Buying a house? Four unconventional ways to become a homeowner.
It’s hard out there in the housing market right now. Prices are high and mortgage rates aren’t low; no-one wants to sell and many people have given up trying to buy. In a recent sentiment survey conducted by Fannie Mae, only 17% of respondents said now was a good time to make a purchase.
Desperate times call for, well, different measures. With that in mind, here are four suggestions for anyone who’s still interested in achieving homeownership, but who’s had it with the current state of the traditional housing market.
Manufactured Housing
If you’ve seen one trailer park, you’ve seen all manufactured homes, right? Wrong.
“I’m in the Marines and I’ve traveled all over the world and lived in a lot of homes. This is by far the best home that I’ve lived in,” said Hector Cardenas, who bought one of the first houses available in a new manufactured-housing development near Richmond, Virginia, in 2023.
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The house boasts four bedrooms, two bathrooms, and large yards in both the front and the back. It cost Cardenas $240,000. He estimates that a comparable “site-built” (manufactured homes are also known as “factory-built”) residence would have cost him $125,000more.
Cardenas is one of the beneficiaries of a big industry-wide push that started about a decade ago to make manufactured homes look and function more like site-built ones, said Chad Reed, director of programs and growth at Boston-based Ivory Innovations, a housing nonprofit.
The Manufactured Housing Institute, an industry group, developed a new standard called the “CrossMod” – short for “crossover” homes. CrossMod and other newer manufactured homes are “designed to compete” with traditional site-built single-family homes: they look similar, boast comparable energy efficiency and weather resistance, and are permanently affixed to a foundation.
Anyone buying a manufactured home will likely need to get homeowners’ insurance through a specialized provider, Reed said, but one bigger hurdle that used to plague the process has been largely smoothed over. Mortgages that treat manufactured homes as real estate, not personal property, are much more readily available now, thanks to CrossMod.
Several big builders are developing CrossMod homes, with Clayton Homes being the largest. Manufactured homes do tend to be clustered together in relatively new developments, Reed said – but house hunters might soon encounter more of them on existing lots.
Manufactured homes are not “sexy,” Reed said, but “when you talk about increasing affordability, it’s kind of hard to get better than manufactured.”
Land Banks
What’s a “land bank”? Not a bank, and not really land – but a lesser-known repository of properties available for purchase, and an excellent option for some people looking to put down roots in a special community.
“By and large, the properties have some sort of challenge, but many, many of them are amazing opportunities for first-time homeownership,” said Brian Larkin, the director of the National Land Bank Network at the Center for Community Progress
There are over 300 land banks around the country, mostly – but not only – east of the Mississippi. Land banks were born out of the wreckage of the subprime crisis, when many communities were faced with more vacant and distressed properties than they could manage.
Land banks aren’t the only public agencies that take possession of, and then try to sell, vacant real estate, but they differ from others in one key way. They generally have a mission of selling or otherwise “disposing of” properties according to the best interests of the local community, whereas government agencies like cities or counties may be required by law to sell a property to the highest bidder.
There are a few considerations for buyers, Larkin cautions. One is that land banks tend to serve areas that have a high concentration of vacant properties – which often means there has been depopulation in the area. If you’re moving from a different community, be aware that the local economy and services may be different than what you’re used to.
Also, since land banks exist to steward properties that have been abandoned, those homes usually need to be fixed up - sometimes a lot. (In some cases, if a home is considered too blighted to be rehabilitated, a land bank may decide to demolish it, and simply re-sell vacant land.)
Katelyn Wright, executive director of the Greater Syracuse Land Bank in upstate New York, cautions that the amount of work most land bank properties need may mean they’re not palatable for many buyers.
One Syracuse native, NaDonte Jones, bought a fixer-upper from the land bank and despite working professionally in the construction field – he owns his own plumbing company – Jones says he wound up going well over his initial budget. Still, he said, he’s “very happy with the result,” and believes there’s enormous potential upside in Syracuse property values.
What might be less intuitive is that cheaper properties don’t always mean mortgages are easy to get. In fact, banks are often reluctant to make “small dollar” loans – often defined as any amount under $100,000 – because their costs are fixed, and the resulting monthly payments are too small to make it worth it to them. Add to that serious construction needs, and the financing becomes even more challenging.
But many land banks, including Greater Syracuse, have partnerships with Community Development Financial Institutions, which are local or regional mission-oriented lenders that can help with financing specific to the buyer of a land bank property.
