“The United States is experiencing its second crisis of housing scarcity. Unlike the first, which arose in fast-growing 19th century cities before the advent of tall buildings and modern transit, this one is purely political.” So wrote Alex Armlovich and Andrew Justus, J.D., housing policy analysts for the Niskanen Center in a document entitled “An Agenda for Abundant Housing.” That same document by Armlovich and Justus said: “The facts of America’s housing crisis are well-known. Housing costs for both owners and renters have increased faster than the broad cost of living. American families devote an increasing share of their budgets to housing. The crisis pinches hardest in the most productive urban areas. Cheap housing is scarce where good jobs are abundant while good jobs are scarce where housing is cheap.” That was February 2023. More recently, the Niskanen Center’s David Jimenez joined Armlovich and Justus in prepared remarks for the record before the U.S. House Financial Services Committee (FSC) on the subject of “Housing Affordability: Governmental Barriers and Market-Based Solutions.” While each advanced different insights, the Niskanen Center’s Armlovich-Jimenez-Justus trio made certain observations quite in keeping with those advanced by HUD’s Policy Development and Research (PD&R) team members Pamela Blumenthal and Regina Gray. HUD’s Gray, the Niskanen Center’s Armlovich-Jimenez-Justus, specifically discussed manufactured housing by name as a key part of the solution to the U.S. affordable housing crisis. More articles in this MHProNews Sunday Weekly MHVille Headlines Recap also reveal third-party intellectual advocacy and support for more manufactured housing. However, despite that support, manufactured homes are languishing compared to the late 1990s. Going back further in time to the early 1970s described by Professor Lee Ohanian and James Schmitz in a recent op-ed in the Washington Post (see recap below), mobile homes rivaled and supposedly surpassed conventional housing in production/shipments as measured in percentage of U.S. market share of new single-family housing starts.
While all have some measure of utility for the manufactured housing industry in terms of apparently positive support for building much more new HUD Code manufactured homes, several things are curiously missing from these various analyses. The remarks to Congress by the Niskanen Center’s Armlovich-Jimenez-Justus will serve to illustrate that claim. In Part I of this report is the text of their full prepared remarks including footnotes. Both in their remarks and included in some of their linked content too, are items supporting a call for more HUD Code manufactured housing. But what’s missing will be briefly mentioned in Part II, which will be followed by our weekly headlines recap (Part III of this article). The text from the item below is from the Niskanen Center.
Part I
Statement for the record before the U.S. Financial Services Subcommittee on Housing and Flood Insurance on “Housing Affordability: Governmental Barriers and Market-Based Solutions”
Respectfully submitted on behalf of the Niskanen Center,
Alex Armlovich, Senior Housing Policy Analyst
David Jimenez, Social Policy Government Affairs Manager
Andrew Justus, Housing Policy Analyst
Chairman Davidson, Ranking Member Cleaver, and Members of the Committee, thank you for conducting a critical recent hearing on housing affordability. Today’s housing crisis comes in two distinct but related forms: low incomes on the demand side and high housing costs on the supply side. The former is not a new problem, as Americans with low or no market incomes have always struggled to afford market-rate housing. Only work and income support, or housing subsidies, can fix that. Conversely, the supply-side problem of high housing costs is new and increasingly pervasive. To tackle the problem of expensive housing, we must prevent government roadblocks to more housing.
The new supply problem began after World War II in the large East and West Coast cities with tight urban growth controls. Growth controls cap homebuilding through zoning–though that is not the only barrier. Governments use dozens of other land use regulations to dictate every imaginable detail of every building the market is allowed to build (or not).1
High and rising housing costs have since spread beyond the longtime hotspots like New York, Boston, and San Francisco to cities across the country as they run out of buildable land for new suburbs within an hour’s commute. Even smaller cities in more growth-friendly states now have average urban land prices over $1 million per acre. That means a suburban-style home on an average half-acre lot will cost more than $500,000 just for the land, before the first board is nailed.2 The widening urban land shortage has brought America’s broad growth control bans on land-economizing starter homes, townhouses, and apartments to a head as the leading constraints on supply and affordability. Rural communities, by contrast, have plenty of buildable land but still face skilled construction labor shortages and building code barriers to innovation in reducing construction costs.3
Today, the critical details of every building in every incorporated American city are prescribed in advance by a government central planner.4 This goes beyond the height, square footage, or the number of units. The government also dictates the size, shape, and orientation of the yards around the house; the roof pitch and setbacks; the garage size and the curb cut; the number of stairwells; the activities performed and the number of people allowed in the house. A growing number of cities go even further, adding a “discretionary design review,” where a government board decides the materials, facade details, architectural style, and even color of every building.5
In short, our governments command the market not to build, and they add increasing cost and delay to what they allow.
