The Opportunity and Challenge of Manufactured Housing in Indian Country

Although manufactured housing is a viable homeownership option for families across the country, it is particularly important in rural America, where about 15% of the housing stock is manufactured housing. So it’s not surprising that manufactured housing is a vital part of the housing market in Indian Country as well: 17% of households on tribal lands live in manufactured housing.

This makes sense given that manufactured homes are cheaper than site-built housing and can be transported easily to less dense areas where costs may prohibit building small developments and even single units. It’s important that we at Prosperity Now focus our Innovations in Manufactured Homes (I’M HOME) work to examine the role, benefits and challenges of manufactured housing in Indian Country.

Last year, the Center for Indian Country Development (CICD) at the Federal Reserve Bank of Minneapolis looked at loan data from census tracts that include at least some reservation land. What the CICD learned is compelling: 

  • About 49% of all home loans to American Indian Alaskan Native (AIAN) borrowers on these tracts were for manufactured homes. That compares to just 13% for all borrowers.
  • Two lenders—Vanderbilt Mortgage and 21st Mortgage—dominate these markets, accounting for about two-thirds of all manufactured home loan originations to AIAN borrowers and more than 73% of all loan applications to AIAN applicants in 2016. (Vanderbilt is a subsidiary of Clayton Homes, which is in turn owned by Berkshire Hathaway. 21st Mortgage is directly owned by Berkshire Hathaway.) The Center found that these shares have remained relatively consistent over recent years.

Market dominance by just one or two lenders does not, in of itself, suggest bad behavior such as loan steering. No doubt, both Vanderbilt and 21st benefit from their networks (both formal and informal) of retailers and the Clayton brand of homes. That said, borrowers and communities are better served when there is healthy competition, which can lower loan costs to the end borrower and serve as a check on regulatory misfeasance.

Native Americans are as likely as other groups to aspire to homeownership, but challenges remain. The homeownership rate for Native Americans is about 53%, much lower than that of White households, but notably higher than those of other groups. This in part reflects the limited rental stock in rural America and on tribal lands. Many lenders avoid tribal lands due to perceived and real land use, titling and related issues. Their avoidance allows existing lenders to consolidate their presence. Getting more lenders in this space and connecting more homebuyers with them is a key step.

The CICD took an important step earlier this summer when it released the Tribal Leaders Handbook on Homeownership. The handbook is an important tool tribal leaders, developers, lenders and community members can use to navigate the homeownership landscape on tribal lands. It includes all aspects of the homeownership process and calls out case studies that can be effectively used by others who wish to advance homeownership.

Manufactured housing is and will continue to be an important component of this landscape. In the handbook, there is a dedicated chapter on manufactured housing in Indian Country, which is both a good primer on manufactured housing and a discussion of its use on tribal lands.
As with all complex challenges, we need to use a variety of tools, shape existing programs and policies to meet the current environment and encourage innovation by new and existing market participants. There’s no one solution, but the CICD’s new handbook is a good place to start.

To raise this issue even higher, we will have a plenary at the 2018 I’M HOME Conference in Nashville, which will run from December 3-5. We hope you can join us.    

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