Larkin’s advice to any house hunter interested in exploring ownership through a land bank: call the entity directly and ask as many questions as you can. Find out about the condition of the homes that are available, and ask whether there are any special financing options available. One final caveat: if you do buy a home in need of repair, you’ll almost always need to sign an agreement at closing that all renovations will be complete within a certain amount of time.
ADU, Do U?
Ashley Wong and her husband, Eric, have spent the past several months looking for the perfect home. Living in the greater Seattle area, the Wongs wanted more space for themselves, a big yard for their dogs, and a residence for Eric’s aging parents, someday down the road.
“They’re doing great right now,” Ashley said, “but we want to prepare for that to change. We wanted a space where they could be comfortable and we wouldn’t be on top of them.”
The “unicorn” house that they found has a walkout basement with its own bathroom and kitchen, and access to the same backyard as the main part of the house, but it can’t be accessed from inside.
That kind of add-on residence is often known as an Accessory Dwelling Unit, or ADU. They may also be called “granny flats,” “in-law suites,” “sidekicks,” or one of a host of other names. They may be free-standing or added on to an existing structure on a property through a garage, basement, attic, or other space.
ADUs may not be the best quick fix for the affordability crisis, but they are uniquely suited to address a variety of problems, said David Morley, research program manager at the American Planning Association.
Whether a homeowner builds a new structure in his backyard, or converts part of her home to the kind of in-law suite the Wongs were lucky to find already intact, there’s often a sizable construction cost involved, Morley pointed out. ADUs may not be as expensive as a single-family home, but that’s mostly because they’re smaller.
What they can do, however, is allow multiple generations to live together – say with older parents, like the Wongs are anticipating, or with college-age kids who can’t afford their own place but who want some privacy. Alternatively, they may provide a source of income from short- or long-term rentals.
“I think that there's a growing number of people that are really interested in the idea of having a space that they can use flexibly in different ways at different times throughout their time in a home,” Morley said.
For someone who’s house hunting, then, looking for an ADU isn’t an immediate solution to not being able to find something affordable. But broadening the search to properties that might accommodate an ADU for other members of the extended family may be a solution to an eventual housing challenge.
Buyers might also consider, in conjunction with their lender, whether a type of “house hacking” – buying a home with rentable space in order to capitalize on that income stream – makes more sense than buying a place to occupy alone.
Community Land Trusts
Community land trusts (CLTs) are nonprofit organizations that own a parcel of land and sell homes on the space to individuals and families. Buyers get full ownership of their property, but agree to accept a limit on the amount of resale value they can realize when they sell their home. That model doesn’t just make homeownership affordable, it keeps it that way.
“The idea is that you are given an opportunity to build some amount of wealth but it’s restricted in order to make it affordable to the next home buyer,” said Brian Stromberg, the national policy director for Grounded Solutions Network, which develops best practices for CLTs. “The idea is to make it affordable for generation after generation.”
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CLTs usually have some sort of governance structure that includes input from members of the community itself. “Controlling the land gives you the ability to direct what happens on that land to a greater degree than you would be able to otherwise,” Stromberg said.
Denver-based Elevation Community Land Trust has only been around for about seven years, but it’s already seen one person buy a home, then sell it and move on. ECLT has a 25% cap on appreciation: a homeowner who buys a home for, say, $150,000 and sells for $200,000 would pocket $12,500 rather than $50,000, as on the open market.
“This is a way into homeownership and a way into stability,” said Stefka Fanchi, the group’s CEO. Fanchi sees the CLT ownership model as a “steppingstone into the market” that’s preferable to renting.
Elevation CLT operates statewide, making it unusual among community land trusts, most of which, Fanchi points out, are “hyperlocal,” occupying one small neighborhood or section of a city. Still, wherever residents come together to live their values, it maintains community, she said.
“It buttresses against displacement, right?” she said. “It keeps people in place, but it also creates additional community right through people jointly communally owning the land and controlling that over time.”
There’s been a resurgence in interest in CLTs in recent years as housing has become increasingly unaffordable, Stromberg said, but they can be much more than a source of homeownership. The first CLT was developed by veterans of the civil rights movement to secure community-owned farm land for Black residents. Modern versions may contain green space, mixed-use development, and more, and CLTs may be located in cities, suburbs, or rural areas.