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Mobile homes, partially manufactured "kit" homes, and owner-built homes : an analysis of three low-cost… Perong, Susan Ilene 1984

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MOBILE HOMES, PARTIALLY MANUFACTURED "KIT" HOMES, AND OWNER-BUILT HOMES—AN ANALYSIS OF THREE LOW-COST ALTERNATIVES FOR NEW HOUSING, IN RURAL AREAS By SUSAN ILENE PERONG B.A., Sonoma State University, 1979 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n THE FACULTY OF GRADUATE STUDIES School of Community and Regional Planning We accept t h i s thesis as conforming to the ^required standard THE © UNIVERSITY OF BRITISH COLUMBIA A p r i l 1984 Susan Ilene Perong, 1984 In presenting t h i s thesis i n p a r t i a l f u l f i l l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y available for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the head of my depart-ment or by his or her representatives. It i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of The University of B r i t i s h Columbia 1956 Main Mall Vancouver, 'Canada V6T 1Y3 ABSTRACT This thesis investigates the mobile home dominance of the low-cost housing market i n ru r a l areas. The scope was limited to new housing choices available to a ru r a l resident owning or intending to purchase an existing l o t . Three p o t e n t i a l l y lower-cost housing alternatives that u t i l i z e labor-saving procedures were selected for examina-tio n and analysis: (1) the t o t a l l y manufactured "mobile home," (2) the p a r t i a l l y manufactured pre-cut " k i t home," and (3) the self-help "owner-built home." An extensive l i t e r a t u r e search and analyses of a l l three options was conducted ,\ with special focus on the advantages/disadvantages of each option and the problems unique to each a l t e r n a t i v e . As academic l i t e r a t u r e on k i t homes was extremely limited, interviews (seven manufacturers) and a survey ( t h i r t y - e i g h t manufacturers) were conducted i n order to c o l l e c t d i r e c t data. Although the interview/survey procedure was too small to be considered a s c i e n t i f i c study, i t did provide the d i r e c t information needed to complete the analyses of the k i t home industry's potential to provide low-cost r u r a l housing and also aided i n the i d e n t i f i c a t i o n of i n d u s t r y - s p e c i f i c obstacles. The study and analysis confirmed the fact that rural housing i s d i s t i n c t from urban, with i t s unique r u r a l financing and delivery mechanism problems. This d i s t i n c t i o n has resulted i n the US and Canadian federal governments developing several mobile home/contractor-built housing programs for the r u r a l , less affluent home purchaser. In addition, the study confirmed that owner-buildingi;in a l l forms i s common and well suited to rur a l areas, and that the k i t home industry (which combines the advantages of manufac-turing with the labor-saving of owner-building) flourishes in the middle-/high-income homebuilding r u r a l market. In addition, the survey and analysis demonstrated the following: - The k i t home industry has the potential to provide low-cost housing for the less a f f l u e n t r u r a l resident and i s currently doing so on a limited scale. - This diverse and varied industry i s faced with several i n d u s t r y - s p e c i f i c obstacles ( i . e . , marketing and bank/ governmental opposition to owner-building). - An opportunity exists to reduce the owner-building r i s k by u t i l i z i n g the k i t manufacturer as an intermedi-ary with i t s unique and extensive dealer/contractor networks and owner-builder i n s t r u c t i o n programs. This involves the use of owner/manufacturer contracts and completion guarantees; thus, the r i s k i s shared between the lender (federal or bank), manufacturer, and owner-builder. This thesis challenges the exis t i n g federal and f i n a n c i a l i n s t i t u t i o n a l anti-owner building p o l i c y that ignores k i t home potential to be a cos t - e f f e c t i v e housing i v a l t ernative for the less affluent r u r a l resident. The general conclusion of the analysis i s that the mobile home dominance of the lowest cost new housing market i n rur a l areas i s not due to i t being the only low-cost option available, but predominately due to i t possessing a d i s t i n c t financing advantage. Financial and governmental i n s t i t u -t i o n a l obstacles against owner-building only impact the p a r t i a l l y manufactured " k i t " home and self-help options, making them less available to the less affluent potential home purchaser. The r e s u l t i s the dominance of the mobile home i n the lowest cost r u r a l market. TABLE OF CONTENTS LIST OF TABLES . . v i i i LIST OF FIGURES x i INTRODUCTION 1 Limitations 3 Thesis Structure . . . . . 4 PART I. OPTIONS FOR LOW-COST HOUSING Chapter I. RURAL HOUSING SITUATION . . . . . . . . . . . 8 Rural Housing Problems D i s t i n c t from Urban 10 The Rural Population 11 Rural Housing Options and Choice 15 Governmental/Institutional Approaches to the Rural Housing Situation 18 Conclusion and Government Obstacles . . . . 25 II. THE MOBILE HOME 34 A Successful Low-Cost Housing Option . . . . 34 1 General Characteristics of Mobile Homes 3 9 Development of the Mobile Home 45 Advantages 51 Disadvantages 55 v v i I I I . PARTIALLY MANUFACTURED HOUSING 61 Successful Option for Affluent Yet Often Unavailable for Middle- and Lower-Income Families 61 Types and Characteristics of P a r t i a l l y Manufactured Housing 62 Advantages 7 4 Disadvantages 7 9 IV. OWNER-BUILDING/SELF-HELP HOUSING—A PHILOSOPHY AND A PRACTICAL REALITY 85 General Characteristics 85 Philosophy of Self-Help Owner-Building . . . 89 Pr a c t i c a l Application 92 V. PARTIALLY MANUFACTURED KIT HOME PLUS SELF-HELP . . . . . . . . . . 101 Kit Home as Low-Cost Housing 101 Ki t Home Roots--Unfinished Shell House . . . . . . . 104 Ki t Home Potential as Low-Cost Housing . . . 107 VI. OBSTACLES TO LOW-COST HOMEOWNERSHIP 115 Financing 116 Lack of Government Support 117 Local Government Regulations 128 Obstacles to the Mobile Home' 130 Obstacles to P a r t i a l l y Manufactured Housing and Self-Help 134 PART I I . INTERVIEW AND SURVEY RESULTS VII. INTRODUCTION TO PART II 154 Need for Interview and Survey 154 Interview Questionnaire 156 Introduction to Survey 160 v i i VIII. CHARACTERISTICS OF KIT HOME MANUFACTURERS 164 Ki t Type 165 Years i n Business 168 Owner-Building P a r t i c i p a t i o n 170 Ki t Price 176 Location 180 Income of Customers 181 Financing . . . 184 IX. KIT HOME POTENTIAL TO PROVIDE LOW-COST HOUSING IN RURAL AREAS 192 Interview Results 193 Survey Responses . . . 195 Industry Potential for Increasing the Number of Low-Income Customers . . . . 207 X. OBSTACLES TO THE DEVELOPMENT OF THE KIT HOME INDUSTRY . . . 211 Introduction and Limitations 211 Interview Results . . . 213 Survey Results 215 XI. CONCLUSIONS, FINDINGS, AND RECOMMENDATIONS 256 \ General Conclusions 256 Spe c i f i c Findings 263 Recommendations 268 BIBLIOGRAPHY . 273 APPENDIX 282 LIST OF TABLES 1. Total Ex i s t i n g Housing Units i n US 44 2. Mobile Home Shipments and Housing Starts (US) 44 3. Questionnaire Responses 158 4. K i t Type 167 5. Years i n Business 169 6. Percentage F u l l Owner-Builders 171 7. Percentage P a r t i a l Owner-Builders 172 8. Percentage Not Hiring General Contractors . . ; . 172 9. Percentage Customers Not Involved with Construction 173 10. Owner-Building Involvement 174 11. Level of Owner-Building Involvement 175 12. K i t Type and Owner-Building 176 13. K i t Price Range 177 14. Price by K i t Materials Included 179 15. Factory Location 181 16. Income of Customers 182 17. Income Categories 182 18. K i t Type and Income 184 19. Manufacturer/Dealers Offering Financing Aid 186 20. Type of Financing Aid 186 21. Percentage Cash Only Customers 187 v i i i i x 22. Financing Requirements—Minimum Down 189 23. Lowest-Income Customer 196 24. Income of Customer 198 25. Firms S e l l i n g to Customers with under $20,000 Income 198 26. Owner-Building and Income 200 27. Price and Income 202 28. K i t Price and Owner-Building P a r t i c i p a t i o n . . . 203 29. Financing Aid and Financing Type . 205 30. Owner-Building and Financing Type , 207 31. K i t Home S e l l i n g Success 216 32. K i t Type and S e l l i n g Success 218 33. Years i n Business 219 34. S e l l i n g Success and Years i n Business 220 35. Years and Percentage S e l l i n g Success 220 36. S e l l i n g Success and Income of Customers 222 37. S e l l i n g Success and K i t Price 223 38. S e l l i n g Success and Owner-Building 224 39. S e l l i n g Success and Financing Aid 225 40. S e l l i n g Success and Type of Financing 227 41. S e l l i n g Success and Source of Financing 228 42. Owner-Building and Type of Financing Aid . . . . 229 43. Obstacle Ratings 236 44. No Government Financing Aid 239 45. No Government Aid to Owner-Builders 239 46. Local Government Opposition 240 47. Building Approval Delays 240 48. Property Tax 242 49. No Government Financing Aid 244 50. No Government Aid to Owner-Builders . . . . . . . 244 51. Local Government Opposition by Type 245 52. Building Approval Delays 246 53. Overhead/Marketing Costs 247 54. Income and Obstacles 253 LIST OF FIGURES 1. Typical Mobile Home on Rural Lot 36 2. "Traditional Home" Mobile i n C a l i f o r n i a 38 3. Mobile Home Sold Off Lots i n Rural B r i t i s h Columbia Town 40 4. Vacation Mobile Home from Lot Near Yreka, C a l i f o r n i a 42 5. Low Quality Wartime Mobile Home i n Montana . . . 4 7 6. Modern Mobile Home with Newer Traditional Materials Example from C a l i f o r n i a 50 ,7. Typical Pre-Cut K i t Home from B r i t i s h Columbia Near Radium Hot Springs 63 8. Lumber Yard Stick Frame Kit Home from Tacoma, Washington 6 4 9. Prefabricated Pre-Cut Home by Boise Cascade i n Montana . 6 7 10. Log K i t i n B r i t i s h Columbia 69 11. Montana Hand-Hewn Log Cabin 70 12. Log K i t under Construction i n Montana 71 13. Custom-Appearing Pre-Cut Kit Home from B r i t i s h Columbia . . . . . 77 14. An Incomplete Log Home near Vernon, B r i t i s h Columbia 81 15. A | Owner-Built/| Mobile Home from Rural B r i t i s h Columbia 87 16. A Non-Kit Owner-Built Home from B r i t i s h Columbia 88 x i x i i 17. B r i t i s h Columbia Pre-Cut Modestly Priced K i t Home 102 18. Model Home i n Seattle, Washington 147 19. Mobile Home Display Lot i n B r i t i s h Columbia Near Vernon 148 20. Alternative L i f e - S t y l e Non-Code Owner-Built Rural Home (California) 258 21. Low-Cost Stick Frame Kit Advertisement from C a l i f o r n i a Lumber Yard Sales Flyer 265 ACKNOWLEDGMENTS I would l i k e to thank Prof. Brahm Wiesman and Prof. David Hulchanski for a l l t h e i r assistance i n making thi s thesis possible. My deepest thanks also must go to my parents, Harold and Marjorie Perong, for t h e i r support and encourage-ment and to my sons, Jonathan and Michael, who stood by me through i t a l l . x i i i INTRODUCTION This thesis examines the new construction r u r a l housing s i t u a t i o n , the building choices, and the advantages/ disadvantages of the various choices from the perspective of the low- and moderate-income home buyer. The mobile home, a t o t a l l y factory-constructed home, moved to the owner's s i t e , dominates the low-cost new housing market i n many rur a l areas. This dominance has been assumed due to i t s low cost and growing public acceptance as a frugal, sensible housing option. One of the major reasons the mobile home i s less costly i s due to factory manufactur-ing which permits substantial savings i n materials and labor. Factory manufacturing i s not limited to the mobile and modular home industry. P a r t i a l manufacturing, pre-cutting, or p a r t i a l prefabrication of components has been available since before the mobile home emerged on the scene. Few conventional s t i c k - b u i l t homes are constructed without some prefabricated or pre-cut components. Substantial savings i n materials and hired labor can be obtained by using manufac-tured components, but an even greater potential for savings may occur i f the owner contributes "sweat equity" and builds a substantial portion of the house without outside hired labor. 1 The success of the mobile home as a low-cost r u r a l housing option i s well known. The pre-cut or p a r t i a l l y manufactured home has not experienced the same rate of success i n the low-cost/low-income ranges. This thesis w i l l examine the obstacles to the development of the mobile home and the p a r t i a l l y manufactured house. The focus w i l l be on differences that impact a f f o r d a b i l i t y , especially govern-mental and f i n a n c i a l (bank) i n s t i t u t i o n a l obstacles that could be changed. Preliminary studies reveal that the owner-builder, p a r t i a l l y manufactured home buyer must meet higher require-ments for financing and receives l i t t l e benefit from most US and Canadian government subsidy/financing programs. The mobile home industry i n the early years experienced numerous similar obstacles but overcame most of them and the industry developed into a successful low-cost housing option. The mobile home industry i s concentrated and powerful with a few large manufacturers dominating the market. The p a r t i a l l y manufactured and pre-cut housing industry i s dominated by many small low-budget companies without p o l i t i c a l influence o large reserves of c a p i t a l . Many obstacles to the development of the p a r t i a l l y manufactured, pre-cut industry have yet to be overcome. The majority of p a r t i a l l y manufactured pre-cut home purchasers (according to l i t e r a t u r e and survey) are not low-income. Few poor families can afford to purchase a k i t home as few manufacturers offe r financing and cash upon delivery of the k i t i s the common practice. Banks and governments frown on lending large sums of cash for a p i l e of lumber and components, es p e c i a l l y to a low-income home builder. In the early years, the mobile home industry ran into similar obstacles but financing today i s within the reach of a larger segment of the population due to r e l a t i v e l recent changes. This thesis w i l l examine and discuss the various obstacles that a f f e c t the success of several d i f f e r e n t types of lower-cost r u r a l housing with p a r t i c u l a r focus on the infrequently studied p a r t i a l l y manufactured " k i t " home industry. Limitations This thesis w i l l deal only with the economic r e a l i t y of what type house an individual may be able to afford. A general assumption w i l l be made that the market for low-cost housing i s large and personal taste and preference are not the major reasons for the success of one option over another. No investigation into taste and housing type preferences of rural low-/moderate-income residents w i l l be made. A general assumption i s made that the success of one option over another i s due to the a v a i l a b i l i t y of that option and not due to the select d i s t i n c t preferences of the "less a f f l u e n t " rural resident. The higher-income r u r a l residents select from a wide variety of new housing construction, options. One does not predominate over another. Some select mobile homes; others have custom s t i c k - b u i l t houses constructed by contractors or purchase a standard "t r a c t " house; and s t i l l others ele c t to buil d t h e i r own home, often using a " k i t . " While some options may not be available to a less affluent home purchaser due to cost, there may be other factors related to a f f o r d a b i l i t y involved. Some of these other factors w i l l be i d e n t i f i e d and investigated i n thi s thesis. Thesis Structure The thesis i s divided into two major parts. Part I discusses several lower-cost new construction options and cost-saving procedures. Existing l i t e r a t u r e i s explored and discussed together with interview and observation data. In Chapter I, which serves as an introduction to Part I, the rura l housing s i t u a t i o n i n general i s examined. The many problems unique to rur a l residents, population characteris-t i c s , governmental/bank approaches to rur a l housing, and housing choice are discussed i n ah attempt to understand the rural housing s i t u a t i o n from an overall perspective. The next four chapters examine the various new construction housing options and cost-saving procedures. Chapter II examines the mobile home as a low-cost housing option. In t h i s chapter, the history, c h a r a c t e r i s t i c s , and advantages/disadvantages are examined. Chapter III explores the many forms of p a r t i a l l y manufactured housing including the pre-cut timber k i t , and theiprefabricated and modular forms. Several advantages and disadvantages are discussed and evaluated. In Chapter IV the owner-builder cost-saving technique i s studied as a philosophy and p r a c t i c a l r e a l i t y . Some interview data are included i n thi s chapter as they relate to existing practices. Chapter V attempts to combine the materials/labor cost-saving properties of factory manufacturing with the cost-saving technique of self - h e l p i n order to evaluate the " k i t " or p a r t i a l l y manufactured house's potential to provide low-cost housing when the owner contributes "sweat equity." The f i n a l chapter i n Part I, Chapter VI, deals with the many obstacle to low-cost homeownership. Financing, lack of government support, l o c a l government r i g i d i t y and opposition, etc. are discussed i n general and s p e c i f i c a l l y as they impact housing choice. The f i r s t part examines i n depth the existing yet limited l i t e r a t u r e on manufactured and p a r t i a l l y manufac-tured housing including the pre-cut timber k i t , and prefabricated and modular forms. As the k i t home, p a r t i a l l manufactured housing f i e l d has received l i t t l e attention from academic c i r c l e s , additional research i s c r i t i c a l to a thorough examination and discussion. The di r e c t research took two forms--interview and survey. Several k i t home dealers and manufacturers were interviewed before the survey questionnaire was developed. Part II explains the interview/survey process and discusses the r e s u l t s . Chapter VII (the f i r s t chapter i n Part II) i s an introductory chapter simply explaining the • interview/survey procedure and methods. Chapters VIII and IX discuss the survey re s u l t s as the k i t home industry's c h a r a c t e r i s t i c s and potential to provide low-cost rural housing are examined. Chapter X evaluates the survey results to further i d e n t i f y and discuss k i t home obstacles. This chapter combines the l i t e r a t u r e , survey, and interview results i n order to further analyze obstacles to the development of the k i t home industry as a popular housing option for less a f f l u e n t r u r a l residents. 7 PART I OPTIONS FOR LOW-COST HOUSING CHAPTER I RURAL HOUSING SITUATION Rural housing problems have always been d i f f e r e n t i n character than urban housing problems. Rural areas have substantially lagged behind urban areas i n housing quality and there'have been a larger percentage of substandard dwellings. In urban areas substandard dwellings tend eventually to be replaced as land values increase, making i t p r o f i t a b l e to r e h a b i l i t a t e or replace a substandard structure. Rural areas have less land cost influences and aged structures tend to remain u n t i l they either burn or f a l l down. The poor and unemployed handicapped i n rural areas often l i v e i n many of these substandard structures which were b u i l t before building codes. It i s not unusual to find homes in rur a l towns that have no indoor plumbing or e l e c t r i c i t y . Many studies have examined the rur a l housing si t u a t i o n i n both the US and Canada. There are nearly three times as many rur a l housing units lacking complete plumbing as urban units. . . . . . . While r u r a l rental units account for only 26% of the occupied units, they constitute 55% of the de f i c i e n t , overcrowded and excessive cost r u r a l housing.1 8 9 The HUD report by the 1978 Task Force on Rural Housing goes on to explain why the rur a l housing s i t u a t i o n i n the US has not improved i n spite of governmental policy and programs. With respect to housing, the general conclusion of the Task Force i s that available resources either have not been provided e f f i c i e n t l y or at a l l , due to (1) d e f i c i e n -cies i n the delivery system, and (2) a f a i l u r e to make f u l l and imaginative use of exis t i n g authority and r e s o u r c e s . . . . . . . The f a i l u r e to delive r available resources has been compounded by the deliberate termination by a prio r Administration of programs which were serving these areas and communities successfully, such as programs under the United States Housing Act of 1937, consisting of public housing and section 23 (now section 8) leasing programs, and the National Housing Act Section 235 program.2 Government programs have been developed to "solve the r u r a l housing problem" but the success i n the US has been marginal at best. In a 1968 A g r i c u l t u r a l Economic Report t i t l e d Status of Rural Housing i n the United States, the following comment was made: "Rural housing has improved considerably since 1960 but housing occupied by the ru r a l 3 poor may not have improved very much." The Canadian r u r a l housing s i t u a t i o n i s similar to the US experience. The many boom and bust towns create unique housing problems. Government intervention i n the rur a l housing market has substantially increased over the l a s t decade although Canada lagged behind the US i n i n i t i a t i n g r u r a l housing strategies. Canada has lagged behind the example of European countries, of Great B r i t a i n , and of the United States i n providing greater governmental assistance for housing as a matter of welfare and public concern 10 . . • . special attention, i n the advance preparation of plans should be given to a low rental housing and farm housing, i n which t h i s country has had l i t t l e or no experience to date.4 Rural Housing Problems  D i s t i n c t from Urban Financing There i s a greater d i f f i c u l t y i n obtaining mortgage financing either with or without governmental assistance i n rural areas. The c r e d i t gap i n rur a l America has been long recognized and numerous studies of mortgage finance i n l o c a l areas confirm that the terms on which home financing i s available tend to be more demanding i n rural areas and smaller towns—involving larger down payments, shorter loan terms and higher i n t e r e s t rates.5 It i s easy to understand why more people do not become owner-builders. R e s t r i c t i v e codes, discriminatory federal mortgage insuring practices, and the general trend toward s p e c i a l i z a t i o n of construction tasks have a l l contributed to a climate unfavorable to the man who may have thought about building his own home.6 Urban Bias i n Government  Housing Support There i s also major evidence that government programs show prejudice for urban centers over r u r a l areas. This has been discussed i n Congress and policy firmly stated against such practices, but the bias i n the US i s apparent. It i s the conclusion of the Task Force that the Depart-ment can do more within our exis t i n g l e g i s l a t i o n and regulations to meet the needs of ru r a l and non-metropolitan areas. . . . The Task Force recognizes that part of the problem faced by small c i t i e s and ru r a l communities when they deal with HUD relates to the recognition of t h e i r needs by HUD o f f i c i a l s and the p r i o r i t i e s that those o f f i c i a l s place on dealing with these c l i e n t s . ? 11 There have been attempts to develop programs targeted at the ru r a l poor and problems faced by small c i t i e s , but often the requirements of HUD and Farmer's Home Administration are too r i g i d . Both HUD and the Department of Agriculture's Farmer's Home Administration have programs to meet the housing needs of small c i t i e s and have attempted to make some of these programs complement each other. It i s clear, however, that both Departments must continue th e i r e f f o r t s to close the gaps i n th e i r program coverage and to a l l e v i a t e hardships caused by various program requirements and delivery mechanisms.8 Lower Incomes There are many problems of housing financing and support unique to ru r a l areas. In general,'incomes are lower i n rur a l areas and there i s a larger segment of "t r u l y " poor and s o c i a l assistance r e c i p i e n t s . This income difference was pointed out i n The Small Town i n America—A Guide for Study and Community Development by Swanson and Cohen. On a number of indicators, small towns income levels are s u b s t a n t i a l l y lower than the national average. The poverty of America's small towns i s further demonstrated by the substantial number of i t s poor who are aged or disabled, dependent on s o c i a l security and public assistance for support. By and large, small towns are poorer, contain more blue c o l l a r workers, and suffer i n f e r i o r housing conditions.9 In both metropolitan and nonmetropolitan areas, the percentage of poverty decreases . . . but the poverty rate, i n nonmetropolitan small c i t i e s i s double that of metropolitan small c i t i e s . 1 0 The Rural Population Before r u r a l housing problems, choice, or govern-mental approaches can be discussed at length, i t i s 12 important to have an idea of whom the housing i s for. Rural residents are a very diverse group but many myths seem to preva i l about who l i v e s i n the " s t i c k s , " and why. A short discussion exploring the rur a l or small town resident i s necessary to dispel some predominant myths. One major myth accepted by some i s that a l l small towns and rural areas are b a s i c a l l y a l i k e . This i s far from the truth. Some areas are growing while others are declining. Areas d i f f e r i n the types of economic a c t i v i t y and predomi-nance of i n s t i t u t i o n s . Swanson and Cohen, i n The Small Town  in America—A Guide for Study and Community Development, categorize types of communities on the basis of economic c h a r a c t e r i s t i c s . At a speculative l e v e l , certain economic c h a r a c t e r i s t i c s are associated with p a r t i c u l a r types of communities i n the typology of small towns: a. The "absorbed" community progressing as a res u l t of (or perhaps despite) i t s penetration by the outside world i s characterized by increasing proportions of white c o l l a r employ-ment, r e f l e c t i n g better s a l a r i e s and higher s k i l l l e v e l s . b. The "abused" community i s more l i k e l y to be characterized by an increasing proportion of welfare r e c i p i e n t s , unemployed and others who are not included i n on the benefits of the larger society, but are s t i l l dependent on external sources for support. c. The " s e l f - r e l i a n t " town, l i k e the "absorbed," i s predominately white c o l l a r , but i t s s t a b i l i t y protects i t from the fluctuations and problems that a f f e c t the absorbed town. d. The "ignored" community, rather than being loaded with dependent people, i s usually charac-t e r i z e d by stable blue c o l l a r industries which survive largely without f e e l i n g the impact of the larger s o c i e t y . H 13 In "Issues and Approaches of Rural Community Planning i n Canada," Qadeer discusses the differences i n i n s t i t u t i o n a l balance. Another dimension among which communities d i f f e r i s the mix and r e l a t i v e influence of various s o c i a l i n s t i t u -tions. Major s o c i a l i n s t i t u t i o n s i n Canada, e.g., family, government, church, work, etc. have become standardized. . . .In a small community a l l i n s t i t u t i o n s may not be represented to the same degree, and each one of them may not have the proportionate influence. . . . . . . One community may have an over representation of governmental i n s t i t u t i o n s (e.g., m i l i t a r y bases), and another may include small proportions from the whole spectrum (e.g., agricultural-cum-market centers). This i s the basis for d i f f e r e n t i a t i o n of r u r a l communi-t i e s , and contributes to the wide d i v e r s i t y . . . . . . . As a group, r u r a l communities bear close resemblance to urban areas, but, i n d i v i d u a l l y they are d i f f e r e n t i a t e d by the varying mix of s o c i a l i n s t i t u -t ions. 12 Qadeer also discusses the importance of the economic base of a community and notes the change from farming to manufacturing, mining, tourism, etc. i n many rur a l areas. In today's Canada, farming i s one of many a c t i v i t i e s characterizing r u r a l communities--mining, manufacturing, tourism, r e t i r e e s ' and commuters' residences being the others.13 Another common b e l i e f about r u r a l areas i s that growth i s frequently caused by the migration of aff l u e n t r e t i r e e s and "back to the earth" types. If one examines the growing r u r a l areas one can frequently see a clear trend for the children of r u r a l residents to take l o c a l jobs instead of flocking to the c i t i e s as they have done in the past. They now take jobs i n various blue c o l l a r f i e l d s . In "The New Non-Metropolitan Growth; Where Do Blue Collar Residents F i t In?" Houstoun notes that the 14 blue c o l l a r resident i s often ignored i n growing communities. There i s indeed a ma'rket for r u r a l i s o l a t i o n expecially to those with second homes. . . . On the other hand, there i s also an apparent market for development i n which the essential a c t i v i t y s i t e s of d a i l y l i f e are more conveniently and less expensively arranged and which offers family members greater opportunity for shared community experiences than i s t y p i c a l of the overwhelming proportion of recent growth. . . . We can miss that second market—indeed we may regulate i t out of e x i s t e n c e — i f we pay excessive attention to the migrating af f l u e n t and ignore the larger needs of blue c o l l a r , Rural America.14 Thus, new residents to ru r a l areas are also frequently blue c o l l a r workers who come for the good jobs and not for a "higher quality of l i f e s t y l e " or rural style of l i v i n g . Small town and r u r a l residents are not an homogenous group. Society tends to label a person on the basis of education, income, or employment. Some people prefer to categorize individuals as belonging to a class or s p e c i f i c s o c i a l group. One can fi n d a l l groups represented i n the ru r a l regions and small towns. Swanson and Cohen l i s t Warner's six levels of classes: 1. Upper-upper: the l o c a l s o c i a l " a r i s t o c r a t s , " members of families with long h i s t o r i e s of wealth and s o c i a l standing. . . . 