Sustainable and Affordable: New Options in Factory-Built Housing

The U.S. Department of Housing and Urban Development (HUD) defines affordable housing as that which consumes less than 30 percent of household income. According to the latest data from the U.S. Census Bureau, more than 40 million U.S. households pay more than that for their housing. Energy efficiency is a smart choice for any home buyer concerned about the cost of living and the larger issues of energy security and climate change, as residential buildings alone account for some 20 percent of energy use and greenhouse gas emissions.

On January 19, 2011, the Environmental and Energy Study Institute (EESI) and the High-Performance Building Congressional Caucus held a briefing about innovations in factory-built housing that are pushing the envelope for quality and performance while meeting the needs of low-income home buyers. Factory-built homes have the benefits of being constructed inside a manufacturing plant (avoiding weather-related delays), standardization that improves consistency and eliminates waste, and a design/build process that facilitates innovation and quality control. These characteristics allow manufacturers to produce high-quality housing much more quickly and cost effectively than homes that are site-built. This briefing addressed “manufactured” housing –– permanent housing (not trailers), produced almost entirely in the factory to federal minimum standards (the “HUD Code”) –– and “modular” housing, made with prefabricated components and assembled on site to local code. Manufactured housing is the largest source of unsubsidized affordable housing in the United States, but most manufacturers are not using the most advanced energy-saving designs and technologies that could reduce monthly energy costs. This briefing presented the latest research and practices of inventive, forward-thinking companies that are working to make housing more affordable for more American home buyers, more profitable for American businesses, and more sustainable for everyone's benefit.

• U.S. housing is produced by a variety of methods, including off-site production in a climate-controlled indoor facility. Factory production has a number of advantages over on-site construction, including quality control and more efficient use of materials, which minimizes waste generation.
• There are several types of factory-built housing, including “manufactured” – produced almost entirely in the factory and transported to the retailer or consumer on a chassis – and “modular” – assembled on-site from pre-fabricated modules. Modular homes are regulated by local building codes.
• Manufactured homes are regulated by federal safety and quality standards administered by the U.S. Department of Housing and Urban Development (HUD). The housing unit may remain on its chassis to enable future transport (mobile home) or be placed on a permanent foundation. In either case, these homes are not the same as travel trailers, which often are used for temporary housing.
• Manufactured housing is the largest source of unsubsidized affordable housing in the United States. Sixty percent of U.S. homes priced under $125,000 are manufactured homes.
• The median income of a manufactured-home buyer is $29,000. The average sales price of a manufactured home (without land) is $64,900. The average price for a site-built house (with land) is $203,000.
• Progressive manufacturers and entrepreneurs are creating state-of-the-art manufactured homes that feature modern designs, energy-saving products, environmentally preferable materials which also ensure healthy indoor air quality, water-saving fixtures, Energy Star appliances, abundant daylight, and/or solar panels.
• Energy efficient homes require less energy for lighting, heating, cooling, and running appliances, making them more affordable on a life-cycle basis compared to homes that waste energy. Energy Star-qualified homes can save $13,500 on energy costs over 30 years, while improving comfort and durability.
• Many home builders and manufacturers have not been able to offer energy efficiency and other performance improvements without raising the purchase price beyond what low income borrowers can afford.
• Lenders and appraisers generally do not recognize the role of energy efficiency in reducing a buyer’s monthly costs.
• A $1,000 federal tax credit for manufacturers for the sale of Energy Star manufactured homes has helped address this issue. Since the tax credit went into effect in 2006, the number of Energy Star manufactured homes has increased from 25 to 20,000.
• The U.S. Department of Energy is updating energy efficiency standards for manufactured housing, as required by the Energy Independence and Security Act of 2007, and is expected to publish proposed rules this year.