Yet there is reason for bipartisan hope in state-level housing reform. California Democrats fell furthest down the path of growth control of any state in the 20th century. Still, the dreaded consequences of homelessness and outmigration have finally stirred pro-growth reformers in Sacramento. Montana Republicans this year enjoyed the most successful single legislative session for land use deregulation and property rights defense in recent history, accomplishing in one year most of what California reformers have fought for a decade to achieve.6 California’s example demonstrates that even the most extreme growth controls can be fought. Montana shows us that action can be taken before shortages inflict the worst consequences of government-created housing shortages.
Though most direct regulation of land use happens at the state and local level, the federal government has powerful policy tools to support leaders on the ground committed to pro-growth policies. Congress, in particular, can help address the housing crisis on the supply side with a mix of carefully designed strategies to leverage grant dollars and regulatory relief.
Federal grant-making
HUD and USDOT discretionary grant criteria incentives for state and local reform
Within federal agency rulemaking, Congress can direct HUD and DOT to amend their discretionary grant criteria to encourage communities to allow more housing. While avoiding heavy-handed mandates and being attentive to each grant’s specific purpose, Congress can amend existing HUD programs to reward grant applicants with supportive land use policies.7 The bipartisan Yes in My Backyard Act (HR3507), sponsored by Congressman Mike Flood (R-NE) and Derek Kilmer (D-WA), is a valuable step, enacting requirements on reporting on land use reform by Community Development Block Grant recipients that will spur elected and agency officials to identify how to remove government red tape that paralyzes homebuilding.
While beyond this committee’s immediate jurisdiction, the Building More Housing Near Transit Act (HR6199), from Congressman Scott Peters (D-CA) and Congresswoman Cathy McMorris Rodgers (D-OR), updates the Department of Transportation transit capital grant scoring to favor projects with pro-housing land use reforms near stations and terminals.8 This bill will spur more housing options in high-opportunity areas and ensure public transit projects supported by federal taxpayers are highly utilized. It is a disservice to taxpayers and transit riders alike to continue prioritizing grants for new high-capacity mass transit to jurisdictions that refuse to allow enough homes for more people near the transit who will use the transit.
Regulatory policy and administrative rulemaking oversight
Lift the HUD Code chassis requirement, allowing HUD to offer a “modular housing” code
The most straightforward way Congress can influence the housing supply is to strictly enforce a “do no harm” test in its own regulation. Take, for instance, the national HUD Code that governs manufactured homes. These factory-built homes significantly reduce building times and are close to ⅓ of the cost of the average new site-built home.9 Yet Congress statutorily requires a permanent steel chassis–the mobile frame it gets shipped upon–installed at the bottom of a manufactured home, even after the unit is permanently attached to the land.
This seemingly trivial requirement has real consequences. First, it increases construction costs and reduces design flexibility. Second, some local governments use the presence of a permanent steel chassis as an indirect way to limit manufactured housing in their zoning and permitting codes.10 Families, especially in rural communities, thus lose out on an option that can provide affordable housing without federal subsidies.11
The chassis requirement is the only engineering detail that Congress has not delegated to rulemaking by HUD’s Manufactured Housing Consensus Committee (MHCC). Today, when a factory-built home is removed from the mobile chassis it is shipped upon, it is called a “modular home” and must follow fragmented state or local building codes instead of the national HUD code.12 Congress could remove the chassis requirement to allow HUD’s MHCC to write a new “modular” code option that covers factory-built units without a chassis. The new modular code option would be available for off-chassis builders who choose to use it, but builders would retain the option to continue using existing state and local codes if they see fit. Again, lifting the legislative chassis requirement does not instantly change the rules the industry currently faces, nor does it abolish the current HUD code for current and future on-chassis homes. It simply eliminates the legislative intrusion on HUD’s delegated rulemaking authority to begin drafting a new off-chassis modular code option alongside the current on-chassis manufactured code.13
The Expansion of Attainable Homeownership through Manufactured Housing Act of 2023 (HR5918), from Congressman John Rose (R-TN) and Lou Correa (D-CA), removes this chassis requirement and gives flexibility back to HUD rulemaking–therefore, after a new round of MHCC rulemaking, to homeowners and homebuilders. This would provide builders and consumers more design flexibility and lower costs, eliminating one outdated element local governments use to exclude these homes from zoning districts where they otherwise comply. This proposal to eliminate the chassis requirement, and thereby to allow HUD to offer a new modular code option, has also been supported by Senator Tim Scott (R-SC) in his ROAD to Housing framework.14
Conclusion
As America’s housing shortage and rising urban land prices spread to more regions, families and workers struggle to obtain a clear homeownership path. The only way to reduce those land costs is to allow for more efficient land use options like denser single-family homes, townhouses, cottage courts, and multifamily apartments. Federal support of state and local government should be aligned to appropriately foster efforts to reduce government barriers to more land-efficient housing choices for renters and owners.
