Legalizing manufactured housing requires legalizing starter homes

Emily Hamilton at Mercatus has a new policy brief on the key zoning reforms needed to make HUD Code building code reform work: if a town has zoned out starter homes, it has zoned out manufactured housing. Twelve states have passed laws since 2020 to make HUD Code homes easier to site, and the cost advantage is real: a single-section home runs 65% cheaper than comparable site-built housing, a double-section 40%, and a CrossMod 27%. But in the three states with the strongest equal-treatment laws, manufactured housing's share of new construction showed no visible jump afterward, in substantial part because nondiscrimination against HUD Code starter homes is perfectly compatible with bans on all starter homes. Pairing National Zoning Atlas data with FHFA land values, Hamilton finds that land cheap enough to support a single-section home ($47,000 for the lot under a $94,000 house) covers 0.77% of zoned land in Middle Tennessee, 0.89% in Hampton Roads, and 0.02% in Northern Virginia under current minimum lot sizes. Cut minimums to 1/16 of an acre and those shares rise to 12.8%, 5.3%, and 1.8%. The ROAD Act's chassis fix widens the HUD Code cost advantage…but only if those homes aren't also bundled by zoning law with an unaffordably large parcel of land.