened over time. Federally sponsored commissions, task forces, and councils under both Democratic and Republican administrations have examined the effects of land use regulations on affordable housing for more than 50 years.”
Meaning, for 50 years, the causes and cures of the housing crisis have been known. Public and corporate officials apparently accept or may even benefit from the status quo. An ‘all of the above’ U.S. housing strategy is needed. That includes conventional housing plus eliminating barriers to more manufactured homes.
Freddie Mac said most Americans would consider a manufactured home. Of course. It’s better living in a manufactured home than living out of a car, tent, shelter, on the street, or in more costly housing when affordability is paramount.
Understanding the facts is the first step in solving the affordable housing crisis. Understanding perverse incentives, AmeRegCorp, and the Iron Triangle are needed too. The Lakeland Gazette is thoughtfully making a weekly look at affordable housing-related topics possible – watch for it. ##
L.A. “Tony” Kovach is a HousingWire contributor and has contributed to: Tampa Free Press, The Hill, Patch, Manufactured Home Merchandiser Magazine, and others plus is the co-founder of MHProNews and MHLivingNews. Kovach began working in manufactured housing in the early 1980s, has provided live and virtual remarks during federal listening sessions, and has been writing about manufactured home and affordable housing-related issues for over 30 years.