2. : Lower-upper: another wealthy group, i n some in d i v i d u a l cases, even wealthier than members of the upper-upper clas s , but lacking the properly distinguished back-grounds necessary. . . . 3. Upper-middle: mostly businessmen and professionals. 4. Lower-middle: white c o l l a r clerks and small business-men . 5. Upper-lower: working men and small tradesmen. 6. Lower-lower: those associated with lower incomes and poverty l i f e s t y l e s . 1 5 !5 Rural Housing Options and Choice Regardless of th e i r class or type of work, a l l residents need housing that they can afford. The affluent have a wide selection of housing options. They can buy an exist i n g home i n or out of town or i f no homes s u i t them they can hire a contractor and bui l d a custom home. They can choose between building a s t i c k - b u i l t home, a log home, a dome house, or a mobile home. The lower-income r u r a l resident may not have as many choices as his low income prevents xhim from selecting the home of his dreams. He may only be able to afford to rent; but even t h i s i s a major problem i n rur a l areas as there may be few rentals available. If he attempts to buy an ex i s t i n g house the d i f f i c u l t i e s i n obtaining financing may be vast, even greater than for the urban poor. A 1977 Task Force reported the d i f f i c u l t y i n obtaining mortgages for f i r s t - t i m e home buyers i n rur a l areas. A comparison of median terms for f i r s t mortgages on single family homes shows that non-metro areas have a 0.9% higher i n t e r e s t rate, 3.1 years shorter term to maturity and $18,100 lower loan amount and a 0.5% higher down payment.16 There are also few condominiums, townhouses, or multi-family dwellings i n r u r a l areas. Often the only choice i s a single wide mobile home on a small l o t i n a less desirable area. Turner and Fichter discuss the importance of choice i n housing options. In order to make the best use of scarce housing resources, most of which are i n any case possessed by the people themselves each household must have an 16 adequate choice of alternative locations, of alte r n a t i v e forms of tenure and, of course, of alternative struc-tures and ways of building and using them. People who do not have these freedoms i n housing are generally unable to use housing as a vehicle for the i r e x i s t e n t i a l ends. If they cannot hope to get the combination they need, they w i l l tend to minimize the housing action by doing and paying as l i t t l e as possible.17 Mobile homes are a major low-cost option for new housing i n rur a l areas. They o f f e r an alternative to the older housing and are currently meeting a c r i t i c a l low-cost housing need in r u r a l areas for both the home buyer and renter. There are lower-cost options for construction of new dwellings i n r u r a l areas. The same cost-saving, labor-saving techniques used by the mobile home industry are used by the " s h e l l home" manufacturer. Components are cut and constructed i n assembly-line fashion and materials are purchased i n bulk. While the mobile or manufactured house leaves the factory i n one or two pieces, the pre-cut or panel house leaves the factory i n many pieces. While some manufacturers and dealers w i l l construct the s h e l l for the buyer, most of f e r "logs only" or "no labor" s h e l l packages. The cost-savings of pre-cut manufacturing and bulk buying, plus sweat equity can be considerable. Some small 800-1,000 square foot panel k i t s can be purchased for under $10,000 and constructed to s h e l l stage i n a few weeks by an untrained owner-builder plus a friend or two. This p a r t i a l l y manufactured, pre-cut, owner-built house offers a time/cost savings that combines the techno-l o g i c a l advances of the mobile home without losing the 17 "sweat equity" cost-saving advantages. It i s s t i l l common to build a house from scratch and many low-income owner-builders do just that. Some sel f - h e l p housing groups purchase manufactured components for t h e i r houses and build them i n an assembly-line fashion. .Owner-building does not prevent a l l cost/time advantages of manufacturing; the two advantages can be blended. The owner-building option i n i t s various forms i s c l e a l r y a cost-saving option competitive to the mobile home. Cooperatives are also low-cost approaches to housing. Unfortunately, r u r a l areas have not benefited from t h i s option, as the administrative expertise i s weak in most nonurban areas. Most housing a c t i v i s t organizations are located i n larger towns and c i t i e s . Columbia Housing Advisory i s a nonprofit housing organization based in Vancouver, B r i t i s h Columbia, that helps groups organize the construction of cooperative housing. This technical expertise i s usually not present i n smaller towns. Rural areas are usually more landownership-conscious and most wish to own property which i s less expensive than land i n the large c i t y . Nonprofit and public low-income housing has been attempted i n r u r a l areas with substantial success. Many senior c i t i z e n housing complexes and a smaller number of family units have been b u i l t i n rural small towns i n the US and Canada. The public housing projects s t a t i s t i c a l l y have demonstrated that they reach the lowest income segment, the " t r u l y poor," yet they are often the most d i s l i k e d programs 18 Approximately 40% of the counties i n the country do not have any public housing, and those counties are predomi-nately r u r a l . . . l o c a l governments hold a veto power over the rig h t of c i t i e s to enjoy federal subsidies for good housing and many of them have exercised i t l i k e the Russians at the United Nation's Security Council meeting.18 Discretionary power at the disposal of the County Supervisor can be a real asset i f the supervisor i s motivated to use the regulations to make the maximum use of available funds to serve the poor. . . . The great advantage of the FmHA loan program i s the potential for humane consideration of each individual c l i e n t , as opposed to the bureaucratic procedures of the FHA where the c l i e n t never sees or deals with the bureaucrat who turns him down. However, t h i s same discretionary power can t o t a l l y undermine the purpose of the program when i n the hands of one not sympathetic to the poor, the blacks or those needing special consideration.19 Government/Institutional Approaches  to the Rural Housing Situation When examining cost and a f f o r d a b i l i t y , i t i s necessary to examine the major factors that a f f e c t a low-income resident's a b i l i t y to purchase a home. The price of the product i s a c r i t i c a l factor, yet price or cost i s often less important than the a b i l i t y to obtain financing. A home can be low-priced yet not affordable to a lower-income customer due to financing obstacles. The Department of Housing and Urban Development .(HUDl" i n the US and Canada Mortgage and Housing Corporation (CMHC) i n Canada were created to deal with the many financing b a r r i e r s and obstacles involved with homeownership. Since that time many changes have taken place. Both HUD and CMHC have experimented with new programs; some have succeeded while others have f a i l e d . Neither agency i s as f i n a n c i a l l y 19 sound as before and there i s reluctance to try anything new. The focus i s to hang on to what exists and hope for funding increases. It i s i n th i s period of HUD/CMHC stagnation and " f i s c a l r e s t r a i n t " that the p a r t i a l l y manufactured housing industry developed. Technological improvements resulted i n s i g n i f i c a n t cost savings and made owner-building "self-help" easier than ever before, yet the financing and governmental i n s t i t u t i o n s have been slow to accept t h i s r e l a t i v e l y new and perceived "risky" low-cost housing option. In order to better understand governmental/institu-t i o n a l obstacles to a l l types of low-income housing, i t i s be n e f i c i a l to examine a few HUD/CMHC programs, t h e i r history, and changes that have taken place within these programs. The US and Canadian government programs began with an emphasis on mortgage financing and lat e r moved to public housing and subsidy programs. Mortgage financing s t i l l e xists but to a much less s i g n i f i c a n t degree. "Since 1960, there has been a decline i n the number of loans insured. From 1960-1966 the number of rur a l homes insured declined from 30 ,190 to 17,130. 1 , 2 0 For more than ten years i n the US, the Federal Housing Administration (FHA) has been insuring a smaller share of the homes financed by private i n s t i t u t i o n s . The purpose of thi s program was to encourage lenders to provide long term mortgages for home buyers by v i r t u a l l y eliminating the r i s k , to stimulate the building industry and thus create jobs by increasing the demand for new housing construction. It was not a program designed to create housing for low income persons, but has ce r t a i n l y assisted many families to secure better housing which otherwise would have been unavailable.21 20 The mortgage insurance program was also the early focus of the Farmers Home Administration (FmHA), except that a d i r e c t lending to farmers was available i n case a private lender was unavailable. Later nonfarm dwellings were added to the program. It was not u n t i l 1961 that Farmers Home was given authority to make loans for non-farm dwellings. In that and the following years T i t l e V was amended to provide additional authorities r e l a t i v e to farm labor housing and technical assistance grants and seed money loans for se l f - h e l p housing.22 In the US the various FmHA programs provided a large number of ru r a l residents with a home loan that they could not have obtained elsewhere. As the ownership program grew, FmHA expanded into r e h a b i l i t a t i o n and cooperatives which often offered subsidies. The Farmers Home Administration also makes d i r e c t or insured loans to buy, bu i l d , repair or improve rental housing and cooperatively owned housing for r u r a l residents with low incomes and for senior c i t i z e n s with low or moderate income.23 Later subsidy programs i n the form of home int e r e s t write down loans and rental assistance were added. Only recently has the FmHA been permitted to provide rental a s s i s -tance, although HUD has had a sim i l a r program for years. Rental Assistance Program This program provides rental assistance to low-income ru r a l families and seniors who are l i v i n g i n FmHA-funded projects, and whose adjusted annual income i s less than $10,000.24 FmHA also has an active section 502 Homeownership and Rehabilitation Loan Program which provides loans to i n d i -viduals "of low and moderate income to buy, b u i l d , or repair a home. It i s one of the most active i n rur a l areas. 21 The FmHA i s also involved to a small degree with self-help housing. This program i s f a i r l y recent and i t i s often l e f t to the whims of the lo c a l FmHA administrator whether to implement i t or not. F i n a l l y , the sel f - h e l p approach to housing i s u t i l i z e d to a much greater extent by FmHA than by HUD. Farmers Home Administration not only allows the borrower to u t i l i z e his own labor i n the construction of his house under certain circumstances, but since 1968, has had authority to provide technical assistance grants to non-p r o f i t organizations to a s s i s t families i n using t h i s process on a cooperative basis. While the use of self- h e l p i n combination with FHA insured mortgages i s possible, i t i s rar e l y done, and only recently has HUD begun to use i t s own technical assistance grants for self - h e l p sponsors.25 In the US, HUD i s a c t i v e l y involved with r u r a l housing. The Section 8 rental subsidy program i s active i n many small r u r a l towns that have housing authorities to administer the programs. Also, many small towns have HUD public housing units (often seniors only) and the many farm-worker housing programs are active i n ru r a l areas where large numbers of farmworkers l i v e . In the US, the Small Cit y Block Grant Program often r e s u l t s i n s i g n i f i c a n t funds being designated for housing r e h a b i l i t a t i o n . There are many federal l e v e l programs that attempt to address the rur a l housing problem i n the US. Veterans Administration (VA) i s frequently involved i n the financing of homes. The Administrator of Veterans A f f a i r s i s authorized to designate q u a l i f y i n g r u r a l areas, small c i t i e s , and towns as "housing c r e d i t shortage" areas and make d i r e c t loans to these areas from the di r e c t loan revolving fund i f he finds that private c r e d i t i s not generally available for making guaranteed loans.26 While there are a variety of programs meant to address the r u r a l housing s i t u a t i o n , the need i s not being met and many lpw-income families wishing to own a home or receive a rent subsidy are unable to benefit from the e x i s t ing programs. The subsidy programs have long waiting l i s t s 0E0 makes a strong statement regarding the impact of US government programs upon the r u r a l housing s i t u a t i o n . In reviewing the orig i n s and evolution of Federal housing assistance, we fi n d a history of neglect, hypocracy, and f a i l u r e . When a Federal housing policy was established i n t h i s country i n the 1930's nearly 50 years l a t e r than many Western European nations, our i n i t i a l e f f o r t s were t a i l o r e d more to the interests and requirements of the private housing industry (bankers, builders, and labor), than to the needs of people.27 The Canadian programs have followed a si m i l a r housing financing to housing subsidy course. -CMHC i s active i n cooperative and public housing, e s p e c i a l l y i n provinces l i k e Ontario where the province i s committed to low-cost housing. There are a wide variety of housing subsidy and loan programs i n Canada as well. The Native Housing Program can involve a subsidy as high as $90,000 2 8 over the l i f e of the loan. Self-Help i s s t i l l not acceptable although recently the Log Home Industry has been successful i n lobbying CMHC for greater acceptance of t h e i r product. One of the most active r u r a l ownership programs i n Canada i s the Rural and Native Housing Program. The o r i g i n a l program was designed as a joint r province/federal program to provide homeownership opportunities for people of Indian ancestry located i n remote areas. Since 1965 special agreements had been entered into. . . . Occupancy charges would be based on a rent to income scale and ownership would be earned over 15 years. . . . There were not s i g n i f i c a n t numbers of units produced r e l a t i v e to the need.29 In 1974 the program was expanded with a goal of 50,000 units to be produced over a five-year period. Of these, 20,000 were to be designated for non-Native low-income fam i l i e s . The year 1978 brought f i s c a l r e s t r a i n t and budget l i m i t s . Currently the Rural and Native Housing Program operates i n conjunction with several other r u r a l housing programs including the Rural Rehabilitation Assistance Program (RRAP) and the Emergency Repair Program (ERP), where loans and subsidy assistance are made for home improvement of seriously inadequate housing. There are several rental assistance programs that are available throughout Canada. The Section 40 and 44 public housing programs provide needed subsidized rental shelter for thousands of Canadians. Over 7,897 units in B r i t i s h Columbia and nearly 200,000 units throughout Canada (1950-1982) have been subsidized. An additional (1950-1982) 24,308 units throughout Canada are subsidized by Section 44(l)a, Rent Supplement Program. The most common current new rental housing constructed with CMHC loan/subsidy i s the Nonprofit and 24 Cooperative housing programs Sections 15.1/34.18 and 56.1. The 56.1 program provides contributions to public and private nonprofit corporations and cooperatives which operate rental housing programs for low-/moderate-iricome families/seniors. Under sections 15.1 and 34.18 loans for 100 percent of lending value at subsidized i n t e r e s t rates were extended to nonprofit organizations formed exclusively for charitable purposes, p r o v i n c i a l l y or municipally owned nonprofit and cooperative corporations.30 Section 56.1 i s the current program that accounts for a majority of the s o c i a l housing programs allocated i n 1983. This program provides contributions to public and private nonprofit cooperatives which operate rental housing projects for low-/moderate-ihcome families. "Up to 100 percent of the approved c a p i t a l costs of a project are financed by private lenders, . . . The assistance i s i n i t i a l l y used to bridge the gap between economic rent and market 4. -.31 rent." Rental subsidy i s the primary form of housing assistance i n Canada today, although d i r e c t involvement and lending are currently occurring s t i l l under Section 40, Rural and Native Housing Program, and to a limited degree under Section 40/44, Public Housing. The s i t u a t i o n continues to change and budget r e s t r a i n t s and l i m i t s have been placed recently on many programs. Canadian and US programs are d i f f e r e n t , yet the current s i t u a t i o n i s s i m i l a r . They both began with large-scale mortgage insurance to encourage housing supply, 25 moved to massive p u b l i c l y constructed and susidized housing, and then turned to rental (privately constructed and owned) assistance as the primary form of housing assistance. Many rur a l areas normally slow to adjust are currently s t i l l looking at public housing and home purchase loan programs as t h e i r major s o c i a l housing programs. Rental assistance i s just beginning i n many small towns or rural areas. Some housing authorities i n the US s t i l l prefer to build new housing units rather than subsidize e x i s t i n g rural rentals which are often older and i n poor repair. In some rural towns the Housing Authority managed public housing units are the only decent apartments in town. For t h i s reason both Canada and the US have maintained public housing programs for use i n r u r a l and remote areas. Conclusion and Government Obstacles This section has already touched on many of the housing problems faced i n rural areas. The r u r a l s i t u a t i o n i s d i f f e r e n t i n character and population than the urban housing s i t u a t i o n . Market Factors The rural market i s characterized by greater numbers of older housing, poorly maintained units that are not as r e a d i l y replaced by commercial or i n d u s t r i a l structures. Land prices i n small towns and r u r a l areas r i s e slowly; thus, neighborhoods established decades ago often remain unchanged. Rural areas also lack the major development interests that provide much suburban housing developments. Apartments and multi-unit developments are less common in r u r a l areas as raw land plus a "shack" or mobile home i s perceived as more desirable and i s usually available at an affordable rental or ownership rate. The housing s i t u a t i o n i s d i s t i n c t in r u r a l areas, the problems are d i f f e r e n t , and so are the governmental approaches to these problems. Financial Factors The financing of a l l types of homeownership i s of major concern to the potential home buyer. The loan requirements and "small town" bank orientation often are major obstacles to the less affluent potential home purchase Small town banks are less l i k e l y to r i s k loss i n the home mortgage f i e l d . There are not the many financing choices available to a potential r u r a l home buyer as there may be only one or two f i n a n c i a l i n s t i t u t i o n s conducting home mortgage business i n the rur a l area. Rural building i s considered a greater r i s k , e s p e c i a l l y i n areas that are dependent on a few key industries that may close down or move th e i r businesses (and employment opportunities) e l s e -where. The banks perceive the r u r a l housing market as a greater r i s k i n many areas much l i k e the "red l i n i n g " approach taken by some "urban" banks that designate certain less desirable i n n e r c i t y neighborhoods as unmortgageable. 27 Governmental Factors The r u r a l housing s i t u a t i o n and population are d i s t i n c t from t h e i r urban counterparts; thus, the govern-mental housing approaches are equally d i s t i n c t . Many of these approaches r e f l e c t similar concerns of the banker. Few genuine low-income families have access to HUD or FmHA homeownership programs i n the US. The r i s k i s perceived to be too great. The two programs currently producing the most housing, 235 and 236, are reaching r e l a t i v e l y few low-income fam i l i e s . . . . Low-income borrowers under FmHA1s 502 program fared l i t t l e better (11.5 percent had incomes of less than $4,000) (current poverty line).32 Most of the major c r i t i c i s m s regarding the US government programs involve t h e i r i n a c c e s s i b i l i t y to the poor.. Most HUD and FmHA programs aid the "moderate- and middle-income" home purchaser but not those needing aid the most. In reviewing the origins and evolution of Federal Housing Assistance, we fin d a history of neglect, hypocracy, and f a i l u r e . . . . Our i n i t i a l e f f o r t s were t a i l o r e d more to the interests and requirements of the private housing industry (bankers, builders, and labor) than to the needs of people. . . . A public housing e f f o r t was started l a t e , was of secondary importance, was subjected to the c r i p p l i n g influence of l o c a l i n i t i a t i v e , and has been deprived of s u f f i c i e n t funds and resources.3 Although t h i s section applies to the US and was written several years ago, the same si t u a t i o n occurs today. Most home purchase HUD or FmHA programs do not reach the lower-income groups and public housing, rent subsidy, and housing r e h a b i l i t a t i o n programs are s i g n i f i c a n t l y 28 underfunded, with lengthy waiting l i s t s . Income support/ rental assistance i s costly and i n times of rapidly r i s i n g rents and housing costs i t i s d i f f i c u l t to predict anything but cutbacks. The CMHC annual 1982 report indicates that while CMHC loans have dropped from a high of $800 m i l l i o n i n 1975 to less than $150 m i l l i o n i n 1982, subsidies have rise n from $100 m i l l i o n to $600 m i l l i o n . The CMHC data also indicate that i n the l a s t two years there has been a marked decrease i n the number of new units subsidized, yet subsidies (predominantly e x i s t i n g units) have ris e n from $300 m i l l i o n in 1980 to over $600 m i l l i o n i n 1982. 3 4 A similar s i t u a t i o n has occurred with the US rental assistance programs, yet the p o l i t i c a l climate has resulted in fewer units being subsidized as well as the a l t e r i n g of income requirements. This has resulted i n fewer people q u a l i f y i n g for assistance and a greater percentage of the incomes of the poor being used for housing. Even with cut-backs, the section 8 rent subsidy program i s one of the largest housing budget items and i s growing fast as market housing costs continue to r i s e i n many areas. Two FmHA programs that o f f e r greater a c c e s s i b i l i t y to the poor are the Self-Help Program and the Farm Labor Housing Program. Program cuts have occurred i n both. "The most generally useful housing program i n rur a l areas i s that of the Farmers Home Administration (FmHA) but i t s use-fulness i n housing r e a l l y poor people i s largely r e s t r i c t e d 35 to s e l f - h e l p and the farm labor housing program." 29 Both programs are r e l a t i v e l y small and considerably underfunded with regard to the need. Although s t a t i s t i c s show that- HUD does make loans to some owner-builders, there i s no large-scale owner-builder program or policy . Formally, CMHC also shys away from owner-building, although the Rural and Native Housing Program does involve l o c a l c r a f t s -persons. The fact that the low-income home purchase market i s dominated by the mobile home i s well known. Mobile homes have flourished i n rur a l areas. Mobile homes are currently f i l l i n g a serious housing need for the less a f f l u e n t r u r a l resident. Some regard t h i s as a necessary and desirable housing al t e r n a t i v e , while others question why other low-cost options such as "s h e l l houses" which are completed by an owner-builder are not successful. As long as the provision of c r e d i t i s geared more to ; the security and interests of private investors than to the needs of consumers, and as long as the p r e v a i l -ing attitudes hold that families should be denied access to minimally adequate shelter u n t i l they have the capacity to purchase completely f u l l y standard homes by middle-class values, i t i s unlikely that the sh e l l house model w i l l be adopted. . . . . . . Zooming sales of t r a i l e r s does not represent public acceptance or s a t i s f a c t i o n , i n most cases, but a simple lack of a better alternative.36 This l a s t statement r e f l e c t s the b e l i e f and judgment of many i n the housing f i e l d . Are mobile homes successful due to t h e i r appeal as one of many alternatives i n rural areas or are they often the only low-cost al t e r n a t i v e available to the less affluent rural home purchaser? This thesis w i l l examine t h i s question and many others i n an attempt to evaluate and understand the ru r a l housing s i t u a t i o n , and the many obstacles to free choice of new housing options for the less affluent home builder-buyer. 31 Notes U.S. Department of Housing and Urban Development, Report of the Task Force on Rural and Ndn Metropolitan  Areas (Washington, D.C.: Government Printing O f f i c e , July 1978), p. 2. 2 Ibid., p. 6. 3 U.S. Department of Agriculture, Economic Research Service, Status of Rural Housing in the United States, by Ronald Byrd, Beverly Lucia, and Ann Simmons (Washington, D.C.: Government Prin t i n g O f f i c e , 1968), p. i i i . 4 Michael Dennis and Susan Fish, Programs i n Search  of Policy Low Income Housing i n Canada (Toronto, Ontario: Hukkert, 1972), p. 3. 5 U.S. Of f i c e of Economic Opportunity and Rural Housing, A Report on OEO's Rural Housing A c t i v i t i e s and  Achievements, as Indicated by Study of Five Selected Rural  Housing Development Corporations (Washington, D.C.: Govern-ment Printing O f f i c e , n.d.), p. 23. John F. C. Turner and Robert Fichter, eds., Freedom  to Build, Dweller Control of the Housing Process (New York: Macmillan, 1972), p. 3. 7 U.S. Department of Housing and Urban Development, p. 11. 8 U.S. Department of Housing and Urban Development, Developmental Needs of Small C i t i e s , by P a t r i c i a Harris (Washington, D.C.: Government Printing O f f i c e , n.d.), p. 14. 9 Bert Swanson and Richmond Cohen, The Small Town i n  America--A Guide for Study and Community Development (Rensselaerville, N.Y.: The Institute on Man and Science, 1976), p. 12. ^U.S. Department of Housing and Urban Development, Developmental Needs, p. 26. ^Swanson and Cohen, p. 11. 12 Mohammad Qadeer, "Issues and Approaches of Rural Community Planning i n Canada," Plan Canada 19 (June 1979): 109. 1 3 I b i d . , p. 106. 32 14 Lawrence Houston, "The New Non-Metropolitan Growth: Where Do Blue C o l l a r Residents F i t In?" Small Town 2 (March/April 1977). 15 Swanson and Cohen, p. 26. 16 U.S. Department of Housing and Urban Development, Report of the Task Force, p. 6. 17 Turner and Fichter, p. 174. 18 U.S. Office of Economic Opportunity and Rural Housing, p. 162. 19 Turner and Fichter, p. 31. 20 U.S. Department of Agriculture, p. 8. 21 U.S. Office of Economic Opportunity and Rural Housing, p. 40. 2 2 I b i d . , p. 43. 23 U.S. Department of Agriculture, p. 9. 24 Kim Herman, Nina Gutierrez, and Carole Hammond, Housing Resource Handbook (Spokane: Washington C o a l i t i o n for Rural Housing, 1980), p. 9. 25 U.S. Office of Economic Opportunity and Rural Housing, p. 47. 2 6 U.S. Department of Agriculture, p. 8. 27 U.S. Of f i c e of Economic Opportunity and Rural Housing, p. 53. 