While home prices are declining in many U.S. markets, it hasn’t been enough to boost housing demand, according to a recent analysis from Robert Dietz, the chief economist of the National Association of Home Builders. He found a deficit of 1.5 million new homes are needed to make housing relatively affordable in the U.S. “Just 42% of new and existing home sales are currently affordable to a typical household, which is a post-Great Recession low,” the new NHB report states.
In the midst of this ongoing affordable housing crisis, NIMBY (not in my backyard) regulations are preventing one of the most obvious solutions – manufactured housing – from providing affordable homes for many families. Between irrational prejudice about “trailer trash” and the entrenched interests of traditional home builders and developers who enjoy strong political connections, it’s been way too easy for them to pass rules that ban manufactured homes in many areas of the country.
Consider a company called Boxabl which factory-builds small, comfortable homes that fold up for easy shipment and can be installed on site in less than a day. They are highly energy efficient, resistant to extreme weather, architecturally attractive and – most critically – are very affordable. They’ve already delivered 156 units to the U.S. Department of Defense and another 176 to be used as employee housing at a mining company in Bagdad, Arizona. However, Boxabl hasn’t begun selling to the general public yet, because obtaining all the required local, state, and federal certifications necessary is an extremely convoluted and time-consuming process.
Unfair zoning laws are a growing problem in the U.S. Cities and towns use these regulations to restrict or ban manufactured housing, reducing the supply of desperately needed affordable homes. Jurisdictions employ a variety of methods to restrict manufactured housing, including outright bans, lot size restrictions, changes to density and setback requirements, restrictions to manufactured home communities only, age restrictions, and restrictions based on non-conforming uses. In some cases, cities are denying the placement of homes without providing any reason whatsoever. These actions by cities worsen the affordable housing crisis and could be considered discriminatory under the Fair Housing Act.
One reason for the byzantine regulatory structure that discourages manufactured housing is that home construction is a very fragmented industry with many small local players who build houses strictly on site. But proponents of manufactured housing such as Boxabl’s foldable houses insist these products can create new opportunities for traditional builders to embrace new technologies and systems, and to expand their customer bases to include more lower-income buyers.
“Regulations are one of the biggest contributors to the high cost of housing,” says Galiano Tiramani, co-founder of Boxabl. “They exist every step of the way — at the local, state and federal level. By mass-producing quality homes according to a common set of exacting national standards, as an industry we can reduce the current friction created by many of these government touch points.”
At the end of the day, Tiramani says, as the company grows it’s likely Boxabl will spend considerable resources to reform outdated rules, and work with regulators in an aggressive manner to get them on the same page as us. “I believe we will ultimately achieve that goal, but the longer it takes to realize a more fair, reasonable and simplified system of rules, the further out of reach the American dream of owning a home will remain for too many families, he says.
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