Manufactured Housing Offers Affordable Alternative as Conforming Loan Limits Reach New Highs.

As Conforming Loan Limits Hit Record Highs, Manufactured Housing Provides an Affordable Alternative

Summary :

The Federal Housing Finance Agency recently announced that mortgages of up to $726,200 will be considered conforming loans in most parts of the United States starting in January. This reflects the reality of rapidly rising home prices, as tracked by the FHFA’s Housing Price Index. With the price of land increasing for all housing types, manufactured housing can help create affordable homeownership opportunities. However, Fannie Mae and Freddie Mac back less than 25 percent of manufactured home mortgages, and those loans comprised less than 1 percent of their overall mortgage financing in 2021. As conforming loan limits hit record highs, manufactured housing provides an affordable alternative.

Description :

As Conforming Loan Limits reach unprecedented highs, Manufactured Housing presents an affordable alternative for homebuyers. According to the Federal Housing Finance Agency, mortgages up to $726,200 will be considered conforming loans in most parts of the US, beginning January next year. Fannie Mae and Freddie Mac can purchase these loans, and the cap adjusts annually based on average home prices. Jim Gray, Senior Fellow at the Lincoln Institute, describes it as “modest home,” as these loans have a limit, and mortgages exceeding this cap are called jumbo loans. Certain cities like Washington, New York, San Francisco, and Los Angeles have even higher conforming loan limits, some of which will exceed $1 million in 2023. The updated loan limits reflect the reality of spiking home prices, which increased by 18.1% and 12.2%, respectively in 2021 and 2022, according to the FHFA’s Housing Price Index. While conventional financing is available, one affordable housing option deserves greater attention, based on the network convened by the Lincoln Institute. Manufactured homes, energy-efficient, and mobile homes built on land can cost less than half the conforming loan limit in many US markets. Research conducted by non-profit organization Next Step showed that the new type of manufactured home known as CrossMod is virtually indistinguishable from a site-built home and currently costs about $300,000 on average, including land. CrossMod is designed with pitched rooflines and installed on a permanent foundation, making it eligible for conventional financing. Manufactured homes cost $72 per square foot to build compared to $143 per square foot for site-built homes, making them more cost-efficient. However, Fannie Mae and Freddie Mac currently back up only 25% of manufactured home mortgages, comprising less than 1% of their overall mortgage financing, and reaching a greater number of Americans on modest incomes suggests serving the manufactured housing market.

sources:
1- melk360.com ,As Conforming Loan Limits Hit Record Highs, Manufactured Housing Provides an Affordable Alternative ,2023-04-17 15:38:02
2- https://www.lincolninst.edu/publications/articles/conforming-loan-limits-hit-record-highs-manufactured-housing-provides?rand=516