28 Interview with David Hedman, University of B r i t i s h Columbia, Vancouver, B.C., 1981. 29 Canada Mortgage and Housing Corporation, unpub-lished data, n.d. 3 0 I b i d , p. 18. 31 Ibid., p. 26 . 3 2 U.S. Office of Economic Opportunity and Rural Housing, p. 53. 33 - " i b i d . 33 3 4Canada Mortgage and Housing Corporation, unpub-lished data, n.d. 35 U.S. Of f i c e of Economic Opportunity and Rural Housing, p. 166. 3 6 I b i d . , p. 196. t CHAPTER II THE MOBILE HOME Whether they are c a l l e d "trailershacks" (by c r i t i c s ) or "mobile homes" (by the industry), the fastest growing component of the nation's housing stock i s represented by units that are b u i l t on wheels, towed to a s i t e , and then more-or-less permanently i n s t a l l e d there. . . . . . . Mobile homes are often regarded as a major housing resource for the lower income people and i t i s c e r t a i n l y true that they dominate the market for new shelter at the lower end of the price scale.1 Mobile homes dot the countryside throughout the P a c i f i c Northwest. The industry i s growing rapidly and has experienced widespread success throughout Washington and B r i t i s h Columbia. To some, thi s widespread success of the mobile home i s a menace and threat to the country l i f e status quo, while to others i t i s an answer to t h e i r dream for a single-family home and a p r a c t i c a l lower-cost housing option. A Successful Low-Cost Housing Option Regardless of whether one considers mobile homes the f u l f i l l m e n t of a dream or a nightmare they are currently helping to meet a c r i t i c a l housing need i n r u r a l areas. For several years, there has been an enormous gap i n what rur a l families need and want i n a house and what i s available in t h e i r price range. The mobile home has helped f i l l t h i s gap i n both Canada and the US. 35 The federal government and the t r a d i t i o n a l housing industry have been unable to f i l l our country's need for low and moderate priced housing. The mobile home industry i s proud of i t s e f f o r t s to help meet that need and to a degree i t s pride i s j u s t i f i e d . 2 The p r i n c i p a l thesis of thi s study i s that socioeconomic and i n s t i t u t i o n a l systems i n force to protect the American ideal of a " t r a d i t i o n a l home" limited the kind of housing produced which created a void were accommodated e f f e c t i v e l y by the mobile home industry.3 Although the mobile home may not look exactly l i k e a " t r a d i t i o n a l home," i t offers privacy and a chance to have a yard i f i t i s placed on a ru r a l l o t (see Figure 1). In a 1977 housing survey taken of Washington State residents, i t was noted that the mobile home on a l o t was a more highly desired from of housing than a townhouse, apartment, or mobile home on a rented space. It seems that people wanted to l i v e i n a single-family home, and had l i t t l e i n t e r e s t i n l i v i n g i n a multi-unit dwelling or i n a mobile home on a rented space i n a mobile home park. . . . While the single-family home was c l e a r l y the most preferred type of housing, some consid-eration was also given to any type of home having some kind of yard or l o t that i s also owned. Thus, yard ownership seems to be very important to people. . . . Since a large number of people i n our sample wanted to move into better housing, i t i s important to look at the types of homes they prefer. Respondents were asked to select one of seven kinds of housing that i s owned . . . buying a mobile home on a l o t you also buy was preferred by 17%.4 In spite of i t s possible nontraditional looks, the mobile home i s an acceptable option to the single-family home when i t i s placed on a private l o t . Rabb described her impression of the physical differences between a mobile home and the t r a d i t i o n a l home. Mobile Homes are also rectangular i n shape but they lack most of the d e t a i l s that are associated with 36 Figure 1. Typical Mobile Home on Rural Lot in B r i t i s h Columbia 37 a "home." Roofs generally have a shallow pitch or are f l a t , and most are made of aluminum or other metal, as i s the siding. Windows and doors are usually small are rarely have even fake shutters (also of aluminum) . . . the proportion of length to width i n a single-wide makes i t look l i k e a shoe box.5 While the industry may take objection to t h e i r homes described as looking l i k e shoe boxes, Rabb's descrip-t i o n i s quite accurate of the mobile home industry as i t has been i n the past and i s commonly perceived today. Changes have taken place i n the industry e s p e c i a l l y with regard to design and material, and many mobile homes today look much l i k e the " t r a d i t i o n a l home" (Figure 2). Mobile homes have almost replaced the loca l contrac-tor i n many areas, as few can afford a custom s t i c k - b u i l t home. Now mobile homes and factory k i t s which often eliminate the need for a contractor dominate the new home market i n rura l areas. For more than 250 years, the king of U.S. housing has been the f r i e n d l y neighborhood l o c a l builder and contractor who has put up nearly a l l new single-family houses i n the country. His product i s c a l l e d the st i c k b u i l t house. In the past v i r t u a l l y his only competitor was the do i t yourself American pioneer who put up his own houses, from log cabins to Cape Cod bungalows.6 The l o c a l contractor cannot build homes for those who cannot afford t h e i r high custom prices. Not everyone can b u i l d a home from scratch. Financing and the knowledge of home building techniques have always been major obstacles to the popularity of t h i s s e l f - h e l p option. The mobile home grew because i t was less expensive and i n many ways less regulated than other forms of housing. It was treated Figure 2. "Traditional Home" Mobile in C a l i f o r n i a 39 d i f f e r e n t l y than a " r e a l house" by f i n a n c i a l and g o v e r n -mental i n s t i t u t i o n s . C l a s s i f i e d as a v e h i c l e , f o r c e d i n t o s e g r e g a t e d o r unzoned a r e a s , f i n a n c e d d i f f e r e n t l y , and p e r c e i v e d d i f f e r e n t l y , t h e m o b i l e home grew o u t s i d e of the c o n v e n t i o n a l h o u s i n g market ( F i g u r e 3). My t h e s i s i s t h a t because m o b i l e homes were i g n o r e d by t h e c o n v e n t i o n a l h o u s i n g i n s t i t u t i o n s which d i d n o t acknowledge t h e m o b i l e u n i t as a form of h o u s i n g , m o b i l e i n d u s t r i a l i z e d h o u s i n g was pushed f o r w a r d i n a market t h a t d e v e l o p e d o u t s i d e the i n s t i t u t i o n a l network and t h e m o b i l e home i n d u s t r y c a p i t a l i z e d on t h e advan-t a g e s i t o b t a i n e d from t h i s l a c k of i n s t i t u t i o n a l c o n t r o l . . . . By comparing the m o b i l e home u n i t w i t h the i n s t i t u t i o n a l i z e d u n i t on t h e c o n v e n t i o n a l market, the p r e f a b r i c a t e d home, i t can b e t t e r be seen how t h e m o b i l e home u n i t has g a i n e d an advantage. M o b i l e i n d u s t r i a l i z e d u n i t s have made g a i n s i n t h e h o u s i n g market. . . . P r e f a b r i c a t e d h o u s i n g , on t h e o t h e r hand, i s s t i l l not a dynamic i n d i v i d u a l p r o d u c t . . . . . .• . Lack o f acknowledgement o f t h e m o b i l e u n i t w i t h i n t h e i n s t i t u t i o n a l network o f t h e h o u s i n g market has f o s t e r e d t h e consumption of t h i s u n i t o u t s i d e the c o n v e n t i o n a l h o u s i n g market. . . . The m o b i l e i n d u s t r i -a l i z e d u n i t , by f a l l i n g out o f t h e range of i n s t i t u -t i o n a l j u r i s d i c t i o n c o n t r o l l i n g t h e h o u s i n g market, was put i n a p o s i t i v e p o s i t i o n w h i l e o t h e r i n d u s t r i a l i z e d h o u s i n g b e i n g produced w i t h i n t h e l i m i t s of t h e market, was a f f e c t e d n e g a t i v e l y . 7 G e n e r a l C h a r a c t e r i s t i c s of  M o b i l e Homes M o b i l e home means a v e h i c u l a r p o r t a b l e s t r u c t u r e b u i l t on a c h a s i s , d e s i g n e d t o be used w i t h o r w i t h o u t permanent f o u n d a t i o n as a d w e l l i n g when connected t o i n d i c a t e d u t i l i t i e s . 8 The N a t i o n a l A s s o c i a t i o n of B u i l d i n g M a n u f a c t u r e r s (NABM) d e f i n e s t h e t h r e e forms o f manufactured h o u s i n g as f o l lows::: M o b i l e Homes: F a c t o r y - a s s e m b l e d non-permanent s t r u c t u r e s u s u a l l y 8' t o 14' i n w i d t h and 32" or more i n l e n g t h b u i l t on a c h a s i s f o r h a u l i n g t o a s i t e where i t need n ot comply w i t h t h e p r e v a i l i n g b u i l d i n g code. U s u a l l y f i n a n c e d as c h a t t e l p r o p e r t y , t a x e d as a v e h i c l e or p e r s o n a l p r o p e r t y . 9 40 41 While mobile homes share many common c h a r a c t e r i s t i c s , they come i n many shapes and sizes. The two major d i s t i n c -t i v e types of units are the single and double wide. Double wides, which usually look more l i k e a conventional house, have grown dramatically i n popularity over the l a s t few years but the single wide unit s t i l l commands almost half of the market i n Washington State. Washington has a steady consumption of MH units, though in recent years there has been a decrease i n units produced i n the state. There are 2 headquarters and 7 plants i n the state. . . . In 1979 11,038 units were shipped to the state of which only 45% were single wide. . . . Washington produces between 25-33% of the units i t consumes.10 In addition to the standard double or single wide unit, there are many "expandable" units which enlarge rooms and may improve the appearance. "Perhaps the one way to make the exterior more cl o s e l y resemble a t r a d i t i o n a l home i s to use a tip-out, s l i d e out, or tag unit which w i l l break up the box l i k e appearance of the unit while adding additional .,11 space. Mobile homes also d i f f e r i n the quality and type of materials used i n t h e i r construction. "House-like" wood exterior siding instead of aluminum i s becoming increasingly popular. Some mobile home dealers are o f f e r i n g two-story mobile homes which look much l i k e a pre-cut vacation home (Figure 4). The mobile home can be just about any type house that i s factory b u i l t and on wheels. Many s t i l l look as they did twenty years ago but consumer demand and new technology have resulted i n major changes i n materials Figure 4. Vacation Mobile Home from Lot Near Yreka, C a l i f o r n i a 43 and design. The mobile home s t i l l must meet certain requirements and these requirements may determine i t s nature and ove r a l l appearance. The mobile home has become a well-established housing option i n both urban and rural areas. No longer i s i t true that mobile home owners are primarily migrants, seniors, or young married. Many families are selecting the mobile home as th e i r permanent home. A .large spectrum of the population i n a l l income levels chooses to l i v e i n mobile homes today, and some would not consider l i v i n g i n anything else. The mobile home i s most common i n ru r a l areas. Considering i t s r e l a t i v e l y new appearance as a permanent form of housing, i t accounts for a growing portion of the existing housing stock i n rural North America. The 1980 census data indicates the mobile home as a substantial type of housing i n ru r a l America and as not uncommon i n urban areas (see Table 1). While mobile homes account for greater than 1 i n 30 existing housing units i n urban areas, they account for almost 1 i n 9 i n ru r a l areas. When examining recent housing a c t i v i t y , the mobile home accounts for a much larger percentage of the new housing market. The 1980 s t a t i s t i c a l yearbook indicates that there were 221,565 mobile home shipments i n 1980 (see Table 2). From Table 2 s t a t i s t i c s i n d icating new housing a c t i v i t y i n the US, i t i s clear that the mobile home i s increasing i t s share of the new housing 44 TABLE 1 TOTAL EXISTING HOUSING UNITS IN US (1980) Total Total Total Housing Urban Rural A l l Types 86,692,823 64,636,819 22,056,004 Mobile Homes 4,322,570 1,703,207 2,619,363 Source: U.S. Department of Housing and Urban Develop-ment, Office.of Policy: Development and R e s e a r c h D i v i s i o n of Housing and Demographic Analysis, 19 80 National Housing Pro-duction Report (Washington, D.C.: Government Printing O f f i c e , February 1980 ) . TABLE 2 MOBILE HOME SHIPMENTS AND HOUSING STARTS (US) 1980 1979 1978 1977 Mobile Home Shipments 221,565 .'277 , 372 275,372 267,289 % Mobile of Market (17%) (16%) (12%) (13%) Total Private Housing Starts 1,292,000 1,745,000 2,202,000 1,987,000 Source: U.S. Department of Housing and Urban Develop-ment, Office of Policy Development and Research, Division of Housing and Demographic Analysis, 1980 National Housing Pro-duction Report (Washington, D.C.: Government Printing O f f i c e , February 1980). 45 market each year. The majority of these new units are going to nonurban areas. The success of the mobile home option i s well known. It did not begin as a well-established popular 'housing option. There have been many s t r u c t u r a l , i n d u s t r i a l , and i n s t i t u t i o n a l changes over the years. Development of the Mobile Home The e a r l i e s t trace of mobile home existence goes i back to before the 1930s when tr a v e l t r a i l e r s f i r s t came on the market. The f i r s t few were made to be pulled behind the family car and had no bathing f a c i l i t i e s or f u l l conveniences. Soon the demand shi f t e d to another market-transient workers, whose numbers grew during the depression. Various economic and s o c i a l changes contributed to an increase i n the demand for mobile housing during the period 1930 to 1940. More leis u r e time, longer vaca-tions, and an increasing desire to t r a v e l on the part of a l l economic groups were factors responsible for a widening use of mobile homes. . . . Mobile homes helped solve the housing problem for a large number of salesmen, entertainers, construction workers, farmhands, and other seasonal laborers, most of whom were engaged i n occupations which necessitated t h e i r moving frequently from one part of the country to another. During the 1930's, the depression forced many families into a nomadic way of l i f e as they sought employment opportuni-t i e s i n other geographic areas of the country.12 The industry grew at a steady pace with the recreation enthusiasts and transient workers purchasing the bulk of the t r a i l e r s . The use of the mobile home as a permanent dwelling began during the war years when housing became c r i t i c a l , e s p e c i a l l y i n the defense industry areas. In the US, the federal government purchased large numbers 46 of mobile homes and there were few sales available to the general public. By 1943, more than 60 percent of the nation's 200,000 mobile homes were in defense areas; the National Housing Agency had purchased 35,000 of t h i s t o t a l . There were no sales to the general public because private sales had been forbidden by executive order. As the wartime demand for mobile homes increased, the demand for c r i t i c a l materials also increased.13 Unfortunately, the war took the quality out of most housing as shortages of material plagued the industry (Figure 5). E s p e c i a l l y hard h i t was the mobile home industry, which required more metal than conventional housing. As a r e s u l t , the mobile home industry substituted wood chasis for s t e e l , took t i r e s off and put them in a pool for workers who were to move to other war plants, cut e l e c t r i c a l wiring to one fourth, replaced plywood with substitutes, and took canvas off the roof. . . . As a r e s u l t of these low construction standards, the wartime mobile home was c l e a r l y a substandard dwelling unit.14 The postwar years saw an escalation of the housing c r i s i s . The mobile homes again became available to the general public and the industry began to grow. But the "temporary housing" use continued through the postwar years and escalated dramatically i n the 1950s. The market grew i n two d i s t i n c t d i r e c t i o n s . The t r a v e l t r a i l e r market, which had always dominated the mobile home sales, was soon replaced by the temporary housing market. Soon i t was discovered that the larger t r a i l e r s could not only provide a form of transient accommodation but also a more economical form of housing than renting or owning a conventional dwelling. So, i n the 1950's, people i n the United States began increasingly to l i v e i n t r a i l e r s for f i n a n c i a l rather than mobility reasons.15 48 The composition of the immediate postwar mobile home market through 1950 was vastly d i f f e r e n t from that which existed p r i o r to the war. In 1937 the vacation market dominated mobile home sales. By 1950 the smaller t r a v e l t r a i l e r units were dominating the vacation market, s a t i s f y i n g the demand for mobile l i v i n g accommodations for recreational purposes. Another r a d i c a l change by 1950 was the need for temporary housing, which accounted for 45 percent of mobile home sales. Prior to World War II thi s market was v i r t u a l l y nonexistent.16 Throughout the next decade the size of the units grew. Highway improvements and new laws regarding mobile homes made wider units possible. Mobile home "parks" began to develop and an entire new l i f e - s t y l e began. Mobile home units have been steadily increasing i n size since they f i r s t appeared on the market. . . . In 1954 the industry introduced the 10-wide model to consumers and by 1969 i t accounted for 98 percent of production. . . . In the year 1962, the 12-wide mobile home was introduced by the industry manufacturers. . . . The 14-wide mobile home came into mass production > during 1979 and accounted for 2.3 percent of t o t a l shipments.I 7 As the units grew larger and technological advances resulted i n str u c t u r a l improvements, i t became necessary for the industry to develop a common set of standards i n order to protect and improve i t s reputation. Many small manufac-turers went under due to the changes and technological advances which required large c a p i t a l expenditures i n machinery and to o l i n g . The industry became concentrated into the hands of a few. In the mid 1930's, the industry consisted primarily of numerous small marginal producers. As previously stated, no accurate figures were maintained, but estimates range from 300 to 2,000 manufacturers i n the industry. . . . As early as 1960, F. A. Boynton stated: "It i s obvious that the mobile home industry i s now entering an e n t i r e l y new phase." This phase has been 49 aptly coined, "The Era of the Big Few." . . . In 1968, the ten largest mobile home manufacturers i n unit sales accounted for 43.3% of the t o t a l market.18 During the 1970s, many new materials came on the scene. The focus was on developing a more t r a d i t i o n a l "home-like" appearance (Figure 6). Many expandable units h i t the market and wood siding and synthetic rock or brick facing became s t y l i s h . False shutters, changes i n window, size and location, and even a few two-story "cabin-style" mobile homes arrived on the market. The focus was not only on design but also on the entire mobile home l i f e -s t y l e . Low maintenance park l i v i n g and an easy-going l i f e - s t y l e became the p r i o r i t i e s . Golf course mobile home retirement v i l l a g e s , community buildings, common swimming pools, and tennis courts added to the mobile home park image. Major park improvements occurred during the 1970s and the demand for double wides and expandables grew. The consumers demanded better parks as well and higher quality units, and for the most part they got what they demanded. Four s i g n i f i c a n t trends are currently taking place in the housing industry. . . . Consumers are no longer emphasizing that the p r i n c i p a l decision to make when purchasing a home i s as to the basic unit i t s e l f . They are, instead, emphasizing the t o t a l environment, that i s the entire community with i t s f a c i l i t i e s , atmosphere, qua l i t y of neighbors, and even i t s proximity to other communities.19 In observing the changes that have taken place within the industry i t s e l f , and i n the mobile home units, i t i s indicated that the increase i n size of units, the lack of increase i n cost of units, the more a l l -i n c l u s i v e packages, the development of national stan-dards, and the development of better parks have contributed to the a t t r a c t i o n that the product has for the consumer.20 Figure 6. Modern Mobile Home with Newer Trad i t i o n a l Materials Example from C a l i f o r n i a 51 Drury discusses the two future paths she saw for the mobile home industry. To t h i s writer there seem to< be- two paths the industry can take. F i r s t , i t can continue to move along the path of producing larger and larger units and aim for approval i n the conventional housing market. If the industry follows t h i s path i t i s quite l i k e l y that i n the future the mobile unit, i n the form we know i t today, w i l l disappear as a distinguishable form of housing. .. . . Once i t i s indistinguishable from other housing i t w i l l come under the controls i n the housing market and w i l l lose i t s advantage. . . . The second path that can be taken i n the future, assuming that the c l a s s i f i c a t i o n remains constant, i s to continue producing a unit that can be defined as a vehicle. . . . Following t h i s second path i t might be possible for the development i n the United States of a major i n d u s t r i -a l i z e d housing industry.21 At the current time, the industry appears to be going not i n one d i r e c t i o n but going both ways. There i s a strong trend toward the mobile home becoming more l i k e a t r a d i t i o n a l home with acceptance on a r u r a l l o t , but at the same time, the very inexpensive single wide units s t i l l predominate i n many small town mobile home "parks" and on small r u r a l l o t s . Advantages Mobile homes have several advantages over conven-t i o n a l housing. They are cheaper to purchase, guaranteed s t r u c t u r a l l y sound, easy to set up, and convenient to select i n that they are marketed off a l o t . They have low maintenance costs and i n the US the vehicle i d e n t i f i c a t i o n often exempts them from some taxes. The park l i f e - s t y l e i s desirable to many, esp e c i a l l y r e t i r e d people who may need the s o c i a l a c t i v i t i e s and recreational f a c i l i t i e s . 52 To s t i l l others, the mobile home may simply be the only alternative a v a i l a b l e . Cost When one asks an individual mobile home owner, why he selected t h i s option, the most common response i s low cost. Between 1970 and 1979 the median price for a new single-family home increased from $23,400 to $71,000 and continues upward. To t h i s increased purchase price i s added the increasing f i n a n c i a l burden of higher mortgage rates and energy costs. Thus the cost of purchasing and l i v i n g i n a house has escalated beyond the f i n a n c i a l means of many low- to moderate-income would be homeowners.22 The cost factor has been an issue of great debate. Certainly the i n i t i a l cost i s less but i n the long run, when appreciation i s entered into the calculations, the figures are not as c l e a r l y favorable. Mobile home ownership does not confer long-term economic benefits as compared to ownership of a single detached or condominium unit, since the mobile home depreciates i n value rather than appreciating.23 Recent trends show that mobile homes no longer depreciate as i n f l a t i o n has pushed up the value of a l l housing dramatically. Appreciation seems to be strongly linked to the land costs or s i t e of the mobile home park rather than to the q u a l i t y of the unit. Land costs i n r u r a l areas have increased rapidly in recent years and a mobile home on a r u r a l l o t may c l e a r l y be a better long-term investment than a condominium or townhouse in a small town. The factory process of building i s extremely 53 co s t - e f f e c t i v e , e s p e c i a l l y i n areas where weather affects construction. There i s simply no question that a good modern house can be made faster, better, and at a lower cost, under the weather-protecting roof of a modern house factory. That i s the only l o g i c a l way to make a house. Continuing to bui l d houses s t i c k by s t i c k , by hand, one at a time at each building s i t e , makes no more sense today than c a l l i n g on the horse and buggy to l i c k a big c i t y ' s rush-hour t r a f f i c snarls.24 Another c r i t i c i s m of cost comparison of mobile home costs and conventional home costs i s that the mobile homes frequently have various options and set-up costs that are not accounted for i n the comparisons. While added costs for options i s a concern, a major advantage of the mobile home i s fast delivery and instant set-up. "Lower cost, higher q u a l i t y , and faster delivery are just three of the advantages of a manufactured house, when i t i s compared with buying a conventional new house made by a 25 ' loc a l builder." National Standards of  Construction Mobile homes i n the US must comply with national building standards. This i s a major advantage i n case of acceptance by the buyer and the community. Individual homes pass inspection in 1 the factory and thus time-consuming l o c a l building inspections are not necessary. The purpose of building to acceptable standards was to ensure that the completed unit was safely designed, that adequate materials had been used and that health and safety hazards had been eliminated. By i n t e r n a l l y developing a set of national performance standards the industry i s capable of deli v e r i n g a mobile home unit 54 constructed by the same standards to any location in the United States. Such national standards are unique to the mobile home industry because other segments of the housing industry are plagued by varying l o c a l labor and code regulations.26 Marketing Marketing i s another major advantage unique to the mobile home. Dealers can s e l l several homes off the l o t . They are v i s i b l e and overhead i s low, while a conventional home builder must s e l l the house where i t stands or pay a large sum of money to have i t moved. Either way the cash outlay can be s i g n i f i c a n t . The practice of s e l l i n g mobile homes through dealer networks gives mobile homes a d i s t i n c t marketing advantage and benefits the potential home buyer. Tax Savings i n Some Areas In many places (US) mobile homes are c l a s s i f i e d as vehicles and taxed d i f f e r e n t l y than a t r a d i t i o n a l home. Changes are being made to equalize the tax share but i n most places, i n the US the mobile home s t i l l has a d i s t i n c t advantage. The units' vehicular d e f i n i t i o n has made i t immune to many r e s t r i c t i o n s and c o n t r o l s . . . Had i n s t i t u t i o n a l controls been exerted on the mobile home i t might well have been eliminated as have been most other innovative t o t a l l y i n d u s t r i a l i z e d housing units i n the past.27 This advantage i s changing as communities a l t e r t h e i r tax and regulations, but i t i s s t i l l a perceived advantage, e s p e c i a l l y i n retirement communities with large mobile home parks. 