Rural areas still face barriers to innovation in reducing construction costs. Congress, through its delegation of building code authority to HUD for factory-built homes, has a direct lever to support creative housing supply innovation for both higher quality and lower prices.
Every major American city has adopted growth control ordinances with the partial exception of Houston, Texas, which has many land use regulations but not a traditional zoning code. At least 70% of residentially zoned land in nearly every city bans apartments. See:
Patrick Sisson, “What Is Zoning Reform and Why Do We Need It?”, Planning Magazine, 2023. https://www.planning.org/planning/2023/winter/what-is-zoning-reform-and-why-do-we-need-it/↩︎
Manufactured homes are approximately 50% cheaper per square foot than site-built homes. Since a larger share of manufactured units target the entry-level starter home segment, the average delivered manufactured home is also smaller. See: Laurie Goodman et al., “New evidence shows manufactured homes appreciate as well as site-built homes”, Urban Institute, September 2018. https://www.urban.org/urban-wire/new-evidence-shows-manufactured-homes-appreciate-well-site-built-homes↩︎
Members of the public have frequently asked HUD if administrative rulemaking alone could remove the chassis barrier to new and advanced technology and designs in home manufacturing. HUD staff noted in their FAQ document that the barrier to innovation is part of the law, and could only be lifted by Congress. See: HUD Office of Manufactured Housing Programs, “FAQS – MANUFACTURED HOUSING IMPROVEMENT ACT OF 2000”, FAQ #16. https://www.hud.gov/program_offices/housing/rmra/mhs/faqs72010↩︎
Part II Additional Information with More MHProNews Analysis and Commentary in Brief
1) In the remarks provided by Professor Lee Ohanian and Senior Minneapolis Federal Reserve economist James A. “Jim” Schmitz Jr., linked in our weekly headline recap below, the MHProNews analysis stated in part that there is only so much that can be packed into a roughly 700-word op-ed in the influential and left-leaning Washington Post. So, it is perhaps more understandable that the “Manufactured Housing Improvement Act of 2000” (a.k.a.: MHIA, 2000 Reform Act, 2000 Reform Law, etc.) is not mentioned. That said, in the remarks above to Congress by the Niskanen Center’s Armlovich-Jimenez-Justus, there are some 1800 words. The MHIA and federal enhanced preemption could easily have been mentioned in a statement of that length. In the 22-page Niskanen “An Agenda for Abundant Housing” by Armlovich and Justus, manufactured homes are mentioned several times. But in a roughly 10800-word length report, the MHIA is also missing. Perhaps that is even more curious, given that Armlovich and Justus said on page 18: “No categories of growth control should automatically be exempt from state preemption, state and federal carrots and sticks, or other policy actions.”
2) Furthermore, Niskanen’s Armlovich and Justus specifically cited the example of accessory dwelling units (ADUs). MHProNews, along with our MHLivingNews sister site, has for several years reported on the surge in new ADU production that enforcing state preemption created. Meaning, there is a proven template for enforcing preemption as a means of overcoming “political” and apparently harmful/costly zoning barriers. Look again at what Armlovich and Justus said in An Agenda for Abundant Housing: “No categories of growth control should automatically be exempt from state preemption, state and federal carrots and sticks, or other policy actions.” Federal enhanced preemption is in some sense the ultimate stick, since HUD was empowered by a widely bipartisan vote of Congress to “preempt” local zoning barriers erected for – wait for it – apparently cronyism i.e.: ‘political purposes.’ Here is how Democratic lawmakers put it in their closing paragraph to then HUD Secretary Mel Martinez during the Bush-43 (R) era.
3) “More specifically, these combined changes have given HUD the legal authority to preempt local requirements or restriction which discriminate against the siting of manufactured homes (compared to other single family housing) simply because they are HUD-code homes. We ask that HUD use this authority to develop a Policy Statement or regulation to address this issue, and we offer to work with you, to ensure that it comports with Congressional intent.” So said the six Democratic lawmakers who signed that letter to HUD Secretary Martinez, which if found on the Manufactured Housing Association for Regulatory Reform (MHARR) website, along with pages of other references to “enhanced preemption.” Also found on the MHARR website is a public post that made clear that MHARR offered to work with a Manufactured Housing Institute (MHI) state affiliate to engage in a legal action to take the federal preemption issue to the Supreme Court, if necessary. Per MHARR, neither MHI nor a state association accepted that offer. So, while MHI’s then-vice chairman (currently chairman) William “Bill” Boor told Congress almost a year ago that MHI wanted to see enhanced preemption enforced, for years those words are not found on the MHI website. What kind of advocacy can it be if what they claim to Congress that they want to see enforced is not even mentioned on their own website?