55 Increasingly, many individuals are selecting the park planned community for i t s l i f e - s t y l e advantages. This i s e s p e c i a l l y true i n "retirement" communities. The s o c i a l advantages are c l e a r l y a t t r a c t i v e to many people. Security, low maintenance, and close access to many f a c i l i -t i e s (golf course, pool, tennis courts) are a t t r a c t i v e to many i n d i v i d u a l s . Financing Financing for conventional homes i s d i f f i c u l t to obtain unless one's income i s over $25,000 US or $30,000 Canadian. One must usually also have a large down payment, yet because the i n i t i a l cost of. the mobile home i s low, the payments may be more f e a s i b l e . When bank or government financing aid i s not available for conventional homes, the mobile home may become the only lower-cost option i n r u r a l areas. They have also on occasion received the same status for federal or p r o v i n c i a l grants or loans. When a mobile home rests on a permanent foundation on private land i t i s treated as an ordinary house for the purposes of the annual home owner grant ($170 i n 1971) under the Provincial Home Owner Grant Act for the ($500 on an older house and $1,000 on a "new" house) under the P r o v i n c i a l Home Acquisition Act).28 Disadvantages Appreciation Mobile homes t r a d i t i o n a l l y have had a problem with depreciation, or the lack of appreciation, compared ;to other types of housing. This factor has caused many to c r i t i c i z e the acclaimed "low cost" advantage. Mobile 56 homes no longer seem to depreciate but some may argue that in times of r i s i n g housing costs they may f a i l to increase in value as rapidly as conventional housing. Appreciation of any house i s c r i t i c a l l y dependent on location. Thus, in rural areas where land prices are r i s i n g at a faster rate than building costs, the type of structure may not.be as c r i t i c a l as where the home i s located. This i s extremely true i n fast-growing areas or areas where growth r e s t r i c t i o n s , new zoning laws, or environmental regulations have recently taken e f f e c t . Mobile homes are the cheapest kind of home you can buy. You need fewer d o l l a r s to buy a mobile home, but i t s cost, i f extended for the l i f e of the home, may be higher than expected.2 9 More and more mobile homes, espe c i a l l y those located on permanent foundations i n a t t r a c t i v e settings, do not depreciate markedly.30 The fact that, mobile homes depreciate i s a very powerful ba r r i e r to industry growth. . . . Several conditions have contributed to the poor "appreciation" of mobile homes. H i s t o r i c a l l y , mobile homes were not placed on "owned land." In some cases, zoning r e s t r i c t i o n s have prevented mobile homes from being placed within neighborhoods which would allow for appreciation.31 Aesthetics and Appearance The c l a s s i c a l box-like exterior appearance of mobile homes has also been a problem and an obstacle to the growth and development of the mobile home market. The use of metal siding, porches, r a i l s , and other materials less common to other types of housing causes the mobile home to stand out as a d i s t i n c t i v e l y d i f f e r e n t home. This 57 has often worked to i t s disadvantage, esp e c i a l l y i n gaining acceptance i n ru r a l subdivisions. Though many are locked into the elongated "Pullman car" pattern, manufacturers are breaking out of t h i s monotony and of f e r i n g refreshingly new room layouts.32 Unfortunately, too many mobile homes are s t i l l losers in the looks department.33 Poor Regulation of Sales  Dealers Another major problem i s that of the dishonest fly-by-night dealer. It takes l i t t l e investment to become a mobile home dealer. Many do not know the business well. The wholesale and r e t a i l financing and s e l l i n g techniques of a mobile home dealer are similar to those of an automobile dealer. The mobile home dealer i s more independent, however, and his rela t i o n s h i p with the manufacturer i s not as close 'as that of the auto dealer with his manufacturer. Thus, the mobile home dealer operates with fewer merchandising, financing aids from the manufacturer, even though manufacturers furnish floor-plan financing i n some cases. Mobile home dealers are also " f l o o r planned" with banks and sales finance companies who usually advance to the dealer approxi-mately 90 to 100 per cent of the cost of each unit, including transportation costs.34 Unfortunately, the industry has always attracted a less desirable element of dealers due to the ease of getting into and out of the business. "The mobile home industry i s plagued with an unusually large number of f l y -by-night dealers, partly because i t i s an easy business to 35 enter and leave." The mobile home meets a c r i t i c a l housing need in many areas. It i s not without problems and disadvantages. Each individual must make a choice with regard to s p e c i f i c housing need. For many rural residents, the mobile home 58 meets a l l needs. It i s r e l a t i v e l y inexpensive, can be quickly set up, and provides the l i v i n g environment suitable for a variety of l i f e - s t y l e s . Although for some the*••mobile home meets a l l t h e i r housing needs and expectations, others consider i t a compromise. Few individuals are able to purchase the "house of th e i r dreams." Fianancial r e a l i t i e s usually prevent t o t a l "dream f u l f i l l m e n t . " While a mobile home cl e a r l y meets most i n d i v i d u a l s ' needs, i t may not meet everyone's desires. The industry has changed markedly i n recent years and addressed the issue of market preference and taste. Great improvements have occurred;in design and materials. These changes have made the mobile home desirable to a wider income range. The improvements i n appearance and structure have also gained the mobile home greater acceptance with the fi n a n c i a l and governmental i n s t i t u t i o n s . Loans for mobile homes are no longer as d i f f i c u l t to obtain. The i n i t i a l lower cost i s b e n e f i c i a l , e s p e c i a l l y during periods of high i n t e r e s t rates. A new modest-sized mobile home may cost as l i t t l e as $18,000. For many ru r a l residents with a rur a l l o t , the mobile home may c l e a r l y be the only fea s i b l e option,;regard-less of t h e i r personal choice, due to i t s low cost, a v a i l -a b i l i t y , and ease of financing. 59 Notes U.S. Office of Economic Opportunity and Rural Housing, A Report on OEO's Rural Housing A c t i v i t i e s and  Achievements, as Indicated by Study of Five Selected Rural  Housing Development Corporations (Washington, D.C.: Govern-ment Printing O f f i c e , n.d.), p. 94. 2 The Center for Auto Safety, Mobile Homes, the  Low Cost Housing Hoax (New York: Grossman, n.d.), p. x i i . 3 Margaret Drury, Mobile Homes—The Unrecognized Revolution i n American Housing (New York: Praeger, 1972), p. 11. 4 Kenneth Tremblay, J r . , Don Dillman, and Joyce Dillman, Housing S a t i s f a c t i o n and Preferences of Washington Residents, a 1977 Statewide Survey.(Bellingham: Washington State University, College of Agriculture Research Center, 1977), p. 11. 5 Judith Rabb and Bernard Rabb, Good Shelter, a  Guide to Mobile, Modular and Prefabricated Houses Including  Dome (New York: Quadrangle, 1975), p. 30. A.M. Watkins, The Complete Guide to Factory-Made  Housing (New York: E. P. Dutton, 1980), p. v i i . 7 Drury, p. 13 7. 8 Canada, The Report of an Inquiry Conducted for  the Government of the Province of B r i t i s h Columbia, Mobile  Homes—Problems and Prospects, by Michael Audain ( V i c t o r i a , B.C.: Queen's Printer, November 1975), p. 10. 9 Rabb and Rabb, p. 7. •^Thomas Nutt-Powell, Michael Furlong, and Christopher Pinkington, The States and Manufactured Housing (N.p.: 1980), p. 206. ''•'''Rabb and Rabb, p. 40. 12 Harold Davidson, Housing Demand: Mobile, Modular or  Conventional (New York: Van Nostrand, 1973), p. 14. 13 Ibid., p. 11. 14T, Ibid. •^Canada, p. 7. 60 16 Davidson, p. 22. Ibid. ^ I b i d . , p. 27. 19 Ibid., p. 72. Drury, p. 8. 2 1 I b i d . , p. 140. 22 Nutt-Powell, Furlong, and Pinkington, p. n . 2 3 United Community Service of the Greater Vancouver Area, Policy and Research Department, Mobile Home Living  i n the Lower Mainland (Vancouver, B.C.: United Community Service of the Greater Vancouver Area, January 1971), p. 23. 24 Watkms, p. v n . 25 Ibid., p. 3. 26 Davidson, p. 43. 2 7Drury, p. 120. 2 8 B r i t i s h Columbia, Department of Industrial Develop-ment, Trade and Commerce Economics and S t a t i s t i c s Branch, Mobile Homes i n B r i t i s h Columbia: A Socio-Economic Study, March 1971, p. 11. 2 9 Rabb and Rabb, p. 30. 30 Watkins, p. 76. 31 Owens/Corning Fiberglass, Barriers to Greater Sales Growth, An Investigation of Consumer Shelter Decision- Making As It Impacts the Mobile Home Industry. 32 Watkins, p. 76. 33 Ibid., p. 7 4. 34 Davidson, p. 50. 5The Center for Auto Safety, p. 26. CHAPTER III PARTIALLY MANUFACTURED HOUSING Successful Option for Affluent Yet  Often Unavailable for Middle- and Lower-Income Families The non-mobile manufactured housing has grown steadily for several years i n i t s many forms. This alterna-t i v e to the mobile home has not been studied i n depth as a d i s t i n c t l y d i f f e r e n t class of housing. Non-mobile manufac-tured housing i s offered i n many types and price ranges. It i s possible for a potential k i t home buyer to purchase a k i t and put i t together with some hired labor for approximately the same cost as a s i m i l a r l y sized mobile home. This chapter w i l l discuss the various forms of p a r t i a l l y manufactured " k i t " homes as d i s t i n c t from other types of housing. Advantages and disadvantages w i l l be studied i n order to compare th i s housing option to the mobile home and evaluate i t s potential as a viable housing option for the prospective low-/moderate-income r u r a l new home buyer. "It's accurate to say that factory made houses now account for more than half of a l l new single-family houses now b u i l t and sold i n the United States."''' The mobile home represents a large segment of the manufactured housing industry but there are many other 62 types, including prefabricated and modular. These pre-cut timber, log, dome, panalized, and component homes may be less v i s i b l e yet they contribute substantially to the rur a l housing market (Figure 7). Few new homes today are completely s t i c k - b u i l t . Prefabricated stairways, trusses, doors, and windows are used extensively by most " t r a d i t i o n a l " home builders. "Prefabricated parts and components were being used i n most of a l l other new housing being b u i l t each 2 year by l o c a l builders and developers." Types and Characteristics of P a r t i a l l y  Manufactured Housing The manufactured house comes i n many various shapes and sizes (Figure 8). Some are almost completely factory-b u i l t , requiring l i t t l e on-site labor (modular), while other homes are merely pre-cut lumber that must be t o t a l l y erected on-site. Regardless of the degree of factory construction, the manufactured home i s very popular i n rura l areas where there i s a shortage of s k i l l e d labor. The opportunity for true savings on the cost of a prefabricated manufactured house occurs when the owner contributes his own labor and elects .to construct his home. Savings also can be made, naturally, by building your own year round home from a factory package or k i t . Building any home i s no easy chore. Don't kid yourself about t h i s . It takes work. But i t ' s considerably less of a mountain to tackle than building a s t i c k -b u i l t house.3 Figure 7. Typical Pre-Cut K it Home from B r i t i s h Columbia Near Radium Hot Springs 64 Figure 8. Lumber Yard Stick Frame K i t Home from Tacoma, Washington 65 Modular A modular house i s almost t o t a l l y constructed i n the factory. The house i s constructed i n several pieces which are then hooked together on-site. Some consider there to be no " r e a l " difference between modular and mobile homes. Canadian mobile homes are considered by some to be i d e n t i c a l to US modular homes, but most authors consider the modular to be d i s t i n c t from the mobile. Rabb and Rabb describe the difference from t h e i r perspective. Modular homes are i n dead center of the industry i n terms of qual i t y and cost. They are competitive with double-wide mobiles and smaller prefabricated homes. The higher end of the mobile range of modulars, while the more expensive modulars are competitive with the less expensive prefabricated homes.4 Unlike mobile homes, v i r t u a l l y a l l of which have metal siding and almost f l a t roofs, and rar e l y have even fake shutters as standard equipment, modular homes are very close i n materials, appearance and construction to s t i c k b u i l t homes. . . . . . . A modular home must be placed on either a f u l l basement lower level or crawl space, because a l l u t i l i t y connections are beneath the floor.5 Davidson describes the t y p i c a l modular home from his perspective. Plumbing, wiring, and carpets are i n s t a l l e d at the plant, and the plumbing and wiring are connected at the s i t e . A crane l i f t s the modules from trucks onto a concrete slab foundation on which two or more sections are attached by on s i t e labor.6 Rabb and Rabb also define a modular home. Modular homes: A permanent structure consisting of one or more modules assembled i n a factory i n accor-dance with a building code, and q u a l i f i e d to be financed and taxed as real property when placed on a permanent foundation.7 66 The d i v i d i n g l i n e between modular and mobile homes i s not d i s t i n c t . Many consider a home modular i f i t i s composed of heavier " t r a d i t i o n a l " materials l i k e sheetrock instead of paneling. The modular market, i f c l a s s i f i e d separately from the mobile home, i s quite small. Its popularity i s growing but has run into many stumbling blocks (especially i n the US) that have made i t less popular than the mobile home. "The 196 9 modular home market of approximately 10,000 units i s small when compared to the prefabricated housing market of 240,000 units or the mobile home market of over 400,000." Clearly, Davidson and Rabb and Rabb consider the modular home between the mobile and prefabricated or k i t homes. Prefabricated Housing Prefabricated homes make up the bulk of the non-mobile manufactured housing. They come i n many shapes and sizes (Figure 9 ) . Rabb and Rabb define the prefabricated home thusly: "Prefabricated homes: Factory-assembled com-ponents to be shipped to a s i t e for assembly to form a 9 building or house structure." They further state that "i n the housing industry a prefabricated home i s one b u i l t by a construction technique that involves the precutting and pre-assembly i n a factory of some or a l l parts of a house. There are many types of prefabricated homes. The log home k i t i s the most common and one of the highest i n 67 68 material cost, but i t i s f a i r l y easy to erect. Many log k i t home buyers ele c t to bui l d t h e i r own (survey results) (Figure 10) . Log k i t s . Log homes come i n great variations and fl o o r plans (Figure 11 ) . Some firms o f f e r a l l components for the complete home; others have "logs only" packages. A few manufacturers o f f e r "unfinished s h e l l " packages, thus providing labor. Most provide help or assistance for owner-builders, who may account for over 50 percent of t h e i r sales. A log home, l i k e most pre-cut, prefabricated packages, goes together l i k e a giant puzzle. It i s easier for an owner-builder to construct a package than to build from scratch. Some small homes may require a s k i l l e d crew of three less than one week to complete. Other k i t s may take the owner-builder longer than a year. The log home industry offers the greatest f l e x i b i l i t y and design v a r i a -t i o n . Every manufacturer has his own designs and construc-tion techniques. Some k i t s are easy to assemble; others are more d i f f i c u l t . This v a r i a t i o n i s a major a t t r a c t i o n of the log home (Figure 12 ) . Dome k i t s . One. dome kit: manufacturer's brochure, e n t i t l e d Monterey Domes Geodesic Homes for Living, states: Monterey Domes off e r s a range of models from under 1,000 square feet to over 4,000 square f e e t — a n d every-thing i n between. Of course, that's just for st a r t e r s . By joining one dome to another, you can create what i s cal l e d a geodesic c l u s t e r . With extensions, dormer windows, skylights and other available options, you can Figure 10. Log K i t i n B r i t i s h Columbia 70 Figure 11. Montana Hand-Hewn Log Cabin 71 72 have just about any e f f e c t or aesthetic mood you're looking for. I think y o u ' l l find that the design p o s s i b i l i t i e s are almost l i m i t l e s s . i l Dome manufacturers normally have a legal patent on th e i r p a r t i c u l a r connector mechanism where the studs meet to form the geometric frame. Normally included i n the k i t are the pre-cut studs and plywood panels. It i s not unusual for the basic dome package to cost under $10,000. A dome can be an extremely low-cost housing option. It i s favored by those who prefer not to finance a home.and have a few thousand d o l l a r s to complete the basic s h e l l . The dome can ea s i l y be completed i n stages, as the walls inside do not need to be load-bearing. Some owners prefer the dome for i t s unique design arid would not consider building a square home. Panelized homes. Most panelized homes are constructed u t i l i z i n g the t r a d i t i o n a l stud frame technique. The panels are constructed i n a factory and trucked to the s i t e where they are erected on the foundation. Usually the panel manufacturer has a crew to erect the s h e l l . Any type of structure can be b u i l t using the panel technique. A few log home firms also o f f e r log panel packages so there i s no clear d i v i d i n g l i n e . There are other hexagon, round, and exotic-shaped home packages on the market which u t i l i z e panel and pre-cut construction techniques. Many are designed for unusual s i t e s . One manufacturer states: "Toppider can grow where 73 o t h e r homes c o u l d n o t l i v e . T o p s i d e r r i s e s from a p e d e s t a l base and branches s t r o n g l i m b s t h a t form t h e p l a t f o r m f o r your 12 e i g h t - s i d e d panorama of t h e w o r l d around you." The manufactured house comes i n many shapes and s i z e s . Most homes b u i l t today a r e a t l e a s t p a r t i a l l y m a nufactured. P r e - c u t k i t s a r e most common i n r u r a l a r e a s , but th e y a r e o f t e n not as v i s i b l e as m o b i l e homes. M a r k e t i n g Most p r e f a b r i c a t e d and modular homes a r e marketed th r o u g h a d v e r t i s e m e n t s and a l i m i t e d d e a l e r network. Modular homes a r e o c c a s i o n a l l y b u i l t by m o b i l e home manufac-t u r e r s and marketed s l i g h t l y d i f f e r e n t l y . F r e q u e n t l y t h e p r e f a b r i c a t e d m a n u f a c t u r e r o p e r a t e s on a s m a l l s c a l e i n a l i m i t e d a r e a . Rabb and Rabb s t a t e t h a t " p r e f a b r i c a t e d homes are s o l d much l i k e o t h e r forms of manufactured h o u s i n g . M a n u f a c t u r e r s a d v e r t i s e t h e i r p r o d u c t s i n newspapers and 13 magazines and ask you t o w r i t e f o r t h e i r c a t a l o g s . " T r a n s p o r t a t i o n c o s t s can be v e r y h i g h f o r a modular home, and f r e q u e n t l y , modular home m a n u f a c t u r e r s ( l i k e p r e f a b r i c a t e d home m a n u f a c t u r e r s ) f i n d t h a t t h e i r home i s not c o m p e t i t i v e i f moved more than a few hundred m i l e s . An e x c e p t i o n t o t h i s r u l e i s a new e x p e r i m e n t a l l o w - c o s t p r e f a b r i c a t e d home c a l l e d " L i f e h o u s e , " r e c e n t l y d e v e l o p e d as t h e answer t o t h e h o u s i n g c r i s i s . I t i s b e i n g b u i l t i n Taiwan, and a l l components f i t i n t o a s t a n d a r d s h i p p i n g c o n t a i n e r . 74 We're not building anything but a dwelling that can be sold for the price of a mid-priced sports car. . . . . . . The purpose of the f i r s t house, said Steven-son's engineer, Shig Shiwota, was to test the concept that a l l the parts of the house could be packaged i n the standard shipping container. . . . . . . When the container i s set on a pier founda-t i o n , much l i k e that used for a mobile home, i t s sides f o l d down to become the f l o o r of the Lifehouse and i t s steel beam frame becomes the str u c t u r a l support for the l o f t . . . . . . . Interior and exterior walls are inside already framed, insulated and covered with sheathing. . . . They s l i d e into place over a track and are bolted together at the edges. . . Kitchen and bathroom, the f i r s t items packed into the container, are l e f t as they stand, ready to use.14 Lifehouse i s unusual but i t i s not alone i n the experimental housing l e v e l . Domes have also been very popular and can be extremely low i n cost. To begin with, i n the building of a Monterey Dome you save at least t h i r t y percent on the cost of materials and labor. There are two basic reasons for t h i s : f i r s t , the geodesic concept eliminates the need for expensive, load-bearing support walls. Secondly, one or two people with v i r t u a l l y no building s k i l l s can erect t h e i r dome package i n a matter of a few days. Weigh; these two together, and you begin to see why more and more people are choosing our geodesic homes as a l o g i c a l solution to t h e i r housing needs.15 Advantages Cost Like mobile homes, the strongest advantage to manufactured housing when compared to s t i c k - b u i l t housing i s the low cost. The more factory construction, the greater the savings; thus, modular homes generally are less costly than prefabricated units which require more on-site labor. More e f f i c i e n t building techniques are needed to provide housing within the price range of lower-income fam i l i e s , as stated e a r l i e r . One possible approach i s to b u i l d modular homes. Then a g r e a t e r p e r c e n t a g e o f u n s k i l l e d l a b o r can be u t i l i z e d and modular homes can be produced much f a s t e r t h a n c o n v e n t i o n a l h o u s i n g t h r o u g h t h e use of m a s s - p r o d u c t i o n t e c h n i q u e s . 1 6 The raw m a t e r i a l s can be purchased i n b u l k and t h e s a v i n g s passed on t o t h e consumer. T h i s i s a l s o t r u e f o r t h e m o b i l e home. The g r e a t e s t s a v i n g s a r e p o s s i b l e w i t h a p r e f a b r i c a t e d home o n l y i f t h e owner s e l e c t s t o complete the c o n s t r u c t i o n w i t h o u t c o s t l y h i r e d s k i l l e d l a b o r . I n one k i t home p u b l i c a t i o n , t h e m a n u f a c t u r e r quoted customers' comments on owner b u i l d i n g : I had not even b u i l t a doghouse, but i t was a br e e z e t o e r e c t . . . . We saved on t h e c o n s t r u c t i o n c o s t s as we, a c o u p l e o f s e n i o r c i t i z e n ' s , d i d the work o u r s e l v e s . . . . We d i d most o f t h e c o n s t r u c t i o n o u r s e l v e s and we were v e r y i m p r e s s e d t h e way e v e r y t h i n g f i t t o g e t h e r . 1 7 The p a r t i a l l y m a n u f a c t u r e d , p r e - c u t home has many d i s t i n c t advantages over s t i c k - b u i l t homes, e s p e c i a l l y i n r u r a l a r e a s . Rabb and Rabb condense t h e s e advantages i n t o a s h o r t s t a t e m e n t : "Why M a n u f a c t u r e d Housing? . . . t h r e e good r e a s o n s — m o n e y , t i m e and v a r i e t y . " 1 ^ The g r e a t e s t v a r i e t y u s u a l l y o c c u r s w i t h t h e p r e - c u t , p r e f a b r i c a t e d home, w h i l e t h e l a r g e s t t ime s a v i n g s o c c u r s w i t h t h e modular home. Money s a v i n g s depends on t h e amount of l a b o r an owner wi s h e s t o c o n t r i b u t e , and on t h e l o n g - t e r m c o s t s i n c l u d i n g a p p r e c i a t i o n . A g a i n , Rabb and Rabb s t a t e : " P r e f a b r i c a t e d h o u s i n g o f f e r s t h e g r e a t e s t v a r i a t i o n i n p l a n n i n g , w h i l e m o b i l e and) modular homes o f f e r t h e l e a s t f l e x i b i l i t y . " 1 9 They go on t o say t h a t " b u i l d i n g your own home i s a l i t t l e l i k e p a i n t i n g a s e l f - p o r t r a i t — t h e home 76 and i t s s i t e w i l l r e f l e c t your personality, your way of , • v „20 l i f e . " • Variety and Choice i n  Style and Materials Variation i s an important a t t r a c t i o n to many i n d i -viduals. Building one's "dream house" i s the ideal to many people. S e t t l i n g for a box-like mobile or modular home may not be s a t i s f a c t o r y . With the pre-cut or panelized prefabricated home, custom designs are possible (Figure 13). Rooms can be changed to s u i t the p a r t i c u l a r needs and tastes of the owner. This factor i s a major advantage of the prefabricated manufactured home. The k i t home industry offers a wide variety of st y l e s , designs, materials, and construction types to sui t a l l tastes. Quality of Materials Pre-Cut International homes can comply with the Uniform Building Code, meet or exceed a l l i n s u l a t i o n require-ments for heating loads and energy consumption, and carry International Congress of Building O f f i c i a l s ICBO Approval No. 3215.21 The log and dome prefabricated manufacturers boast of the quality and strength of the i r homes. The dome house i s strong by virtu e of i t s shape. The log or cedar lock-wood home i s strong by virtue of the heavy stacked timber used for walls. Both dome and log home manufacturers state that t h e i r homes can withstand high winds and earth-quakes better than conventional housing. Figure 13. Custom-Appearing Pre-Cut K i t Home from B r i t i s h Columbia 78 Financing The financing of a k i t or modular home may be easier than that of a s t i c k - b u i l t (nondeveloper) custom home. The manufacturer may of f e r some assistance i n obtaining the best rates or suggest a bank that i s fam i l i a r with the quality of his homes. Occasionally, manufacturers may do more. Contracts, where manufacturers guaranteed the completion of a k i t , used to be common. Now only a few manufacturers advertise any d i r e c t assistance either by guarantees or di r e c t loan. Most offe r hints and a few have good agreements with a s p e c i f i c bank. One manufacturer's brochure states: "Financing: We w i l l a s s i s t you i n arranging your construction financing--including an itemized cost estimate for your p r o j e c t . 1 , 2 2 Currently the s i t u a t i o n has deteriorated and many banks have withdrawn t h e i r previous support. Tight money i s aff e c t i n g everyone and the si t u a t i o n i s not as easy as i t was when the following statement i n a k i t catalog was published: "Once you own a piece of land, i t ' s often a l l the equity you 2 3 need to swing a mortgage commitment or construction loan." Ease of Construction—A  Giant Puzzle The k i t house, whether pre-cut or i n panel sections, has many advantages that make i t an a t t r a c t i v e option for lower-cost housing i n r u r a l areas. While usually not as inexpensive as a mobile home, the cost of a k i t can be cut substantially e s p e c i a l l y i f the owner contributes the labor 79 and hires l i t t l e s k i l l e d help. The ease of construction of a k i t or modular home i s a major a t t r a c t i o n . Because time i s spent on cutting and labeling the materials accurately, high s k i l l s are not usually required to erect the basic s h e l l of the home. The owner-builder may only need to hire help for the foundation and for the e l e c t r i c a l and plumbing aspects, but most construction tasks are possible for the layman. Appreciation In Chapter II, the short-term/long-term costs were evaluated i n l i g h t of the low appreciation rates of the mobile home. While long-term costs may be greater for mobile homes due to less appreciation than for s t i c k - b u i l t homes, the other manufactured housing types appreciate markedly. Most pre-cut k i t s look l i k e custom designed homes, are very a t t r a c t i v e , and do well i n the market should one wish to s e l l the home. Disadvantages Don't bite off more than you can chew. Building a house from a factory package or k i t , can put you leagues ahead of the game, compared with building a s t i c k b u i l t house s t a r t i n g from scratch, as mentioned e a r l i e r . But i t ' s s t i l l not ch i l d ' s play, even for a s k i l l e d d o - i t -yourself person. Putting up a whole house i s the do-it-yourself equivalent of climbing the Matterhorn, the supreme peak.24 Responsibility to Follow  through with Construction One of the major drawbacks of the k i t prefabricated home, when compared to the mobile home, i s that the owner 80 must take some construction r e s p o n s i b i l i t y i f the product i s to remain low-cost. If the owner-builder attempts to do much of the work (which i s necessary to keep costs low), he i s taking on a major task. Building a house, even from a k i t , i s a large job and requires much e f f o r t . It takes dedication, time, and hard work (Figure 14). If one hires u n s k i l l e d labor, one runs the r i s k of unguaranteed or incompetent construction practices. Manufacturers' guarantees do not cover poor construction techniques. "Unless you're a t r i p l e threat construction man, some of the work (excavation and foundation, heating, plumbing, and other such tough chores) probably should be subcontracted to professionals. In short, be r e a l i s t i c about your c a p a b i l i t y . " The owner-builder who wishes to 'build a pre-cut or panel home must also take r e s p o n s i b i l i t y for h i r i n g s k i l l e d help when necessary. Sales Problems Another major problem of modular and k i t homes i s the high bankruptcy rate of manufacturers. The industry i s characterized by many small manufacturers. With the changing economic s i t u a t i o n and market conditions, many companies go bankrupt. Only a few companies have been around for over twenty years. One should be careful to select a reputable firm with years of experience and a v a l i d guarantee. Cash on delivery, not before, i s also a safe p o l i c y . Rabb and Rabb comment: "During the course of our research we saw the Figure 14. An Incomplete Log Home near Vernon, B r i t i s h Columbia 82 extent to which the industry i t s e l f i s i n flu x . A number of firms i n i t i a l l y contacted have gone under and given the • ..2 6 present economic prognosis. In spite of disadvantages, the prefabricated home has become an extremely popular housing option i n higher-income ranges. It i s a t t r a c t i v e to a l l age levels and income brackets. The k i t s range i n cost from under $10,000 to over $70,000 for an elaborate pre-cut cedar package. A l l prefabricated homes require on-site labor to construct the home. A few manufacturers w i l l erect the home for an added fee or may recommend a lo c a l contractor. Many owners select to save on labor costs by building the home themselves or perhaps with a few friends. This, savings i s one of the major advantages of the prefabricated home but i t also involves greater r i s k and r e s p o n s i b i l i t y . 83 Notes ^A. M. Watkins, The Complete Guide to Factory-Made  Housing (New York: E. P. Dutton, 1980), p. 9. 2 Ibid. , p. v n . 3 I b i d . , p. 23. 4 J u d i t h Rabb and Bernard Rabb, Good Shelter, a  Guide to Mobile, Modular and Prefabricated Houses Including  Dome (New York: Quadrangle, 1975), p. 62. 5 I b i d . , p. 78. Harold Davidson, Housing Demand: Mobile, Modular or  Conventional (New York: Van Nostrand, 1973), p. 95. 7 Rabb and Rabb, p. 7. g Davidson, p. 95. 9 Rabb and Rabb, p. 7. 1 0 I b i d . , p. 78. 1^Monterey Domes, Inc., Monterey Domes Geodesic Homes  for Living (Riverside, Ca.: Monterey Domes, Inc., n.d.), p. 28. (Brochure.) 12 • Topsider Homes, The Home That Is a Vacation (Yadkinville, N.C.: Topsider Homes, n.d.). (Brochure.) 1 3Rabb and Rabb, p. 87. 1 4 L o s Angeles Times, December 1982, p. 4. 15 Monterey Domes, Inc., pp. 28-29. •^Davidson, p. 95. 17 Justus Homes, Advertising publication (Tacoma, Wash.: Justus Homes, n.d.). 18 Rabb and Rabb, p. 7. 19 Ibid., p. 2. Ibid., p. 1. Pre-Cut International. K i t home brochure (Woodm-v i l l e , Wash.: Pre-Cut International, n.d.). 84 22 Ibid. 23 Frank Coffee, The Complete K i t House Catalog (N.p.: n.p., n.d.). 24 . Watkins, p. 147. Ibid. 2 g Rabb and Rabb, p. 7. CHAPTER IV OWNER-BUILDING/SELF-HELP HOUSING—A PHILOSOPHY AND A PRACTICAL REALITY General Characteristics With few exceptions, the p a r t i a l l y manufactured prefabricated home i s only low-cost i f at least a portion of the labor to construct the house i s free. This means that one must consider not only contributing one's own labor but also the labor of friends and family. Most lower-income purchasers of k i t homes elect to do a substan-t i a l portion of the labor themselves and "barn r a i s i n g s " have become popular again. Examination of the owner-builder experience i s necessary i n order to investigate owner-build-ing i n general, and owner-building together with p r e f a b r i -cated housing as a viable low-cost housing option i n rur a l areas. This chapter w i l l examine the benefits, disadvan-tages, philosophy, and r e a l i t y of owner-building. Turner and Fichter state that "approximately a t h i r d of the world's people house themselves with t h e i r own hands, sometimes i n the absence of government and professional intervention, sometimes i n spite of i t . " 1 It i s an accepted fact that many people throughout the world b u i l d t h e i r own homes due to cost and financing l i m i t a t i o n s . The 85 86 complexities and s p e c i a l i z a t i o n of construction practices and lack of building knowledge among the public have made self-help less popular today. While c e r t a i n l y less predomi-nate today, the s e l f - h e l p option has remained deeply ingrained i n r u r a l Canada and the US. Many rur a l residents today prefer to b u i l d t h e i r own dwelling even i f offered other choices (contractor-built, subdivisions, mobile homes, townhouses) within t h e i r means. They are even building structures around t h e i r mobile homes (thus, one half mobile home, one half owner-built home) (Figure 15). A study by J. Visher of r u r a l residents l i v i n g i n subdi-visions stated simply, "Rural residents l i k e to build t h e i r 2 own homes." Self-help owner-building i s common i n rural areas (Figure 16). Urban residents do not select t h i s option as frequently as rural residents. In recent years the unfinished but habitable home industry has absorbed a s i g n i f i c a n t share of the housing market. The demand for unfinished but habi-table homes i s largely concentrated i n small towns and r u r a l areas. Indeed, the current survey suggests, most pointedly, that incomplete houses constitute an ^ important source of new housing i n rural communities. More than one-half of the houses surveyed (53.2 percent) were found i n r u r a l areas. Another 43.9 percent of the sample houses were located i n urban fringe areas which surrounded small towns.4 The r u r a l predominance of owner-builders could have many explanations. The r u r a l resident may be more accustomed to doing for himself, as s k i l l e d labor i s frequently d i f f i c u l t to f i n d . A higher degree of seasonal 87 88 89 work often exists i n r u r a l areas, thus providing rural residents the time needed for sel f - h e l p . The lack of financing aid may also play a major role i n the selection of the owner-builder option. Less r i g i d developmental controls i n rur a l areas ( i . e . , zoning, building standards, s i t e preparation requirements, etc.) may make owner-building more f e a s i b l e . Many factors and combinations account for ru r a l s elf-help popularity. Some of these factors may be i n t r i n s i c benefits and not e a s i l y measured. Turner discusses the advantages of sel f - h e l p from an i n t r i n s i c values and s a t i s f a c t i o n perspective. Philosophy of Self-Help  Owner-Building The main motive for personally committing oneself to the always exacting and often exhausting job of organ-i z i n g and managing, l e t alone s e l f - b u i l d i n g , may be the bodily need for s o c i a l l y acceptable shelter, but "higher" needs for creative expression and personal i d e n t i t y are, i n most cases, also present and for many important. . . . . . . 1 am sure that i t i s t h i s e x i s t e n t i a l whole-ness—the simultaneous s a t i s f a c t i o n of the universal need for belonging to a p a r t i c u l a r society and the highly d i f f e r e n t i a t e d and personal need for s e l f -expression—that gives housing i t s special meaning when done at the le v e l of personal and community action. Although there may be no a n a l y t i c a l way to prove i t , i t i s obvious to me that both economy and c o n v i v i a l i t y can come about only through personal r e s p o n s i b i l i t y . 5 The f u l f i l l m e n t of these deeper needs, while not measurable, may play a s i g n i f i c a n t role i n the success of the se l f - h e l p housing option. The pride i n one's own accomplishment and a sense of s e l f - f u l f i l l m e n t are d e f i n i t e l y benefits. Turner and Fichter discuss these 90 needs and chastise the government for exercising too much control over housing, thus denying the individual an ef f e c t i v e and e f f i c i e n t pathway to s e l f - f u l f i l l m e n t . By exercising too much control over housing, governmental i n s t i t u t i o n s have denied the individual an important vehicle for self-expression and have created f r u s t r a t i o n at the lower-income l e v e l where choices are so limited. In order to make the best use of scarce housing resources, most of which are i n any case possessed by the people themselves, each household must have an adequate choice of alternative locations, of alternative forms of tenure and, of course, of alte r n a t i v e struc-tures and ways of building and using them. People who do not have these freedoms i n housing are generally unable to use housing as a vehicle for th e i r e x i s t e n t i a l ends. If they cannot hope to get the combination they need, they w i l l tend to minimize th e i r housing action by doing and paying as l i t t l e as possible.6 A lack or loss of autonomy, re s u l t i n g i n a dependency on other persons or i n s t i t u t i o n s for those necessities one i s w i l l i n g and capable of providing for oneself, can be int o l e r a b l e f r u s t r a t i n g i n any context. For physical and mental well-being, every man, woman and c h i l d must be able to exercise his or her individual i n i t i a t i v e : and housing, for the poor and the wealthy a l i k e , i s a major opportunity.7 The need for personal control and independence i s important i n most aspects of l i f e . In attempting to solve a major problem, governments frequently may i n s i s t on a high level of control. This high level of control may have many hidden costs. When dwellers control the major decisions and are free to make th e i r own contributions to the design, construction or management o f . t h e i r housing, both the process and the environment produced stimulate i n d i -vidual and s o c i a l well-being. When people have no control over, nor r e s p o n s i b i l i t y for,.key decision in the housing process, on the other hand, dwelling environments may instead become a barr i e r to personal f u l f i l l m e n t and a burden on the economy.8 The f a i l u r e of governments to support the owner-builder and encourage the ind i v i d u a l to build his own home i s well known. It i s easy to understand why more people do not become owner-builders. R e s t r i c t i v e codes, discriminatory federal mortgage insuring practices, and the general trend toward s p e c i a l i z a t i o n of construction tasks have a l l contributed to a climate, unfavorable to the man who may have thought about building his own home.9 The trend i n government a c t i v i t y during the l a s t few has been toward increased control. Increased regula-and more " s t i c k s " (penalties) than "carrots" (incen-) have been the rule i n both the US and Canada. The t r a d i t i o n a l mortgage support programs have become more r i g i d and less widely used as federal programs shifted from lending and mortgage insurance to subsidy. Cutbacks i n so c i a l housing programs have continued over the l a s t decade. HUD at one time supported s e l f - h e l p housing but withdrew th e i r support a f t e r a short time. The benefits of se l f - h e l p housing have not been completely explored. Many benefits are not e a s i l y adaptable to a cost benefit analysis. The concept of housing as a vehicle of self-expression and s e l f - f u l f i l l m e n t i s rarely discussed i n CMHC or HUD publications. People do not only need to obtain things. I think they need,above a l l , the freedom to make t h i n g s — things among which they can l i v e . To give shape to them according to t h e i r own feelings, t h e i r own tastes, t h e i r own imagination.10 years tions tives 92 Pr a c t i c a l Application Whatcom and Skagit County  FmHA Self-Help Example The Farmers Home Administration, an agency of the U.S. Department of Agriculture, offers a number of programs which provide grants and low-cost loans to improve housing i n rur a l areas. Potential recipients include r u r a l residents, government e n t i t i e s , and both nonprofit and profit-motivated sponsors. . . . Unlike HUD programs which generally operate through banks and other approved lending i n s t i t u t i o n s , FmHA i t s e l f acts as the lender, making loans d i r e c t l y to q u a l i f i e d a p p l i c a n t s . H Farmers Home Administration, an agency formed to aid farmers i n financing needed land and supplies, runs a housing program for r u r a l areas. One of thei r programs combines d i r e c t lending with a form of sel f - h e l p housing. Section 523 provides grants to public and nonprofit groups to enable low-income rural residents to bui l d t h e i r own homes. The houses are financed under FmHA's Section 502 program, with Section 523 providing adminis-t r a t i v e money to the sponsor for h i r i n g counselors and construction supervisors. Grants are made for two years with funds advanced as needed, and are budgeted for 30-day periods. Self-help sponsors, public agen-cie s , and private nonprofit organizations are also e l i g i b l e to apply for s i t e loans under Sections 523 and 524.12 These technical assistance grants have resulted i n many self-help housing organizations being formed throughout the US . One small group exists i n Whatcom County, Washing-ton. The program requires that the low-income families work i n groups under supervision. Each family must put i n at least t h i r t y hours per week of labor plus attending meetings and lectures. One major rule of the program i s that no family can move i n u n t i l a l l homes are completed. The Whatcom program i s highly s e l e c t i v e . Families must not only meet the r i g i d federal income guidelines but must pass an interview procedure where only those deemed most l i k e l y to succeed are accepted. The Farmers Home Administration's loan guidelines set the following c r i t e r i a for participants [1980 standards]: -They must be a married couple or a couple of people, or a single person (with or without children) who does not already own an adequate home. -Each family's gross income minus f i v e percent and minus $300 for each c h i l d must be between $7,100 and $11,200 per year. Each family must also have less than $5,000 i n assets (not including household goods). -Each must have reasonably good c r e d i t but be unable to get conventional financing. . . . . . . It i s stressed that t h i s i s not a grant, but an interes t subsidized loan. The loans for the current project here are for about $30,000 including land and cost, of the materials. Value of the completed homes i s about $40,000. . . . Most of the families involved with the program are younger couples.13 The Whatcom County self-help housing organization has aided many families to bui l d t h e i r own homes. They have b u i l t several designs u t i l i z i n g stick-frame on-site construction. The construction supervisors, employees of the self-help program, are i n charge. Each family has limited freedom i n the design and materials selected. The organization operates on a low budget. The coordinator's salary i s modest and the construction supervisor's i s a near i n s u l t for such hard work. The choice i n designs i s limited. Tim Rosenham, of nearby Skagit County, reported problems i n working with the l o c a l FmHA. He reported that his innovative two-story 94 energy-efficient home, while modestly priced ($40,000), looked too expensive and FmHA was unhappy. They i n s i s t e d he discontinue that design. The Whatcom self-help group was also instructed to discontinue t h e i r popular two-story model, as i t was too nice. Tim Rosenham, a s k i l l e d a r c h i t e c t , did not share FmHA's views. He also f e l t that the benefits were more than f i n a n c i a l . 1 It i s a system that not only allows people to more ea s i l y afford a home of t h e i r own i n i n f l a t i o n a r y times, but creates a close-knit community among ., neighbors, said Tim Rosenham. . . . . . . It's l i k e an old time barn r a i s i n g , suggested Frank Donato, contractor.14 Most consider the benefits of s e l f - h e l p overwhelming, as low-income individuals improve t h e i r s k i l l s and gain self-confidence and s e l f - f u l f i l l m e n t . The family i s rewarded materially also, as the value of the home upon completion usually exceeds the loan amount by about $10,000. The Skagit grant proposal was detailed and gave documentation to some of the problems as well as the triumphs. It made frequent reference to a past history of incompetence and mismanagement. . . . funding of i t s f i r s t technical assistance grant of February 28, 1978. From that time u n t i l November 1978,, the parent organization was rocked with management d i f f i c u l t i e s which resulted i n the SSHH director Art Gordon being cashiered and the present director Tim Rosenham being hired. . . . We created f i s c a l p o l i c i e s which preserved the organization's solvency and paid overdue c r e d i t o r s . . . . when thi s grant period began only 1.3 equivalent houses had been produced r e s u l t i n g i n a T.A. cost per unit of over $30,000. . . . Since then, four new groups have at least started construc-ti o n and the cumulative T.A. cost per unit has decreased to about $8,500 per unit, including the unproductive f i r s t half of the grant. We have learned that the way to reduce T.A. cost per unit i s to build houses.15 Management problems did occur, yet within one year they were dealt with. It i s unlikel y that incompetent FmHA administrators are f i r e d as e a s i l y . In spite of the admitted rocky beginning, Tim Rosenham again made reference to the i n t r i n s i c advantage of building one's own home: "We were successful i n closing on seven scattered s i t e s i n Anacortes and a beautiful group of four on Samish Island plus one i n Bow. The i n t r i n s i c motivation of working on the i r own house 16 was increased by working on t h e i r own land." The problem of searching for land that met FmHA r e s t r i c t i o n s and l o c a l approval was discussed. "The land search was ultimately successful i n spite of needing county variance for the Samish lots and i n spite of several abortive transactions i n Anacortes."''"7 The Skagit s e l f - h e l p program claimed to make use of some on-site cost/time-saving techniques. Construction procedures were improved by f i r s t giving more authority to the construction Supervisors, who in turn have i n s t i t u t e d "assembly-line" techniques, standardized d e t a i l s , and pre-cut roof components to speed building.18 Neither the Whatcom County or the Skagit s e l f - h e l p programs operated on any large scale. Their s t a f f i n g was under ten f u l l - and part-time personnel, and t h e i r budget was approximately $100,000 per year. When I interviewed Carol Hammond, direct o r of the Whatcom self-help program, and TinviRdsenham about increasing the number of houses b u i l t each year, they mentioned problems with coping with administrating such large numbers. The e f f o r t on a personal level with i n s t r u c t i n g , interviewing, meetings, counseling, and paperwork would require large s t a f f i n g increases. The Whatcom sel f - h e l p housing organization did not even have a secretary; the di r e c t o r did a l l the typing. It appeared that both agencies operated much l i k e any small business, a l l working toward a single goal,:'• with each s t a f f member doing a b i t of everything. When discussing problems, both Hammond and Rosenham mentioned d i f f i c u l t i e s with FmHA. One of t h e i r custom designed homes had been considered too good-looking. FmHA loc a l administrators were i n s i s t i n g i t be discontinued. Carol Hammond stated they had decided to go along with the decision, but Tim Rosenham was considering f i g h t i n g i t . Apparently, FmHA wanted one-story rambler, cheaper-looking homes, not middle-class-appearing a r c h i t e c t u r a l innovation. Hammond stated that she had chosen to compro-mise i n order to survive: "Mark against us . . . f i n e s t 19 i n the nation . . .we're not as important as the program." She also stated that the pressure often comes from above the l o c a l l e v e l . Past problems with fraud and fear of p o l i t i c a l pressure i f the homes were perceived as more than basic shelter, were the major reasons given for the d i f f i c u l t y with FmHA. She seemed understanding of the position of the l o c a l FmHA administrators, e s p e c i a l l y considering the current administration i n Washington, D.C. 97 Rosenham, a talented a r c h i t e c t , f e l t FmHA was t o o ^ i n f l e x i b l e . He had designed a low-cost energy-efficient home that did not look cheap. While there have been numerous design competitions and mi l l i o n s of federal d o l l a r s (HUD) spent for such low-cost innovation, the l o c a l FmHA apparently did not appreciate i t at the grassroots l e v e l . The s e l f - h e l p program, while small, i s playing a part i n helping some renters become homeowners and obtain adequate housing. It does demand something i n return and cer t a i n l y the program i s not for everyone. Tim Rosenham commented on the fact that self-help i s not for a l l f a m i l i e s , as i t was a st r a i n i n g experience. "Families either get close or s p l i t . . . . Production of houses i s not possible 20 without motivated f a m i l i e s . " While admitting the s t r a i n , he remarked that those who complete the program usually are more motivated and capable people a f t e r t h e i r experience. He stated that i t 21 tended to "catapult people from low income into middle." Hammond had sim i l a r feelings for the program. She stated that less than 10 percent of the applicants are accepted into the program. They spend much time screening and 22 re c r u i t i n g and "turn a l o t of people away." They accept about six out of every f i f t y applicants. She also r e c a l l e d times when the stress broke up fami l i e s , but stated that the benefits for most families were large. The Whatcom FmHA program seems to have had much success i n housing•low-income families. Their t o t a l impact 98 upon the housing market i n Whatcom, although small, has made a difference i n the l i v e s of several low-income families. Self-help has many cost-saving and i n t r i n s i c advan-tages. The successful Whatcom and Skagit experiences have demonstrated t h i s f a c t . Self-help can take many forms and i s not limited to a s p e c i f i c housing s t y l e . The next section w i l l examine the p a r t i a l l y manufactured/pre-cut k i t house u t i l i z i n g owner-building, s e l f - h e l p , cost-saving techniques. 99 Notes John F. C. Turner and Robert Fichter, eds., Freedom  to Build, Dweller Control of the Housing Process (New York: Macmillan, 1972), p. v i i i . 2 Jacqueline Vischer, Rural Residential Subdivisions  in B r i t i s h Columbia ( V i c t o r i a , B.C.: Ministry of Municipal A f f a i r s , 1981), p. 91. 3 U.S. Department of Housing and Urban Development, Housing and Home Finance Agency, Office of Program Policy, The Unfinished but Habitable Home, by William Shenkel (Washington, D.C.: Government Printing O f f i c e , 1965), p. 1. 4 I b i d . , p. i i i . 5 John F. C. Turner, Housing by People Towards  Autonomy i n Buidling Environments (New York: Pantheon, 1976), p. x x i i i . Turner and Fichter, p. 174. 7 I b i d . , p. 247. Ibid. , p. x x x m . 9 Ibid., p. 3. 1 0 I b i d . , p. 827. ^Kim Herman, Nina Gutierrez, and Carole Hammond, Housing Resource Handbook (Spokane: Washington C o a l i t i o n for Rural Housing, 1980), p. 7. Ibid., p. 6. 1 3 . Brian Cantwell, "Self-Help Housing Giving Families Control over Lives, Says Director," The Argus (Mt. Vernon, Washington), February 21, 1980. Ibid. 15 Skagit County Self-Help Housing, A Grant Proposal, 1981-1983 (Mt. Vernon, Wash.: Skagit County Self-Help Housing, n.d.). Ibid. 1 7 I b i d . 1 8 I b i d . \ 100 1 q Interview with Carole Hammond, Whatcom County, Everson, Washington, 1981. 2 0 Interview with Tim Rosenham, Skagit Self-Help, Mt. Vernon, Washington, 1981. I b i d . 22 Hammond. CHAPTER V PARTIALLY MANUFACTURERED KIT HOME PLUS SELF-HELP Anyone who s t i l l builds one from scratch not from a factory package should have his head examined.! Ki t Home as Low-Cost Housing In r u r a l areas where land i s inexpensive and e x i s t i n g home and renovation financing d i f f i c u l t to obtain, the k i t home may be one answer for a low-cost house. The previous chapters on sel f - h e l p and k i t homes outlined several poten-t i a l advantages for a lower-income family i f one selects to become an owner-builder. The i n i t i a l cash outlay i f one erects the k i t with l i t t l e hired labor can be kept low espec i a l l y with the less elaborate k i t s . If the amount needed to borrow i s kept low, a lower-income individual should have a better chance to qu a l i f y for a home loan. Some 1,000 square foot (size of FmHA approved house) k i t s s e l l for under $15,000 (Figure 17). If one adds $5,000 for additional i n t e r i o r materials and $5,000 for hired labor, one could have a custom designed home for $25,000, or roughly the price of many US mobile homes. If one purchased the land for $10,000 and placed $5,000 down (not currently possible), the monthly payments 101 102 103 on a standard thirty-year mortgage could be around $350 per month, or approximately the cost of renting an older home in many ru r a l areas. The potential for the k i t home plus self-help to provide lower-income housing appears r e a l i s t i c . In t h i s chapter the k i t home, i n combination with self-help building, i s examined i n order to determine i f there i s a potential for t h i s combination to meet the low-cost housing needs i n r u r a l areas. There i s l i t t l e academic l i t e r a t u r e that discusses k i t homes, although many make reference to the general need for increased use of technological advances i n housing. The United States today--at a time when housing more than ever i s needed—does not exploit e x i s t i n g building technology to the f u l l e s t . The technology i s available, but the constraints are an obstacle. The l a t t e r can only be overcome by a determined, concerted e f f o r t by a l l elements of the building industry.2 The combination of k i t home plus owner-building has grown ste a d i l y for the l a s t few years. Census figures t e l l the story--a story no one has paid much attention to. Owner-builders are presently responsible for approximately 20 percent of the new single-family dwellings constructed annually i n the United States and 12 percent of a l l housing begun each year.3 There are hundreds of k i t home manufacturers throughout the US and Canada producing k i t s for many owner-builders. Although not a l l t h e i r customers choose to save and contribute substantial sweat equity, most customers are involved with construction to a greater extent than i f the home was e n t i r e l y contractor-built. 104 ' K i t Home Roots--Unfinished ' Shell House ;Some k i t manufacturers offe r an unfinished s h e l l house option that has grown i n popularity over the l a s t few years. Many panel manufacturers s e l l only t h i s 'option, as erecting the k i t requires specialized equipment. With a panel manufactured k i t home, a crew usually can erect the weatherproof s h e l l i n days, not weeks. Entire walls are s e t j i n place at one time. This method has grown i n popularity l a t e l y with some log manufacturers. The heavy logUwall sections with windows i n place are l i f t e d onto the foundation. This manufactured k i t s h e l l house resembles the 1960 unfinished house, only larger cost savings are possible with greater manufacturing. Like the e a r l i e r 1960 unfinished house, the owner-builder i s l e f t to complete the work himself. Before k i t homes came on the scene the unfinished s t i c k home was popular. Several large contracting companies offered many standard models. Early i n the industry's history the manufacturers would purchase most materials in the owner's l o c a l area and t o t a l l y construct the home on-site. Unfinished houses, though highly standardized, t y p i c a l l y are not prefabricated houses. . . . For the most part unfinished housing companies hire l o c a l contractors and subcontractors, maintaining regional warehouses or ordering materials from l o c a l sources.4 The owner was then expected to purchase the remain-ing materials l o c a l l y as well as contribute his own sweat 105 equity to complete the house. The attractiveness of the unfinished house i n 1965 was the low i n i t i a l cost and often builder-aided financing. Unfinished but habitable homes, the construction of which can be completed by the purchasers, have enabled many families of limited incomes to become homeowners. . . . By providing "sweat equity" i n i t i a l out of pocket costs of housing are reduced and lower income families, who! might not otherwise have been able to do so have obtained home-ownership. . . . A p e c u l i a r i t y of the unfinished but habitable housing industry concerns the practice of using "builder recourse paper." Lenders shifted mortgage r i s k s to the builder by requiring builder endorsement on loans granted to unfinished house purchasers.5 The unfinished house i s considered a higher r i s k by the lender, yet for years the builder guarantee system allowed, many lower-income r u r a l families to build a home. To the lender, the p r o b a b i l i t y of a loss i f foreclosure becomes necessary, i s increased for unfinished houses lacking plumbing, heating, finished i n t e r i o r s , or other essential i n t e r i o r construction. Hence, not only must the r e l a t i v e cost of alternative financing methods be considered but also to be considered are financing plans that encourage completion of construc-t i o n ^ The unfinished housing industry flourished for several years and more builders entered the business. The unfinished housing industry i s highly competitive. Yet ; i n the current study, f i v e builders sold approxi-mately 40% of the houses studied.. . ...-:.As: new/builders entered the industry and competition increased mortgage terms were lengthened to a maximum of 12 years. The r e l a t i v e l y low down payment re s u l t i n g mostly from the lower cost of an unfinished house led to increased sales.7 ;Soon the bubble burst as builders took greater and greater r i s k s . Many low-income c l i e n t s could not f i n d the funds for additional materials to complete the house.. 