4) Bing’s Artificial Intelligence powered Copilot said on 5.1.2024 that “prioritizing enforcement of existing laws can have a more immediate impact on affordability and access to manufactured housing.” That’s simply common-sense. No Albert Einstein level genius is needed to recognize that enforcing a current law is faster than chasing a possible law, which will then still face enforcement doubts, based on approaching a quarter of a century of waiting for the MHIA to be properly enforced.
5) Ohanian and Schmitz, as well as more from Armlovich and Justus are among the headlines for the week in review. The articles that follow routinely dive deeper into these issues. But the illustration from the article linked above (and also linked from the Masthead below) makes a key point by Copilot. “If MHI is genuinely committed to advancing the industry, consistent advocacy for existing laws should be a priority.” It is a duh, moment/remark, right? It is apparent that MHI is posturing efforts that may lull the trusting into complacency, believing that the Manufactured Housing Institute (MHI) is ‘doing their best’ or ‘doing what they can,’ etc. When in fact, as the ELS article linked below (and others) reflect, it seems apparent that MHI is posturing efforts that have no immediate intention of achieving the enforcement of laws that could spur record industry growth.
The possible reason or motivation for that lack of commonsense action? In a word, consolidation. More specifically, that certain ‘insiders’ at MHI, as insiders have told MHProNews and as their own published remarks clarify, in word and deed plainly want to consolidate as much of the industry as they can. Industry underperformance can make consolidation less costly. See the headlines that follow for more and don’t miss today’s postscript.
6) With no further adieu, here are the headlines for the week that was, from 5.19 to 5.26.2024.
1) Note that while every headline spotlights a significant subject, or it wouldn’t be presented on our website(s) or by MHARR, the Associated Press (AP) related item above is a focused an eye-opening fact-laced and evidence-based analysis on just how surprisingly safe someone who lives in a mobile home, or a manufactured home, is from the risk of death in a given year in recent decades. It is simply stunning that MHI has failed to properly Protect-Educate-Promote (P.E.P.) the manufactured home industry. To be clear, it isn’t that MHI does nothing. That could quickly become self-evident. Rather, they are doing a lot which has led to nowhere. They are posturing efforts, they are making statements, they are busy holding meetings, photo and video-opportunities, all of which have resulted in poor performance.
3) Weiss’ “illusion of motion” phrase is a different way of expressing the notion of gaslighting and the “Illusory Truth Effect” that researchers and Investopedia, among others, have documented.
4) There appears to be a significant push underway from a variety of sources – some perhaps well meaning, others perhaps not – to press the case for the removable chassis on HUD Code manufactured homes. As MHProNews once again reported last week, the potential to enact the Hiler Amendment existed some 33 years ago. The Hiler Amendment could have made the removable chassis on HUD Code manufactured homes federal law decades ago. Meaning, these are not new ideas.
5) While it merits questions and hopefully transparent and thoughtful responses, the remarks above by the Niskanen Center’s Armlovich-Jimenez-Justus saying:
Lift the HUD Code chassis requirement, allowing HUD to offer a “modular housing” code
should be a cautionary or red-flag for manufactured housing pros. The very kinds of issue that this platform raised a year ago, and that MHARR has also pressed, are illustrated by those words. See the most recent remarks from MHARR in the weekly recap, linked above, and the flashback to the still relevant report with analysis shown below. Nothing is faster than properly and routinely enforcing existing laws. AI powered Copilot confirmed it.
6) Is the proverbial fix in? Time will tell. But count on MHProNews to continue to shine the light of facts, evidence, applied industry expertise and common sense to the events and issues as they arise and develop.
7) Programming notice. A special report is planned for tomorrow, Memorial Day, featuring a higher profile MHI member company and their statements in their own words. Watch for it. That will arguably shed still more light on the concerns raised in this report. ###
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Our son has grown quite a bit since this 12.2019 photo. All on Capitol Hill were welcoming and interested in our manufactured housing industry related concerns. But Congressman Al Green’s office was tremendous in their hospitality. Our son’s hand is on a package that included the Constitution of the United States, bottled water, and other goodies.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.