106 The banks and f i n a n c i a l i n s t i t u t i o n s o f f e r i n g builder guarantee loans withdrew t h e i r support. The mobile home grew in.popularity and unfinished houses shifted to a "higher"-income c l i e n t e l e that could meet s t i f f e r financing requirements. Unfinished houses are s t i l l popular i n i r u r a l areas and packages are offered by many l o c a l contractors, lumber |yards, and some k i t home manufacturers. The industry has changed and i t i s far more d i f f i c u l t to obtain a loan than it iwas twenty years ago. The HUD backing for unfinished I houses Was shor t - l i v e d and today HUD and CMHC stay away from anything except completed houses. CMHC did conduct an experiemntal program i n New Brunswick but problems arose and no ove r a l l program ever got off the ground. The current NHA inspection procedure makes any type of self-help housing less f e a s i b l e i n Canada. Contractors have d i f f i c u l t y meeting the s t i f f requirements i n order to qual i f y for mortgage insurance; the owner-builder has l i t t l e chance. According to the l o c a l Vancouver CMHC manager, only about two applications for mortgage insurance are received annually from owner-builders. The unfinished housing industry i s not as popular as i t was i n the 1960s, and the t o t a l l y manufac-tured house (mobile and modular) has taken over much of the market. ; When the banks and the government i n s t i t u t i o n s deserted the unfinished house, i t became a less f e a s i b l e option for the lower-income groups. The k i t home industry i n many ways i s the modern version of the unfinished home. Although many manufacturers 107 do not become involved i n the construction of the k i t s , some offer shell-labor included packages, where the owner i s l e f t to complete the k i t unfinished house. ! K i t Home Potential as Low-Cost Housing N Whether the unfinished house i s from a k i t or s t i c k - b u i l t from a l o c a l contractor, the financing problems w i l l be s i g n i f i c a n t for less affluent home buyers. The self-help plus k i t home appears to be able to meet the low-cost housing needs i n ru r a l areas. Some low-income families are able to overcome the obstacles and obtain financing to complete the house themselves. An interview with two k i t home manufacturers i n Washington State provided more detailed answers to the low- and moderate-income financing problem. Both used th e i r own type contractor financing to permit less affluent owner-builders to obtain interim financing. One made private agreements with the buyer to carry some of the loan. In thi s case the bank was not :aware of the agreement nor of the fact that the owner was constructing the home himself. The k i t manufac-turer guaranteed the work and completion of the home and made private contractural arrangements with the customer. In another case a lending i n s t i t u t i o n required the k i t home manufacturer to provide technical assistance and guarantee completion. It involved an "above table" contractor contract. The manufacturer was a well-known i high l i n e company with substantial assets. 108 Obviously, some middle- and lower-income owner-builders have current access to some k i t s but s t i l l over one half the k i t home manufacturers surveyed reported they never sold homes to individuals earning under $20,000 per year. Many f i n a n c i a l and governmental i n s t i t u t i o n s have not encouraged owner-building i n k i t , unfinished s h e l l , or other forms. To some, the combination of manufactured housing plus self-help might seem contradictory. Why pay to have i someoneipre-cut the lumber or p a r t i a l l y construct the home when one can do t h i s task alone? When questioned about manufactured k i t homes, both Tim Rosenham and Carol Hammond, of Whatcom and Skagit se l f - h e l p homes, had thought of i t but never conducted a detailed analysis. The Whatcom project used pre-cut studs and trusses and the Skagit system admitted to u t i l i z i n g on-site assembly-line techniques. Neither seemed interested i n combining t h e i r programs with an exis t i n g or custom designed factory pre-cut k i t which could be constructed much more quickly. They both considered the cost to be too high, yet most people who do build t h e i r own homes hire some s k i l l e d labor. The FmHA program does permit the individual groups to select what labor to hi r e . Usually t h i s involved h i r i n g . s k i l l e d technical assistance to meet.specific codes ( i . e . , e l e c t r i c a l , plumbing, founda-t i o n , e t c . ) . Even the most ardent owner-builder hesitates doing a l l the work himself, e s p e c i a l l y i n areas that must be done just r i g h t . Most owner-builders are not s k i l l e d 109 i i n everything and cannot afford the time to learn i t a l l , although they can o c c a s i o n a l l y ; r e l y on s k i l l e d friends or r e l a t i v e s for expertise. 'To hire labor to cut or prefabricate a home may seem more costly but frequently i t i s not much more when one considers the fact that most k i t manufacturers purchase materials far cheaper than the owner-builder could possibly obtain them. The time savings involved to erect the house usually more than makes up for the added cost. While situations vary i n d i f f e r e n t areas, the l o c a l lumber yard i s rarely the cheapest source of lumber and materials i f one wants them i n any quantity. Even i f one i s lucky and obtains ia discount and lowest bid, one must be careful of the quality and understand the various grades of lumber and ranges within the grades. With a k i t , the purchaser may receive an automatic discount due to higher volume. The manufacturer also may purchase the lumber d i r e c t l y from the m i l l or ;logging firm and then m i l l s the lumber by contract or by employee labor. The Chisum concept i s based on mass production techniques. It uses the Chisum Log M i l l that turns logs to desired sizes and cuts. . . . From s t a r t to f i n i s h , four men can process enough logs for an average si z e , two-bedroom home in a single day.8 ,If the k i t home manufacturer m i l l s and pre-cuts the logs, the t o t a l lumber "package" may not be as expensive as one may assume due to the lack of "middlemen p r o f i t s . " These savings vary from manufacturer to manufacturer and are highly dependent on many variables. It i s important to 110 inquire about lumber qualit y , grade, and source before . purchasing any k i t or bulk lumber from a supplier. The time savings offered may not be important to the owner-builder. The owner-builder's personal circumstances may determine whether time i s an important factor. Is the owner-builder renting elsewhere? Has he borrowed money at a high inte r e s t rate? Can the owner-builder earn high wages i f the time i s spent elsewhere? Every contractor knows that each month delayed translates into a cost and th i s time cost should be taken into consideration when evaluating the owner-building k i t home pot e n t i a l . 'If one examines the exi s t i n g FmHA program, one can see an opportunity for saving on materials and time by cutting down the length of time from s t a r t to completion. If the construction coordinator, funded with a federal grant, works with each group from s t a r t to completion (nine to twelve months), and he earns $20,000 per year constructing ten homes, the cost per home for his labor i s about $2,000. If t h i s time i s cut to six months, t h e o r e t i -c a l l y he could run two groups and the savings would be about $1,000 per home. This does not count the individual's time saved nor does i t take into consideration the t r a i n i n g and construction assistance most k i t home manufacturers o f f e r . The nine- to twelve-month commitment i s a long time to devote t h i r t y hours per week to one project. If t h i s time could be cut i n hal f , i t might make the commitment easier so more families could p a r t i c i p a t e . A large I l l percentage of the low-income families i n the country are the e l d e r l y , and single parents. Many members of these two groups may not have the health or time for such a commitment. Turner points out that choice i s an important factor i n housing. Every family's needs are d i f f e r e n t and the use of k i t s might provide more opportunity for selection of the design and the time each family wishes to commit. Many k i t s can be purchased for less than $15,000 and most manufacturers offer custom design services i f one of th e i r designs does not su i t an individual's taste. Another potential solution might be to purchase a modular home and place i t on a "sweat equity" constructed foundation. This v a r i a t i o n of the self-help program might r e s u l t i n homes being completed i n only a few weeks. This shortcut obviously would not be as rewarding an experience, nor provide as much sweat equity, but for a r e t i r e d couple i n i l l health, equity and resale value might be less important. The potential for self-help plus p a r t i a l manufacturing requires further study. No one sel f - h e l p firm could possibly conduct a study on t h e i r small budget but FmHA should address the topic as i t involves meeting the objectives of t h e i r program and could r e s u l t i n a reduction i n t h e i r cost per unit. The k i t home industry reports that many of th e i r customers are building t h e i r own homes. The cost savings over having the k i t constructed by a contractor can be $10,000-$20,000 on an average-sized home. Many k i t s boast of the ease of constructing t h e i r houses and time estimates 112 range from a few weeks to a few months. Many k i t s can be assembled to s h e l l stage i n three weeks with the owner and a few friends. The following are some comments from some Justus Home k i t owners: I had not even b u i l t a doghouse before, but i t was a breeze to erect. . . . The clear directions and generous advice enabled me to sort my thumbs from my fingers. The summer of '72 was a fun one for me, my family and friends. We a l l helped i n the construction and we s t i l l t a lk about the good times we had putting i t together. --Dick & Mary Hermens . . . We saved on the construction costs as we, a couple of senior c i t i z e n s , did the work ourselves, the course was l a i d on July 11 and we moved in November .11. For two people that was pretty good. — I r a and Ema Man. . . . We did most of the construction ourselves and were very impressed with the way everything f i t together. . . . The dealer was just great. He helped us i n every way he could. --Frank & Wilma P i c c o l i ^ Monterey Dome also makes mention of the ease of putting the k i t s together. Two people--and oftentimes just one—can build a complete Monterey Dome sh e l l from s t a r t to f i n i s h . Many do. Of course, the more friends or family you have around to help, the more fun for everyone. . . . . . . The home that comes to you i n a package, organized, compact, complete . . . that's the way your Monterey Dome's Basic Package i s delivered to you. A l l the components are precut, p r e d r i l l e d and ready to assemble simply and quickly. Plus everything has been color coded to take the guesswork out of building your new home.10 Similar sales pitches are expressed by Precut and Pan Adobe Homes. The entire home package i s precision precut at the factory, part-numbered for easy assembly, and shipped complete to the building s i t e for construction.11 Pan Adobe has professional construction supervisors and crews available to erect the Pan Adobe building package, to provide technical assistance on s i t e construction or to help i n any way needed.12 113 The k i t home p a r t i a l l y manufactured house plus the owner-building s e l f - h e l p teachnique can o f f e r considerable savings to a potential r u r a l home buyer. The amount of savings depends on many market variables and choices ( i . e . , s i t e , style of house) that the owner-builder makes. One must question why, i f s e l f - h e l p plus k i t homes offer great savings, greater numbers of individuals do not take advantage of them. There may be several answers to t h i s question, some quite obvious. Owner-building, k i t or otherwise, involves responsi-b i l i t y , r i s k , time, and energy that many consider undesirable. It i s easier to turn a l l the work over to a general contrac-tor. In spite of t h i s major disadvantage, many affl u e n t families currently ele c t to build t h e i r own k i t , yet r e l a t i v e l y few less affluent families select the same option. One needs to evaluate further why there are r e l a t i v e l y few less a f f l u e n t owner-builders of k i t homes. The next chapter, which examines the many obstacles to low-cost/ low-income housing, w i l l address these questions. i 114 Notes 1A. M. Watkins, The Complete Guide to Factory-Made  Housing (New York: E. Pi Dutton, 1980), p. 62. 2 . Albert G. H. Dietz and Laurence S. Cutler, Building Systems for Housing (Cambridge, Mass.: MIT Press, 1971), p. 2. 3 John F. C. Turner and Robert Fichter, eds., Freedom  to Build, Dweller Control of the Housing Process (New York: Macmillan, 1972), p. 4. 4 U.S. Department of Housing and Urban Development, Housing and Home Finance Agency, Office of Program Policy, The Unfinished but Habitable Home, by William Shenkel (Washington, D.C.: Government Printing O f f i c e , 1965), p. 4. 5 I b i d . , P- 3. 6 I b i d . , P- i v . 7 I b i d . , P- 3. p Chisum Industries, The Chisum Log M i l l (Grand Island: n.d.). (Brochure.) 9 Justus Homes, Advertising publication. (Tac.oma, Wash.: Justus Homes, n.d.). •^Monterey Domes, Inc., Monterey Domes Geodesic Homes  for Living (Riverside, Ca.: Monterey Domes, Inc., n.d.), p. 20. (Brochure.) 1 •'•pre-Cut International, k i t home brochure (Woodin-v i l l e , Wash.: Pre-Cut International, n.d.). 12 Pan Adobe Cedar Homes. Pan Adobe brochure (Renton, Wash.: n.d. ) . CHAPTER VI OBSTACLES TO LOW-COST HOMEOWNERSHIP According to Webster, an obstacle i s "something that stands i n the way or opposes, OBSTRUCTION." There are many obstacles to the development of low-cost homeownership. Homeownership i s one of the most desired possessions of the twentieth-century North American family. Because the modern home i s more elaborate i n structure and materials than a mud hut or grass shack, i t i s a costly major construction task. In a speci a l i z e d complex society construction s k i l l s are not acquired by a l l members; thus, people must be hired at a high cost to perform specialized tasks. Land costs can contribute s u b s t a n t i a l l y to the high cost of housing i n many areas depending upon the si t u a t i o n . Building a low-cost structure that meets the needs, expectations, and desires of the potential twentieth-century consumer has been one of the major challenges of the housing industry. Many obstacles stand i n the way of low-cost housing in general and many s p e c i f i c obstacles impact the potential mobile or k i t home purchaser. The f i r s t section of t h i s chapter examines obstacles to low-cost housing i n general, 115 116 while the second section w i l l examine the obstacles to low-cost mobile, k i t , and owner-built homes in s p e c i f i c . Financing One of the most commonly reported obstacles to keeping any new or old housing low-cost i s the cost of borrowing money. Financing rates have increased substan-t i a l l y i n the l a s t few years. Davidson discussed components involved with housing cost.. The a b i l i t y to provide new approaches to low-cost housing implies more economical methodology i n one or more of four major component areas: technology, construc-t i o n , land cost, and financing. . . . Within these four components financing alone may account for from 50 to 70 percent of the t o t a l cost, depending on interest terms and length of mortgage contract. . . . Thus any program for low-cost housing should contain provisions for reducing financing costs, land costs, and construction cost. Apparently any workable program must involve the government, as no private builder has the a b i l i t y to control a l l [aspects].! High home prices together with high financing costs have driven homeownership out of range for many rur a l and urban residents. A study conducted i n the late 1970s of housing problems i n Washington State documented a problem not unique to the State of Washington. Using the average price of a single-family house of $68,250 and the 25 percent of income rule for housing payments, an i n t e r e s t rate of 12,percent would require a mortgage payment of $560 or an annual income of $26,880. Only 22 percent of the households i n the State had incomes exceeding $26,000 in 1976 or the income required to purchase such a house i n 1979. . . . Each year additional low and moderate income households enter the housing needs category. Available programs are only available to help a small portion of the t o t a l need.2 117 The high cost of housing and financing i s important i n terms of a f f o r d a b i l i t y but the a v a i l a b i l i t y of financing i s also important i n ru r a l areas which often re l y on l o c a l small town banks, and savings and loan associations for the i r home and farm loans. These sources for r e s i d e n t i a l loans also provide c a p i t a l for large farms, industries, and businesses i n the lo c a l area and often cannot provide for s i g n i f i c a n t r e s i d e n t i a l loan need. The cost and a v a i l a b i l i t y of financing are two of the most important factors among the many which were p e r t i -nent to the r e s i d e n t i a l construction industry during the past few years. The housing industry r e l i e s heavily on c r e d i t , and r e s i d e n t i a l mortgage debt i s an important component of the f i n a n c i a l structure of the industry.3 T h e ' a v a i l a b i l i t y of financing was one of the major reasons given for the government intervention into the housing market. The early CMHC and HUD programs focused on financing the many homes for returning WW II veterans. Those early programs stimulated the housing market and made i t possible for thousands of returning WW II veterans to purchase t h e i r f i r s t home. Lack of Government Support The lack of government support to low-cost housing can take many forms but most involve the lack of some form of f i n a n c i a l support. The federal government i n both Canada and the US has been involved d i r e c t l y i n low-cost housing, for nearly half a century. Before CMHC and HUD were created other housing and land purchase policy and 118 programs a i d e d r u r a l r e s i d e n t s i n t h e i r a t t e m p t s t o own l a n d and b u i l d a home. There have always been d i f f e r e n c e s between r u r a l and urban h o u s i n g , and government h o u s i n g p o l i c y was l a t e r adapted t o accommodate t h e d i f f e r e n c e s . R u r a l a r e a s d i f f e r i n a number o f fundamental ways. They l a c k t h e p r i v a t e e n t r e p r e n e u r i a l h o u s i n g a c t i v i t y t h a t i s found i n t h e c i t i e s and suburbs. T h i s i s due t o t h e absence o f b u i l d e r s , d e v e l o p e r s , a r c h i t e c t s , commercial l e n d i n g i n s t i t u t i o n s and s a v i n g s and l o a n s which a r e r e q u i r e d f o r an a c t i v e h o u s i n g i n d u s t r y . . . . The l a c k of p r i v a t e s e c t o r a c t i v i t y r e s u l t s i n t h e need f o r g r e a t e r p u b l i c s e c t o r l e a d e r s h i p and p a r t i c i p a t i o n , but r u r a l a r e a s a l s o l a c k t h e p u b l i c and n o n - p r o f i t d e l i v e r y mechanisms t h a t a r e r e q u i r e d . . . . F o r example, l o c a l o f f i c i a l s a r e o f t e n p a r t - t i m e and i n e x p e r i e n c e d , and s m a l l town government budgets cannot s u p p o r t t h e q u a l i t y and number o f p r o f e s s i o n a l s t a f f p e o p l e t h a t a r e n e c e s s a r y t o p l a n , a p p l y f o r and conduct programs o f ho u s i n g and community development a s s i s t a n c e . . . . As a r e s u l t , r u r a l h o u s i n g d e l i v e r y i s a t b e s t , random and fragmented; a t w o r s t i t i s n o n e x i s t e n t . 4 In t h e US, t h e FmHA became i n v o l v e d w i t h h o u s i n g i n r u r a l a r e a s when i t was de t e r m i n e d t h a t e x i s t i n g HUD programs were l e s s u t i l i z e d and l e s s s u i t a b l e f o r r u r a l America due t o t h e l a c k o f " p u b l i c and p r i v a t e " d e l i v e r y mechanisms mentioned i n t h e p u b l i c a t i o n above. The FmHA programs a r e p r a i s e d by many b u t , as a l l government s u p p o r t systems, t h e y have drawbacks. As f o r t h e Farmers Home A d m i n i s t r a t i o n program, i t might be noted t h a t u n t i l r e c e n t l y l o c a l agents were r e q u i r e d t o be g r a d u a t e s i n a g r i c u l t u r e , even though t h e y may have had n o t h i n g t o do w i t h i t a f t e r j o i n i n g FmHA. These agents o f t e n have l e s s e x p e r i e n c e i n ho u s i n g and h o u s i n g r e l a t e d c o ncerns than t h e job demands.5 Another c r i t i c i s m o f FmHA i n o v l v e s i t s l a c k o f a v i a b l e l a r g e - s c a l e h o u s i n g r e h a b i l i t a t i o n program, a l t h o u g h 119 substandard housing i s c l e a r l y more predominant i n r u r a l areas. "Its Section 504 home repair program can be regarded as a poor equivalent of the r e h a b i l i t a t i o n loan and grant program which HUD administers under provisions of the 1964 and 1965 l e g i s l a t i o n . " An interview with the Whatcom County FmHA agent i n charge of housing confirmed the l a s t two c r i t i c i s m s . The agent I spoke with had no t r a i n i n g i n housing and knew nothing of demand or needs analysis. The estimate of substandard housing i n Whatcom County as i n d i -cated i n a recent Whatcom County housing survey indicated need for housing r e h a b i l i t a t i o n to be i n the thousands, yet the agent I spoke with seemed certain that they were meeting the need with nine r e h a b i l i t a t i o n s under Section 504 in the entire county. Statewide estimates confirm t h i s f a c t . From estimates.completed i n December 1979, r u r a l areas of the State on the average have a higher incidence of substandard housing units than urban incorporated areas. . . . As stated below, i t i s estimated that the ov e r a l l average percent of the t o t a l number of sub-standard units i s 14.6 percent statewide i n r u r a l areas.7 The FmHA home purchase program has had a major impact i n many impoverished r u r a l areas. In some small r u r a l towns the only new homes b u i l t are through the FmHA1s heavily subsidized 502 program. This program provides d i r e c t loans to individuals of low to moderate income to buy, bu i l d , repair, reno-vate or relocate a home. . . . The inte r e s t rate varies according to the applicant's adjusted family income; for families with incomes below $11,200 the i n t e r e s t rate can be as low as 1%; for those earning between $11,200 and $15,600, the market inter e s t rate applies. . . . Loans may be made for 100% of the cost 120 (eliminating the need for a down payment) but the applicant must be able to meet the monthly payments with 20% of his or her adjusted income and must be unable to obtain conventional financing at reasonable rates. Maximum loan repayment i s 33 years.8 Rent supplement programs are rather recent additions to low-cost housing subsidies. They were developed as an answer to the public housing c r i t i c i s m s . HUD's Section 8 housing program i s active i n many areas. In 1965, the passage of the rent supplement program added for the f i r s t time, subsidy for operating private rental projects. The program was designed to make up the difference between what tenants could afford to pay for a unit and the cost of operating and maintaining i t , i . e . , i t subsidized part of the cost of operating a project i n addition to debt retirement. 9. Public housing has been long c r i t i c i z e d as an undesirable way to house low-income residents, yet i n ru r a l areas the horror stories are uncommon. In many rural areas the nicest apartments i n town are new senior c i t i z e n public housing complexes. Many housing authorities manage various senior c i t i z e n and low-income family units, yet other r u r a l areas have l i t t l e due to loca l opposition. This (opposition to public housing) i s an old story. Some communities do not establish public housing aut h o r i t i e s ; some establish them to s a t i s f y public demand and then simply f a i l to act, sometimes for many years; others build a handful of units and rest on t h e i r labors.10 Turner and many others blast public housing as being imper-sonal, cold, and unhealthy for people, yet the Canadian and rural American experience with the various forms of nonprofit and public housing have displayed certain horror stories as untrue. OEO discusses the bias against public housing, e s p e c i a l l y the bias on the part of many l o c a l o f f i c i a l s . 121 Those who have been working i n the r u r a l housing f i e l d for a period of time should have l i t t l e d i f f i c u l t y i n r e c a l l i n g the bias against public housing which was i m p l i c i t i n most thinking and action. The price which the friends of public housing had paid which emerged in the form of packing box architecture, crowded grounds etc., coupled with the tendency of l o c a l governments to operate Jim Crow housing or m i l i t a r y barracks, and the increasing war which private enterprise had waged against public housing propaganda-wise had l e f t i t with few friends. The search was for better, depending on your viewpoint. Private interests wanted a r i p o f f for aiding i n the solution. . . . . . . Approximately 40% of the counties i n the country do not have any public housing, and those counties are predominately r u r a l . This s i t u a t i o n springs from another basic defect i n the program: It i s Federally financed, but can be brought into being only by a state or by a l o c a l government under the guidance of state law. Local governments hold a veto power over the r i g h t of c i t i z e n s to enjoy federal subsidies for good housing and many of them have exercised i t l i k e the Russians at a United Nations Security Council meeting.H Frequently, l o c a l governments w i l l not even consider public housing as an option because of public opinion against i t and the b e l i e f that i t might a t t r a c t more "welfar bums" to the community. If they do accept public housing, i t i s usually senior c i t i z e n housing and low-income families are not welcome. Even i f a l o c a l o f f i c i a l or planner wants some low-income housing, the neighborhood may raise a major objection to i t s placement i n t h e i r area. Public housing, l i k e Section 8 rent subsidy, aids the t r u l y poor i n r u r a l areas ( i . e . , those on welfare or l i v i n g on d i s a b i l i t y or s o c i a l security e x c l u s i v e l y ) . Although these programs aid the lowest-income seniors, handicapped, and f a m i l i e s , they often receive the sharpest c r i t i c i s m and have received substantial cutbacks i n the US. 122 In Canada various cooperative and nonprofit housing systems have changed the image of low-income public housing, yet the impact i n rur a l areas i s small compared to the need. The Farmworker Housing Program (US) and Native Housing Program (Canada) are two other heavily subsidized programs. Like public housing and rent subsidy programs, the federal government pays d i r e c t l y for a low-income family's housing cost. One advantage of public housing over Section 8 or the various homeownership subsidy programs i s that the dwelling unit's ownership i s retained by the government and i s available for use by many families. With i n f l a t i o n , t h i s i s a less costly way to house the poor over the long run i f managed properly. Over time, the units are free and clear and the subsidy i s subst a n t i a l l y reduced; thus, the govern-ment provides housing for a low-income family at one tenth the cost of a new Section 8 rent supplement unit. Yet the public housing programs have received substantial cutbacks and are not u t i l i z e d i n many areas. In r u r a l areas Self-Help and Farmworker/Native Housing programs provide very inexpensive homeownership. Some Farmworker housing i s rental and a form of "public housing," yet other housing i s home purchase. The FmHA Section 502 homeownership program i s used together with Self-Help technical assistance and other specialized home-ownership programs to provide low-cost housing for lower-income fam i l i e s . The problems and obstacles encountered 123 by t h i s program have a l r e a d y been d i s c u s s e d but the o b s t a c l e s a r e b a s i c a l l y t h e same f o r a l l t y p e s of h e a v i l y s u b s i d i z e d homeownership programs. There i s s i m p l y a f a r g r e a t e r need f o r t h e s e programs than t h e f u n d i n g a l l o w s and t h e need i s g r o w i n g . There i s now not enough f e d e r a l l y s u b s i d i z e d b u i l d i n g g o i n g on t o even make a dent i n the market i n most r u r a l a r e a s . When most of t h e s e programs were d e v e l o p e d t h e l o n g - r a n g e p l a n was f o r s u b s t a n t i a l i n c r e a s e s i n f u n d i n g o ver t h e n e x t few decades. The c u r r e n t debt f o r e x i s t i n g homeownership and r e n t a l s u b s i d y commitment i s s u b s t a n t i a l . 0E0 d i s c u s s e s t h e impact o f two HUD programs. The s i g n i f i c a n t p a r t o f t h e A c t , f o r purposes h e r e , S e c t i o n s 235 (homeownership a s s i s t a n c e ) and 236 ( r e n t a l h o u s i n g a s s i s t a n c e ) . Under t h e s e programs, the D epart-ment of Housing and Urban Development (which absorbed FHA when i t was c r e a t e d i n 1965) i s a u t h o r i z e d t o make a s s i s t a n c e payments on b e h a l f of t h e borrower t o t h e p r i v a t e l e n d e r which have the e f f e c t o f l o w e r i n g t h e i n t e r e s t r a t e . . . . A l t h o u g h t h i s s u b s i d y mechanism has l i t t l e i n i t i a l b u d g e t a r y i m p a c t , i t s l o n g e r range impact i s s u b s t a n t i a l . . . . The maximum amount of i n t e r e s t t h a t t h e government has o b l i g a t e d i t s e l f t o 1 pay f o r f u t u r e i n t e r e s t payments on l o a n s i n s u r e d from 1968-1971 i s about $36 b i l l i o n . 1 2 I n t h e m i d d l e of the h i g h s u b s i d y e x p e n d i t u r e s and o p t i m i s t i c g o a l s , R i c h a r d Nixon was e l e c t e d t o t h e US p r e s i d e n c y and t h e Vietnam War e s c a l a t e d . The r e s u l t was immediate c u t b a c k s which have c o n t i n u e d f o r the l a s t decade i n t h e US. Throughout, FmHA's major program has been i t s homeowner-s h i p l o a n a u t h o r i t y under s e c t i o n 502. I n i t i a l l y , t h e s e were d i r e c t l o a n s , dependent on a p p r o p r i a t e funds. As i t became i n c r e a s i n g l y d i f f i c u l t t o m a i n t a i n a f a c a d e of d o m e s t i c c o n c e r n and s i m u l t a n e o u s l y c a r r y on the war i n Vietnam without r a i s i n g taxes, there was pressure to manipulate the budget. . . . The adminis-t r a t i o n cut back on requests for d i r e c t loan funds.13 Canadian housing policy has been more dependent upon the p r o v i n c i a l p a r t i c i p a t i o n . Ontario received a substantial portion of the s o c i a l housing funds due to active p a r t i c i p a t i o n , yet B r i t i s h Columbia only had major low-cost housing during the NDP years when so c i a l housing was a major goal. The most s t r i k i n g contrast between the US and Canada has already been mentioned—that i s the c r i t i c a l role played by Canada's p r o v i n c i a l governments i n the development of programs and i n the a l l o c a t i o n of fund The p r o v i n c i a l government i s very much the middle man.14 The B r i t i s h Columbia NDP government commissioned task force that came back with a "Comprehensive Social Housing Policy for B r i t i s h Columbia." There i s presently a shortage of some 20,000 housing units i n the province. By 1981 an additional 1/4 m i l l i o n w i l l be required because of a rapidly growing population, and high rates of household formation. This w i l l mean adding 46,000 housing units per year. Considering that only 26,000 starts are expected i n 1975 and that the record high was 37,627 in 1973, i t i s unlik e l y that the required number of houses w i l l be produced. In order to meet these targets, increased government a c t i v i t y i n housing production w i l l be needed.15 The massive subsidy programs drained CMHC's and HUD's budgets. For years, i n t e r e s t rates were controlled and housing finance was under the influence, i f not the control of the federal government i n both Canada and the US. Today the housing subsidy goals have been scaled down under a f e e l i n g of greater f i s c a l r e s p o n s i b i l i t y . 125 Many programs have been eliminated and most have been substantially cut back i n terms of units b u i l t or subsi-dized. The federal government i s again being viewed by many as not belonging i n the housing market. Candidates from a l l p o l i t i c a l parties were running on platforms inventing fresh old saws that the best government i s the least government; that the government that governs least governs best; that we should expect less from governments, and maybe even that we deserve less. . . . Against t h i s background many people seemed to lose sight of the poor, the aged, the minorities and the people who l i v e i n out of the way places, up the " h o l l e r s " i n Kentucky, deep i n the M i s s i s s i p p i . . . people who have suffered from ignorance and neglect and i n many cases exp l o i t a t i o n , often due to the absence of government protection.16 The r e s u l t of l i t t l e government a c t i v i t y and high prices and in t e r e s t rates has been a return to housing situations s i m i l a r to the late 1940s when there were high prices, d i f f i c u l t i e s financing, and large postwar "baby boom" :demand. The federal government had not as yet made a substantial impact on the market. In short, there i s no question that the United States possesses the f i n a n c i a l and t o t a l resources to provide a decent home and suitable l i v i n g environment for every American family. There i s c e r t a i n l y no question that i t has the "ingenuity" to do so. But there i s grave doubt, at least i n my mind, that i t has the determination of s p i r i t , to do so. . . . Indifference to the p l i g h t of the miserably housed predominates.17 The current governmental si t u a t i o n i s a major obstacle to low-cost housing. The deep per unit/family subsidies and tremendous exis t i n g debt make i t unlikel y that the deep subsidy programs can continue as more and more families need housing aid and as fewer and fewer families can afford a home without aid. 126 Contained i n t h i s report i s a b r i e f analysis and description of the current problems i n housing i n the State. Due to a combination of r i s i n g prices, increasing construction costs, soaring inte r e s t rates and continuing population increases, housing problems have become more severe over the past year. . . . The severity i s r e f l e c t e d i n the growing number of low and moderate income families who are finding i t d i f f i c u l t to maintain a sound f i n a n c i a l p osition and at the same time continue to l i v e i n affordable shelter. Even a growing number of middle income households fi n d i t d i f f i c u l t to make a l l the necessary s a c r i f i c e s i n order to l i v e i n suitable housing. . . . In 1965, middle income families ($5,000-$9,999) accounted for 53 percent of a l l new homes purchased. By 1976, the middle income \$10,000-$19,000) buyers' share of the market had declined to 38 percent. During the same period, the lower income buyers' portion of -the market went from 17 percent of a l l buyers to 4 percent i n 1976.18 It i s u n l i k e l y that the current governmental pro-grams, unless supported with massive funding increases, could make a major impact i n providing housing for low-income families as the need indicates. While the govern-mental f i n a n c i a l supports help a few people each year, many more are not helped at a l l and cannot afford a home. Other answers are needed where the goals are r e a l i s t i c and exert some s t a b i l i z i n g impact as occurred i n the 1950s and 1960s. The current US administration has made substan-t i a l cuts i n the housing budget. While subsidy programs, Section 8, and public housing.(etc.) s t i l l e xist i n some form, the waiting l i s t s are long. The FmHA Self-Help programs require a forty-hour-per-week commitment and are limited to those within a narrow income range. From the applicants, only a few families are selected. Many government programs have been cut back by narrowing the income range e l i g i b l e for c l i e n t p a r t i c i p a -t i o n . The.home purchase programs have generally accomplish t h i s by allowing prices and i n f l a t i o n to raise the minimum income required to qu a l i f y for a loan yet not raise the maximum income allowed to pa r t i c i p a t e i n the program. At times t h i s range has been less than $2,000, for example, $10,000 minimum and $12,000 maximum. This sub s t a n t i a l l y reduced the number of people who could p o t e n t i a l l y q u a l i f y . Another related way the government obstructs p a r t i c i p a t i o n i n a subsidy program i s by making many unnecessary costly requirements. FmHA w i l l not fund very small houses or expandable homes, although many low-low-income couples or singles may be very happy beginning t h e i r homeownership experience i n a small home that can be expanded as t h e i r incomes and families grow. Many seniors on limited income might also prefer a small house to a public housing apartment because they can reta i n t h e i r pets. FmHA also w i l l not deal with "expandable" houses. For example, many rur a l families which are small could l i v e comfortably i n a 400 square foot house without plumbing and running water which could be b u i l t for a price they could afford to pay, but FmHA w i l l [not allow it].19 The FmHA Self-Help program housing loan requirements are extremely r i g i d . The direct o r of the Skagit program explained how f r u s t r a t i n g i t can be to meet the owner-builder's need for personal touches and meet FmHA 128 requirements for p l a i n but sturdy homes. Tim Rosenham explained a s i t u a t i o n where a group wished to lay re a l t i l e i n a small doorway entrance. The cost would be about the same as for other materials, yet the,proposal was unacceptable. Requirements over l o t siz e , and sidewalk and street width also have added to the cost of many rur a l homes and i n nonurban areas such requirements may be unnecessary f r i l l s . CMHC i s s i m i l a r l y r i g i d i n materials required for subsidized housing. Although standards s t i l l e x i s t , there i s evidence that HUD has moved toward some r e s t r a i n t . In a fact sheet dated November 3, 1983, HUD states: HUD has reduced i t s Minimum Property Standards (MPS) by 60 percent and made i t possible for an estimated $60 m i l l i o n per year to be saved by housing b u i l t to such standards., . . . . HUD has eliminated subdivision and environmental reviews where a j u r i s d i c t i o n has a loc a l Area C e r t i f i c a t i o n process underway.20 Local Government Regulations Local government obstacles have also added to the cost of housing i n many areas. One cannot read an a r t i c l e i n a log or k i t home magazine without seeing a defense of log homes' in s u l a t i o n value or a reference to meeting l o c a l codes. One ad i n the Log Home Guide for Builders and Buyers states, "Our engineering i s the best: we have never encountered a building code we could not 21 meet." The l o c a l government requirements vary, which causes confusion and makes standardization d i f f i c u l t i n the housing industry and also adds to the cost. 129 Most regulatory and processing barriers to affordable housing exist at the lo c a l l evel i n some 19,000 munici-p a l i t i e s around the country i n the form of l o c a l l y established and administered subdivision regulations and zoning ordinances. . . . Studies show that housing costs can be reduced as much as 25 percent through actions i n just four areas over which States and l o c a l i t i e s have contro l : Removing overly r e s t r i c t i v e building and land use regulations that prevent the use of proven, cost saving innovations i n building techniques and s i t e planning and development; Assuring adequate supplies of affordable land for building; Stream l i n i n g processing procedures that cause costly construction delays; and Designing homes which r e f l e c t changing family sizes and owner l i f e s t y l e s . 2 2 Another similar publication stated regulation as a substantial obstacle to low-cost housing. Regulation r e l i e f . i s seen as a key factor i n housing a f f o r d a b i l i t y . Noting that Government regulation can account for as much as 25 percent of the s e l l i n g . price of a house . . .23 Trends seem to be away from costly controls at the l o c a l l e v e l . Several communities have introduced a new position c a l l e d a permit expeditor. A person who tracks the developer's building permit application through the processing system . . . the expeditor makes sure that the application process goes smoothly and approvals (or disapprovals) are achieved i n a timely manner.24 Changes are taking place to reduce the cost of housing on the lo c a l l e v e l but they are slow to reach many r u r a l areas with exi s t i n g out-of-date zoning and subdivision ordinances. Many of these l o c a l l e v e l i n s t i -t u t i o n al obstacles a f f e c t a l l types of housing, while other rules, regulations, and controls a f f e c t only one type of housing. 130 The mobile home i s one type of housing that has been treated d i f f e r e n t l y and special by both the f i n a n c i a l and governmental i n s t i t u t i o n s . In the next section the various types of housing w i l l be explored i n order to compare the various i n s t i t u t i o n a l obstacles that a f f e c t s p e c i f i c types of home construction techniques and types of housing. Obstacles to the Mobile Home The cost of new conventional housing has increased dramatically i n recent years . . . thi s s i t u a t i o n would seem to enhance the position of the mobile home industry since mobile homes are among the most affordable forms of shelter available today. . . . Yet, to date, mobile home shipments have not increased i n a manner consistent with the scenario suggested. In fa c t , shipments have not even.kept pace.25 The above quotation i s from an industry report t i t l e d "Barriers to Greater Sales Growth." It discussed the reasons the industry was not f l o u r i s h i n g as expected. It studied many areas and perceived obstacles to the devel-opment of the mobile home industry u t i l i z i n g information obtained from a large survey. Problems include zoning, appearance, appreciation, reputation, financing (currently), location, and dishonest fly-by-night d e a l e r s / d i s t r i b u t o r s . A l l of these problems a f f e c t the mobile home market i n a negative manner. Local Government One of the most common problems encountered by individuals wishing to purchase a mobile home i s the govern-mental r e s t r i c t i o n s and controls over th i s type of housing. 131 Zoning, a common r e s t r i c t i o n , i s not the only control, but outside of financing aid (non-aid), i t probably has the greatest impact. Many communities have actually banned mobile homes from r e s i d e n t i a l subdivisions. Occasionally they have provided for them i n parks or special areas. Zoning regulations have been a great deterrent to mobile home s i t e development. Local o f f i c i a l s and many l o c a l c i t i z e n s have been opposed to thi s type of development. Many zoning boards and planning commis-sions as well as town boards and c i t y councils have conventional home builders and rea l estate brokers i n thei r membership who see mobile homes as a competitive threat to t h e i r business interests.26 The resistance to mobile homes i s not limited to the loc a l governmental levels but i s also present at the state l e v e l through omission of mobile homes as part of state or p r o v i n c i a l p o l i c y and planning. Based on review of submitted housing p o l i c i e s and further information obtained i n telephone interviews, we conclude that the f a i l u r e to mention MH i n formal housing policy i s based on an ignorance on the part of housing planners and p o l i c y makers of MH. This ignorance pe r s i s t s i n part because of an unconscious bias i n favor of s i t e - b u i l t housing, a bias supported by the d a i l y encounter with t h i s form of housing.27 This resistance to the mobile home affects the demand i n negative and po s i t i v e ways. Because i t has been excluded from some r e s i d e n t i a l subdivisions i n many areas, i t did not get caught up i n the lengthy codes and approval process developers and t r a d i t i o n a l builders must go through. Because i t received special status, has national building codes, and receives special p r i v i l e g e s (parks, lower requirements), i t has flourished. For 132 example, the density requirements, setbacks, and road clearance (etc.) requirements are not as s t r i c t i n mobile home parks as for other subdivisions. When a mobile home i s placed on a rur a l l o t the s i t e preparation approvals go through formal procedures but the numerous building inspections are avoided. A more frequently encountered problem than no space to place a mobile home i s the problem of poor- and low-quality s i t e s . Often the land made available for park locations i s less than desirable and t h i s affects the mobile home market. Financing In both the US and Canada the best financing occurs only i f the mobile home i s placed on a foundation where i t can be financed on a longer-term lower-interest loan. This can only occur i n s p e c i f i c areas as i t i s prohibited in many small towns. Many banks and savings and loan associations consider mobile homes as vehicles rather than as houses, because they are e a s i l y moved, have a shorter l i f e span than a permanently i n s t a l l e d better b u i l t home on a foundation, and because they depreciate with time. As a re s u l t , lending i n s t i t u t i o n s generally grant personal loans rather than long-term mortgages to mobile home purchasers.28 Many of the financing obstacles have been overcome as the mobile home has gained acceptance as a secure investment. The perceptual reputation problem encountered i n the early years of the mobile home has also' been overcome i n most areas. The industry has changed and adapted .to 133 consumer tastes and altered the t r a d i t i o n a l mobile home appearance by using more conventional materials. Mobile homes have now made a major breakthrough. New house developments i n a growing number of r e s i d e n t i a l areas are being b u i l t with mobile-home houses, though only experts can usually t e l l that they are mobile homes. They're made with conventional wood-siding walls, asphalt shingle roofs, conventional windows and doors, and v i r t u a l l y everything inside conforms with standard home building practices.29 The national l e v e l of building standards for manufactured homes has meant that the costly l o c a l l e v e l delays are reduced. Many areas have recognized the need for mobile homes and the role they play i n the community. They have gained widespread acceptance. HUD opened up i t s purchase programs to include them. Most of the s p e c i f i c obstacles to the mobile home housing have been overcome. The high inter e s t rates and d i f f i c u l t y of financing a f f e c t a l l types of housing. It i s inte r e s t i n g to note an obstacle mentioned i n Davidson's thesis on mobile homes that evaluates the balance between mobile homes and subsidized housing. The increased government subsidization of conventional housing units should res u l t i n increased demand for these units and continue to act as a depressant to the demand for mobile housing units. This, a factor which w i l l determine the future demand for mobile homes, i s the projected strength of private conventional housing demand. . . . A key issue i n housing markets has shi f t e d from the a v a i l a b i l i t y and terms of financing to the cost of housing. Based on a comparative analysis of the costs of alte r n a t i v e construction methods, mobile homes do not provide a l l of the answers. However, they do represent a form of housing which can be helpful i n solving lower-cost housing problems.30 The mobile home type of housing i s often the only low-cost option outside of the subsidized housing available i n r u r a l areas. When the programs are meeting the demand for low-cost housing then the demand for the mobile home declines, but when the programs are cut back or token then the mobile homes may be the only option. In the next section the s p e c i f i c obstacles to other types of manufactured housing w i l l be examined. Obstacles to P a r t i a l l y Manufactured  Housing and Self-Help When discussing the obstacles to the other types of pre-cut and p a r t i a l l y manufactured housing i t i s important to include obstacles that impact a l l se l f - h e l p owner-builders, as most k i t home manufacturers s e l l a substantial percentage of t h e i r product to p a r t i a l or f u l l owner-builders. In t h i s section on obstacles the problems encountered by k i t manufacturers and owner-builders w i l l be discussed. Financing Financing i s a major obstacle to any owner-builder. It i s also a problem for contractor-built homes that are b u i l t from k i t s , as l o c a l banks may be reluctant to lend on a p i l e of lumber pre-cut hundreds of miles away. Unlike the mobile home, there are no national building codes; thus, each k i t must meet l o c a l area s p e c i f i c a t i o n s . With a pre-cut product t h i s can involve costly a l t e r a t i o n delays and greater f i n a n c i a l r i s k ; thus, banks may frown on lending for a k i t home unless they are f a m i l i a r with the manufac-turer and the contractor erecting the k i t . 135 An in d i v i d u a l wishing to erect the k i t himself may run into substantial problems obtaining a loan. Without a large amount of cash, the obstacles for financing can be substantial. Banks, as a rule, observe geographic boundaries i n making loans. . . . If you don't have the cash to build you generally need two types of loans: a construction loan, and, l a t e r , a permanent mortgage on the completed house. Long term mortgages on unbuilt houses are rare. A p i l e of pre-cut lumber i s not the best c o l l a t e r a l . . . . To apply for a standard construc-tion loan, you must own your property free and clear and must submit to the bank detailed plans and cost estimates. For loan approval, you may be required to employ the services of a licensed general contractor, who would be committed by contract to bu i l d the house. . . . This makes i t somewhat more d i f f i c u l t for an owner to do much of his own work. Since the contractor w i l l be responsible for s a t i s f a c t o r y completion of the work, the amount of the loan must r e f l e c t the cost of having the contractor do a l l the work.31 Another major problem i s estimating the t o t a l cost of the constructed house i f one expects to do most or a l l of the labor. One k i t home manufacturer advised potential customers of the estimated cost of a contractor b u i l t k i t . "A rule of thumb for estimating the completed 'turn key 1 cost i s add to your basic 'package price' the cost of options, double the amount and add your state taxes and f r e i g h t . " 3 2 This turnkey estimate may exceed the cost of actual construction by $10,000-$20,000 i f the owner plans to contribute his own labor. This i s a major problem when i t comes to q u a l i f y i n g for a loan. There are ways around t h i s . For example, two manufacturers had agreed to assume some r i s k and admitted i n an interview that they had 136 devised an "owner-builder contract," but thi s i s not widely advertised. Another problem facing some owner-builders i s the time normally given for home completion. While a k i t usually shortens t h i s time, many cannot complete a home within the required time without outside help. The owner builder i s also frustrated by the practice of private financing i n s t i t u t i o n s . . . interm financing i s usually given for a one year period, and then only a f t e r the foundation has been l a i d . Construction loans are often given only to commercial contractors and insurance companies frequently w i l l insure only licensed builders.33 34 A survey of graduates of owner-builder schools, most of whom b u i l t t h e i r homes from scratch, revealed that int e r e s t rates, financing problems, bank misgivings about owner-builders, and the high cost of materials accounted for four of the top f i v e hurdles. This survey was conducted among a select group of owner-builders who chose to attend one of the many owner-building schools operating i n the US. Most owner-building schools teach how to build a home from scratch, not from a k i t ; thus, only 13 percent of the respondents used k i t s . From the figures presented i n the a r t i c l e , i t i s not possible to estimate a percentage of individuals who experienced financing and bank d i f f i c u l t i e s , as the majority of the respondents indicated cash and savings or loans from r e l a t i v e s as t h e i r sources of financing. 137 Nearly three out of four (74 percent) used either cash or savings to cover a s i g n i f i c a n t portion of thei r costs. Fewer than half of them (44 percent) used financing from any form of lending i n s t i t u t i o n . . , . Approximately one quarter (24 percent) put the bite on family or friends for loans. . . . median income for our respondents i s s l i g h t l y higher [than US median]; $26,000 . . . 24 percent p u l l down less than $15,000.35 From the information provided i n the a r t i c l e , i t i s obvious that cost, financing, bank, and intere s t rate obstacles are s i g n i f i c a n t for those who need money. It would be in t e r e s t i n g to cross tabulate the income, financing, and obstacle data to evaluate the significance to those needing major financing, as the majority of respondents obviously did not. From the data presented, owner-building appears to be accessible to lower-income fam i l i e s . From the responses received, approximately 24 percent of the families could be c l a s s i f i e d as low-income but the a r t i c l e did not indicate how many of those low-income families needed financing and did not have s i g n i f i c a n t cash savings or aid from family. In spite of the fact that the majority of respon-dents were .middle- or high-income with substantial cash, four of f i v e of the top-rated obstacles were cost- or financing-related. From the data presented i n the a r t i c l e , there i s strong i n d i c a t i o n that cost and financing are major problems to owner-builders. The a r t i c l e also reported that one quarter of the responding owner-builders had incomes that were at levels 138 that could q u a l i f y them for federal housing subsidy and assistance, yet less than 2.5 percent reported u t i l i z i n g any US federal financing or subsidy program. This survey indicates support for the l i t e r a t u r e ' s position that lower-income owner-builders face substantial f i n a n c i a l and governmental obstacles, yet also documents the position that many overcome those obstacles. Federal/State Government One s t a t i s t i c seems p a r t i c u l a r l y s i g n i f i c a n t , since i t r e f l e c t s the role the federal government plays i n guiding national energies. While the Federal Housing Administration (FHA) and the Veterans Administration (VA) a s s i s t the purchase of one out of every three developer b u i l t homes by of f e r i n g mortgage insurance, they perform t h i s service for only one out of seventeen owner b u i l t homes.36 If one examines the survey results i n New Shelter and compares them to the statements above, one can observe that the US federal position on owner-building has not changed subs t a n t i a l l y since 1968. In an interview on March 12, 1982, at the Vancouver CMHC o f f i c e , Mr. F u l l e r stated that s e l f - h e l p housing "never was accepted or turned out to be f e a s i b l e , " but he added that CMHC w i l l underwrite an owner-builder on occasion. He continued explaining that any CMHC loan must have NHA standards. . . . Have an amature doing i t . . . infr a c t i o n s higher." He knew of no log or other type k i t s that have met NHA acceptance. In his opinion, the company did not wish to bother with NHA acceptance. He also stated that i t would take 14" logs to meet in s u l a t i o n requirements; and that he "doubts 139 3 7 more than two [ k i t manufacturers] have our acceptance." Since the interview, CMHC has become more f l e x i b l e and there i s some ind i c a t i o n that log homes have gained acceptance. The governmental barriers i n both the US and Canada are apparently not intentional but are caused by the struc-ture of the individual programs. Like the mobile home, the p a r t i a l l y manufactured home i s not yet seen separate from conventional housing and i s often ignored. Self-help i s also simply ignored and not accepted as a serious option a large number of people wish to select. HUD h o s t i l i t y to s e l f - h e l p i s not so much a matter of deliberate p o l i c y as i t i s program structure. HUD i s programmed to serve r e a l t o r s , builders, t i t l e searchers, appraisers and consultants. . . . it's,surrounded by an industry. Most se l f - h e l p sponsors simply are not large enough to support the scale HUD prefers. HUD would rather be making 235 commitments i n blocks of hundreds. Some HUD f i e l d people say frankly that they do not wish to be bothered with fewer than 70 units at a time.3 8 The t r a d i t i o n a l FHA "203" mortgage insurance programs likewise make no mention of owner-builders or s e l f -help, although loans are made under i t , as t e s t i f i e d to by s t a t i s t i c s and federal o f f i c i a l s . This i s appar-ently a matter of accommodation, since there i s nothing in the statutes or regulations authorizing such loans. The owner-builder i s therefore at the mercy of the lo c a l FHA office.39 Only one federal program offers f i n a n c i a l assistance to low and moderate-income owner-builders: The Depart-ment of Agriculture's Section 502 program. The authori-zation of funds for 1972 under th i s program requires that at least 50 percent of the loans be made to low income fam i l i e s . However, the FmHA i s unable to say how many owner-builders have been assisted under Section 502. 4 0 140 The only federal governmental i n s t i t u t i o n a l program for s e l f -help i s the program the Whatcom and Skagit s e l f -help programs operate under. The requirements are substan-t i a l and much i s l e f t to the judgment and values of the individual FmHA o f f i c e . The only program (FmHA 523) of technical and f i n a n c i a l assistance to sel f - h e l p housing i s limited to organized rural s e l f - h e l p groups—the in d i v i d u a l owner-builder acting on his own does not qu a l i f y . As for f i n a n c i a l assistance to se l f - h e l p e f f o r t s to be provided by HUD, we have seen that the Department has been unwilling or unable to follow Congressional directives.41 Many FmHA l o c a l areas have no self-help program. The few who do are constantly on the defensive, and are forced to j u s t i f y t h e i r existence and cope with the ambiguous program requirements of l o c a l o f f i c i a l s . 'Self-help i n r e h a b i l i t a t i o n , an esp e c i a l l y c r i t i c a l area of need i n Whatcom County, does not e x i s t . The FmHA program was set up to aid lower-income families to afford t h e i r own rur a l home but most employees responsible for administering these programs know l i t t l e about housing. I spoke with agents i n the Whatcom County FmHA o f f i c e . The individual i n charge of housing knew nothing of demand or needs analysis and f e l t that the nine r e h a b i l i -tated homes i n Whatcom County they had aided i n r e h a b i l i t a t i n g had met the need for housing r e h a b i l i t a t i o n i n the county. Studies conducted by l o c a l housing analysts indicated the numbers of substandard units i n the thousands. When I spoke to Carol Hammond (Whatcom Self-Help) and Tim Rosenham (Skagit) early i n 1981, both indicated 141 d i f f i c u l t i e s with FmHA. Rosenham (an architect) had designed an innovative energy-efficient home for his self-help program. He indicated f r u s t r a t i o n i n that the l o c a l FmHA o f f i c e had instructed him to stop building houses that did not "look" low-income. Hammond was also impressed with Rosenham's design and presented i t to the FmHA. The grant proposal makes reference to i t : "A new design came from Tim Rosenham, arc h i t e c t with Skagit Self Help Program, and 42 we presented i t to FmHA." Apparently Hammond also was instructed to cease building the middle-class-looking two-story house. She complied but Rosenham decided to f i g h t . The Whatcom Se l f -Help organization i s s t i l l functioning and the houses just beginning i n 1981 are now complete. The Whatcom agency i s not an extravagant organization. Salaries are low and the work i s hard. We are applying for our second technical assistance grant to enable us to continue to operate our self-help housing program. We propose to remain a small organiza-ti o n with a s t a f f of four to six, with two groups in construction at any given time. We w i l l increase our productivity to 38 houses i n a two year period by implementing a long range plan. . . . We ask that salary for the Construction Coordinator be approved at $15,000. . . . Washington State Department of Employment Security shows the average wage for a similar position to be $32 ,000 or more.. . . . We are very fortunate that John Borman i s w i l l i n g to work with us for such low pay. His s k i l l s are excellent and we hope to be able to keep him. A raise of $15,000 would help.43 The k i t and modular homes have not been successful i n gaining government subsidy money, espe c i a l l y for owner-builders. In the early 1970s help existed for " s h e l l 142 houses" but outside of the formal FmHA "self-help" program no current subsidy program e x i s t s . Many k i t home manufac-turers are not enthusiastic about working with FHA or FmHA but many are w i l l i n g to give i t a t r y . During a July 1983 interview i n Whatcom County with a small log home manufac-turer, the agent indicated a willingness to work with FHA but stated that they never had before. Several dome manufacturers have also t r i e d to obtain approvals, as i t helps i n overcoming l o c a l code acceptance. As domes grow more popular, the n i t t y - g r i t t y of codes and financing i s easier to deal with, es p e c i a l l y since some domes are approved by the FHA and the VA. S t i l l they do present the problems commonly encountered with any new and d i f f e r e n t kind of housing.44 The greatest problem currently facing the i n d i v i d u a l wishing to purchase a manufactured home i s financing and the lack of governmental aid or backing. A l o c a l builder or developer usually w i l l have an easier time obtaining FHA, FmHA, or VA approval for t h e i r s t i c k - b u i l t home than an individual wishing to b u i l d a modular or k i t home. Turner and Fichter question the logic of the role of government. If there were no longer-term financing a l t e r n a t i v e s , t h i s sort of discrimination might well reduce owner-building to the n e g l i g i b l e level of a c t i v i t y i t i s often assumed to be. Yet commercial banks and savings and loan associations have supported owner-builders when the federal government would not. One i s compelled to ask why i f private commercial lending i n s t i t u t i o n s do not consider the owner-builder an inordinate r i s k , the major public servant of housing need apparently does.45 Federal government obstacles plague the k i t home industry and s e l f - h e l p cost-saving option, yet both function 143 without federal assistance. Undoubtedly there would be more k i t homes available for lower-income potential home-owners i f these federal obstacles were overcome and support rather than obstruction was the rule . The current attitude toward self-help and k i t homes has not changed since the e a r l i e r unfinished house fiasco twenty years ago. K i t homes and self-help are perceived as involving r i s k and a r i s k that the federal governments i n Canada and the US do not wish to take. Local Government A major obstacle frequently discussed i n k i t home brochures i s the problem with l o c a l building codes and regulations. Although most k i t s are constructed to meet the accepted building standards, each l o c a l area can place additional r e s t r i c t i o n s on the manufacturer. Many k i t home advertisements make reference to th e i r k i t s meeting codes in a l l areas and the help they can provide i n obtaining approvals. Pre-Cut International Homes can comply with the Uniform Building Code, meet or exceed a l l insul a t i o n require-ments for heating loads and energy consumption. . . . We w i l l prepare plans for the building department. After you apply for a permit we w i l l answer any questions the plan checker may have.46 The lack of national l e v e l building standards has complicated the manufactured housing industry. Standards vary widely and many k i t homes do not employ t r a d i t i o n a l construction methods; thus, the plan checking approval procedure i s often delayed. The lack of u n i f i e d building 144 standards l i k e the mobile home has been demonstrated to be a s i g n i f i c a n t obstacle to the k i t home industry developing beyond the l o c a l l e vel home town small business. A conventional house i s fixed to a given location, and each housing market has i t s own p a r t i c u l a r set of c h a r a c t e r i s t i c s . A builder i s confronted with a variety of l o c a l building codes and zoning ordinances which prevent standardization of constructions. Regulations d i f f e r between neighboring muni c i p a l i t i e s , and there are l o c a l variations as to labor markets. . . . Conven-t i o n a l mortgage financing i s r e s t r i c t e d to the l o c a l j u r i s d i c t i o n of the lending bank because knowledge of the l o c a l market i s compulsory to sound lending practices. Thus, because of the degree of l o c a l i z a t i o n , builders experience major d i f f i c u l t i e s i n moving from one market to another.47 The major problem i n meeting codes for the log homes has been the controversy over the energy e f f i c i e n c y of th e i r wood walls. Arguments over the thermal mass advantages continues. Many log homes do not meet l o c a l l evel codes for energy e f f i c i e n c y . This has resulted i n many manufacturers developing various i n s u l a t i o n techniques. A New Hampshire manufacturer o f f e r s an i n s u l a t i o n package as an option. Solid Wall recently introduced i t s "Sentry Home" which uses 4" x 6" logs for the exterior wall. The exterior i s then covered with s o l i d Thermax i n s u l a -tion completely enveloping the building.48 In order to meet the requirements of several countries, Maisons. d'Autrefois [Quebec firm] has developed three approaches to t h e i r log building system.49 While log homes have widespread acceptance as s t r u c t u r a l l y sound homes, other k i t home manufacturers have had greater d i f f i c u l t y . The dome received some resistance from l o c a l inspectors and design committees. 145 A l l Timberline domes and connector systems have been analyzed for stress on a computer. They comply with the Uniform Building Code (1979 e d i t i o n ) , the American National Standards Institute (ANSI) and the National Sp e c i f i c a t i o n for Wood Construction. Each k i t includes a set of assembly plans and engineering calculations, both approved and stamped by our structural engineer. These w i l l be helpful to your l o c a l building department i f they are unfamiliar with domes.50 With experimental types of building construction, there may also be problems regarding the new techniques and l o c a l union opposition to new ideas. "Local c r a f t unions have i n many instances refused to handle f a c t o r y - b u i l t housing without f i r s t making costly changes at the home s i t e . " Local l e v e l support or resistance can make a great deal of difference with any type of housing. While the mobile home has overcome many l o c a l l e v e l barriers i n r u r a l areas, the p a r t i a l l y manufactured house s t i l l may have d i f f i c u l t y . Harry Wexler, i n Housing and Local Government, elaborates on the power of l o c a l government. Local government o f f i c i a l s influence the housing process through t h e i r decisions i n such areas as planning, zoning, housing and building codes, subdi-v i s i o n , rent control, property taxes, loans and grants. Through deliberate and coordinated decision making, lo c a l government can encourage the construction of new housing units, promote p a r t i c u l a r kinds of dwelling units to meet the needs of special groups, such as the poor and the e l d e r l y housing a c t i v i t y into s p e c i f i c neighborhoods. Likewise l o c a l government can discourage the rate of new housing a c t i v i t y through r e s t r i c t i v e regulations.52 Marketing Unlike mobile homes, the p a r t i a l l y manufactured housing industry i s dominated by numerous small-scale 146 companies. Only a few larger firms have substantial dealer networks or advertise na t i o n a l l y . Consequently, most manufacturers s e l l homes only within a small radius of th e i r factory. Consumer awareness of the various k i t types and options i s a major problem. A few firms do advertise nationally or throughout the world, but most individuals know l i t t l e of the k i t home industry. Unlike the mobile home, the houses are less d i s t i n c t as compared to conventionally b u i l t homes and they are not ea s i l y r o l l e d onto a parking l o t for part-time public viewing. Mobile homes have a d e f i n i t e marketing edge. The wholesale and r e t a i l financing and s e l l i n g tech-niques of a mobile home dealer are similar to those of an automobile dealer. The mobile home dealer i s more independent, however, and his relai t o n s h i p with the manufacturer i s not as close as that of the auto dealer with his manufacturer. . . . Thus the mobile home dealer operates with fewer merchandising and financing aids from the manufacturer, even though manufacturers furnish floor-plan financing i n some cases. Mobile home dealers are also "f l o o r planned" with banks and sales finance companies who usually advance to the dealer approximately 90 to 100 percent of the cost of each unit, including transportation costs.53 Ki t home display areas do exis t but they are usually always permanent and costly to maintain (Figure 18). Most k i t home manufacturers can only afford to place one model in one location and t h i s frequently doubles as an o f f i c e or home. Mobile home lo t s are i n almost every small town in r u r a l areas (Figure 19). Major manufacturers i n the US l i k e Fleetwood may have thousands of homes on v i s i b l e display throughout the country. This increased v i s i b i l i t y gure 18. Model Home in Seattle, Washington Figure 19. Mobile Home Display Lot i n B r i t i s h Columbia Near Vernon gives mobile homes a d i s t i n c t advantage over k i t homes. Marketing and v i s i b i l i t y obstacles occur i n most types of k i t homes. In the next section, the survey results w i l l be analyzed to further understand the k i t home industry and obstacles to i t s development. 150 Notes ''"Harold Davidson, Housing Demand: Mobile, Modular  or Conventional (New York: Van Nostrand, 1973), p. 107. 2 Washington, Housing: The Problems i n Washington  State (Olympia: Washington State Planning and Community A f f a i r s Agency, Local Government Services Division, 1980), p. 1. 3 Davidson, p. 73. 4 U.S. Housing Assistance Council, Looking for  a Home (Washington, D.C.: Government Printing O f f i c e , n.d.), p. 1. 5 John F. C. Turner, Housing by People Towards  Autonomy i n Building Environments (New York: Pantheon, 1976), p. 31. U.S. Of f i c e of Economic Opportunity and Rural Housing, A Report on OEO's Rural Housing A c t i v i t i e s and  Achievements, as Indicated by Study of Five Selected Rural  Housing Development Corporations (Washington, D.C: Govern-ment Printing O f f i c e , n.d.), p. 47. 7 Washington, p. 21. 8 Inte r r e l i g i o u s C o a l i t i o n for Housing (ICH), Housing  Costs and Housing Needs, by Alexander Greendale and Stanley F. Knock (New York: Praeger, 1976), p. 8. 9 U.S. Of f i c e of Economic Opportunity and Rural Housing, p. 42. "^Ibid. , p. 165 . "'""'"Ibid. , p. 162. 12 Ibid., p. 38. 13 Ibid., p. 45. 14 Canada Mortgage and Housing Corporation. R e v i t a l i z -ing North American Neighborhoods: A Comparison of Canadian  and US Programs for Neighborhood Preservation and Housing  Rehabilitation, NHA Publication 5237 (Ottawa, Ontario: CMHC, 19 79), p. 14. " ^ B r i t i s h Columbia, Interdepartmental Study Team on Housing and Rents, A Comprehensive Social Housing Policy  for B r i t i s h Columbia, by Emily Paradise Achtenberg, Peter Larmour, and P a t r i c i a Streich ( V i c t o r i a , B.C.: n.d.), p. 1. 151 16 U.S. Housing Assistance Council, p. 1. 17 Joseph Fried, Housing Crisis--USA (New York: Praeger, 1971 ) , p. • 1. 18 Washington, p. 2. 19 U.S. Office of Economic Opportunity and Rural Housing, p. 176. 20 U.S. Department of Housing and Urban Development, Fact Sheet, November 3, 1983. 21 Log Home Guide for Builders and Buyers.(Gardenvale, Quebec: Muir, 1983). 22 U.S. Department of Housing and Urban Development, The Joint Venture for Affordable Housing, HUD-624-PDR(2) (Washington, D.C: Government Printing O f f i c e , 1983). 23 U.S. Department of Housing and Urban Development, Affordable Housing, HUD-623-PDR( 3) (Washington, D.C: Government Printing O f f i c e , June 1983). 24 U.S. Department of Housing and Urban Development, Putting the Roof on Housing Costs (Washington, D.C: Government Prin t i n g O f f i c e , n.d.). 25 Owens/Corning Fiberglass, Barriers to Greater Sales  Growth, An Investigation of Consumer Shelter Decision-Making  As It Impacts the Mobile Home Industry, p. 1. 2 6 Davidson, p. 45. ' 27 Thomas Nutt-Powell, Michael Furlong, and Christopher Pinkington, The States and Manufactured Housing (N.p.: June 1980 ) , p. 8. 2 8 Judith Rabb and Bernard Rabb, Good Shelter, a  Guide to Mobile, Modular and Prefabricated Houses Including  Dome (New York: Quadrangle, 1975), p. 61. 29 Watkins, p. 70. 30 Davidson, p. 239. 3 1Frank Coffee, The Complete Kit House Catalog (N.p.: n.p., n.d.), p. 170. 3 2Pan Adobe Cedar Homes, Pan Adobe brochure (Renton, Wash.: n.d.). 3 3John F. C. Turner and Robert Fichter, eds., Freedom  to Build, Dweller Control of the Housing Process (New" York: Macmillan, 1972), p. 34. Ibid., P- 23. Ibid., P- 26. Ibid., P- 28. 34 Roger Rawlings, "Anyone Can Build a Home," Rodales  New Shelter, A p r i l 1983, p. 22. Ibid. 3 6 Turner and Fichter. 37 Telephone interview with Mr. F u l l e r , Canada Mortgage and Housing Corporation, Vancouver, B.C., March 12, 1982. 3 8 Turner and Fichter, p. 26. 39 40 41 42 Whatcom County, "Whatcom Self-Help Housing" (Linden, Wash.: Whatcom County, 1980), p. 2. (Unpublished grant.) Ibid. 4 4 Watkins, p. 69. 45 . Turner and Fichter, p. 5. 46 Pre-Cut International, k i t home brochure (Woodin-v i l l e , Wash.: Pre-Cut International, n.d.). 47 Harold Alan Davidson, "An Analysis of the Demand for Mobile Homes with Implications for the Financial Structure of the Mobile Home Industry through 1975," unpublished d i s s e r t a -t i o n , University of Southern C a l i f o r n i a , Los Angeles, 1974. 48 Log Home Guide for Builders and Buyers (Gardenvale, Quebec: Muir, 1983), p. 135. 4 9 I b i d . , p. 110. 50 Timberline Geodesic Homes, n.d. (Brochure.) 51 Davidson, p. 100. 5 2 Harry Wexler and Richard Peck, Housing and Local  Government; A Research Guide for Policy Makers and Planners (Lexington, Mass.: Lexington Boooks, 1975), p. 7. 5 3 Davidson, p. 50. 153 PART I I INTERVIEW AND SURVEY RESULTS CHAPTER VII INTRODUCTION TO PART II Need for Interview and Survey The information on k i t homes provided i n Chapter V came predominantly from k i t home d i r e c t o r i e s , sales l i t e r a -ture , and magazine a r t i c l e s . Academic research i s extremely limited and one can f i n d only minor reference to the industry in most academic documents on housing. Books by Rabb and by Watkins described the various types of k i t homes and t h e i r advantages. Both publications l i s t e d various k i t home manufacturers i n business throughout the US and Canada. Only Davidson's thesis and book analyzed the p a r t i a l l y manufactured home's potential to provide low-cost housing, although the focus of the thesis was on mobile homes. Currently the k i t home has not been studied in depth as a d i s t i n c t i v e type of housing with potential to meet low-cost housing need. The self-help housing process and the mobile home have been studied i n several academic publications but sel f - h e l p plus p a r t i a l manufacturing (pre-cut) housing has been studied l i t t l e as an answer to the current housing shortage and high cost s i t u a t i o n . When conducting the l i t e r a t u r e review and study of 154 155 a l l aspects of low-cost housing, i t became obvious that additional information would be necessary to f u l l y analyze the k i t home s i t u a t i o n and i t s potential to provide low-cost housing i n r u r a l areas. Self-help and mobile homes have demonstrated t h e i r cost-saving p o t e n t i a l . The p a r t i a l l y manufactured home combined with the s e l f - h e l p process has yet to become a well-known established cost-saving housing option. Because k i t homes have not been studied in depth, i t was necessary as part of t h i s study to obtain d i r e c t data i n order to analyze t h e i r potential for low-cost housing. After considerable l i t e r a t u r e review, several short v i s i t s to k i t home manufacturers, and examination of material received form over f i f t y k i t home manufacturers, s p e c i f i c potential interview.questions were developed. The potential questions were general and l e f t room for a large variety of responses and discussion. Seven companies (located i n the P a c i f i c Northwest were selected for the interviews. Three were large and well known, while the other three were of moderate s i z e . A l l the companies had at least one display v i l l a g e and many sold k i t s through dealer networks located throughout the P a c i f i c Northwest. The k i t home dealers interviewed sold a variety of products. Although no two products were a l i k e , several sold similar type homes. The k i t homes could be divided into four major categories: 156 Type *# of Dealers S t i c k - B u i l t Frame K i t * 2 Rustic Log* 1 Solid Wall Pre-Cut Timber 4 Modular 1 *One manufacturer sold Frame and.Log k i t s . The interviews were conducted at the location of business, frequently inside the k i t home. The individuals interviewed were aware of the purpose for the research. The same basic nine questions were asked of each manufacturer and lengthy explanations encouraged as the purpose of the interviews was to further understand the industry and not to simply test sample survey questions. Interview Questionnaire The following questions were asked: 1. How many homes have you sold t h i s year? 2. Where i s your factory? 3. What i s the lowest-income customer you have had who obtained a loan? 4. What financing arrangements do you have? 5. Do you have any approval problems? 6. What are the benefits of your home over the mobile home? 7. What i s your lowest-priced home? 8. Have you ever b u i l t a home with FmHA .- HUD, or another subsidized program? 157 9. What are the obstacles to your business? The responses varied (see Table 3). Some k i t home dealers had no idea what the income or financing arrange-ments of th e i r customers were, as they offered no help with financing except to' suggest possible sources (banks, savings and loans, e t c . ) . These dealers stated that t h e i r terms were cash only." The discussion about obstacles seemed to focus on financing and problems securing financing for current customers as compared to past situations. Some manufacturers 'admitted losing customers due to the new requirements. A . few companies had devised owner-building contracts or made arrangements with a l o c a l bank, but others explained that former bank arrangements were cancelled recently and the sales were cash only. A l l k i t home manufacturers interviewed admitted to s e l l i n g fewer homes t h i s year than l a s t , or to reduction i n business growth. VA, FHA, and FmHA loan programs were not used i n great numbers by any of the dealers interviewed but three admitted occasionally s e l l i n g to customers using FHA or VA. The problems of the owner-builder were also discussed. Only the modular dealer never sold to owner-builders. Dealers A and F (rus t i c log and stick) had several stages of packages available for purchase and both seemed to encourage customers to purchase the erected s h e l l which i s comparable with the unfinished house stage. Two other manufacturers ( s o l i d wall) appeared to push owner-building and offered extensive owner-builder TABLE 3 QUESTIONNAIRE RESPONSES Question Number :-.A B Kit C Home Manufacturer D E F G 1. p 50 Wa. 30-40 Wa 20 Wa. 10 Wa. 50 Wa. p 2. None Orders Bellevue Tacoma Woodville Bellevue Tacoma Tacoma 3. P $20,000 $25,000 $18,000 $15,000 p p 4 . Convent. No shell loans. Convent. 1/3 down No owner-builders . Convent. 20% down i f cont. b u i l t . Convent. 15% down owner-builder contract. Convent. 50-60% cash. Convent. 17-1/2% 7 years. Convent. only. ' . 5 . No No No No No No No 6. . Quality Appreciate Cannot compare Quality Low-cost mainte-nance Aesthetic Last longer Cannot compare Resale Energy-e f f i c i e n t Appreciate Construct technique 7 . $11,600 shell erected $8,500 sh e l l not erected $21,900 she l l erected $7,000 she l l not erected $20,000 s h e l l erected $14,875 s h e l l erected $33,950 entire complete house U l oo TABLE 3--Continued Question Number B Kit Home Manufacturer C D E No No Few VA Few VA FHA and Federal and FHA VA Land Bank No No Financing Lumber str i k e Economy Financing Bank requests Financing Int. . rate Bank not support owner-builder Financing 160 trai n i n g schools and support. One boasted that t h e i r k i t was designed for the owner-builder. No two manufacturers offered the same product nor conducted business i n the same way. Although the formal interview was of only seven P a c i f i c Northwest dealer/ manufacturers, an additional six were contacted before and after the interviews, including one large dome dealer i n C a l i f o r n i a . While the interview data was he l p f u l , a larger sample of the industry was necessary for further analysis. Introduction to Survey Unlike the interview questions, the survey was designed to obtain exact, measurable data so the results could be tabulated using the S t a t i s t i c a l Package for the Social Sciences (SPSS). The answers requested were predom-inat e l y i n the form of multiple choice, yes/no, or numerical. Only a few questions requested a description or explanation. Sixteen basic questions were asked but many required multiple responses. It was estimated that the survey would take less than f i v e minutes to complete. The questions were grouped into three categories—General Information, Owner-Building/Financing, and Obstacle/Business Situation (see Appendix). Most surveys were returned complete but some p a r t i -cipants did not respond to many of the financing questions due to th e i r lack of knowledge of the f i n a n c i a l s i t u a t i o n of cash only customers. 161 In t h i s section responses w i l l be presented and discussed i n three chapters. Chapter; VIII w i l l present the basic survey re s u l t s regarding the ch a r a c t e r i s t i c s of the k i t home industry. Information on k i t type, years i n business, owner-building, financing aid, price, income of customers, and location w i l l be presented i n order to understand the industry and i t s va r i a t i o n s . No two k i t manufacturers are a l i k e , each s e l l s a d i s t i n c t product. Some sp e c i a l i z e i n s e l l i n g to owner-builders; some are involved i n financing; others only s e l l to customers w i l l i n g to pay cash or to obtain t h e i r own financing. Chapter IX w i l l discuss the k i t home's potential to provide low-cost housing i n rur a l areas. The responses w i l l be cross tabulated and analyzed i n order to determine i f the industry has the potential to provide low-cost housing i n rural areas. The l i t e r a t u r e indicated the potential of p a r t i a l manufacturing plus owner-building to provide a low-cost house. The survey re s u l t s are analyzed to determine i f low-income families are currently customers and i f the price of existing k i t s i s low enough for a potential owner-builder with income level below that normally required for new or existing home purchase. In Chapters X and XI, the obstacles to the develop-ment of the k i t home industry w i l l be discussed again and responses to the obstacle question analyzed. The focus w i l l be on i n s t i t u t i o n a l and industry s p e c i f i c obstacles. 162 There are lim i t a t i o n s involved when asking manufacturers/ dealers instead of potential or exis t i n g customers. The survey i n New Shelter magazine"*" asked questions regarding obstacles to owner-builders and these responses w i l l be compared to survey r e s u l t s . One l i m i t a t i o n of both surveys i s that no attempt has been made to survey those who would l i k e . t o become k i t home owner-builders but are unable to overcome the many obstacles. These people, although d i f f i -c u l t to locate, may provide the best source for information on the many "obstacles" to low-cost k i t home ownership. 163 Notes Roger Rawlings, "Anyone Can Build a Home," Rodales  New Shelter, A p r i l 1983, p. .22. CHAPTER VIII CHARACTERISTICS OF KIT HOME MANUFACTURERS Ki t homes come i n many shapes and sizes; no two k i t home manufacturers o f f e r the same product nor conduct business i n the same manner. Because each product i s d i s t i n c t , the survey questionnaire was designed to ask basic questions that would r e f l e c t these differences as well as . id e n t i f y s i m i l a r i t i e s . The purpose i n obtaining t h i s information i s twofold: 1. To obtain basic background information about the industry as a whole i n order to achieve a greater understanding of how i t functions. 2. To investigate, analyze the industry, and propose potential reasons for s p e c i f i c responses. To aid in the further deeper analysis of the industry, how i t functions, and why. This section w i l l present the results as reported i n the survey with some analysis and comparisons with l i t e r a t u r e and interview r e s u l t s . Detailed analysis of the responses as they pertain to the potential for the industry to provide low-cost housing and discussion of the problems and obstacles to industry development w i l l be discussed i n la t e r chapters. 164 165 This section w i l l examine the results reported i n eight s p e c i f i c areas. The responses to questions on k i t type, years i n business, price, owner-builder p a r t i c i p a t i o n , location, income of customers, and financing w i l l be discussed i n t h i s chapter. Responses pertaining to s e l l i n g success and industry obstacles w i l l be discussed i n the section on obstacles. Ki t Type Kits come i n many shapes and sizes, and exact categorization of k i t type i s not always possible. Some are combinations of two or more building s t y l e s . There i s a wide v a r i a t i o n i n methods of construction and materials used i n the k i t home industry. Some manufacturers are constructing log homes i n wall panel sections and using a crane to hoist entire wall sections onto the foundations. Such a manufacturer would have a d i f f i c u l t time categorizing his type home. In spite of the l i m i t a t i o n s , i t i s important to have some description of the type k i t home the manufacturer s e l l s . C l a s s i f i c a t i o n t i t l e s were developed by examining the l i t e r a t u r e provided by over twenty-five k i t home manufac-turers. The c l a s s i f i c a t i o n t i t l e s of log, panel, pre-cut s t i c k , modular, and panel and pre-cut combination were developed. The t i t l e s could be defined as follows: 1. Log. A log house i s a s o l i d timber wall struc-ture. The log could be hand-hewn or precision machine-cut. 166 The width of the wall varies from three to fourteen inches depending on the manufacturer. There are•numerous methods of securing the logs. Some are groved, copped, or slotte d for a weather-tight f i t . Most large logs are spiked but a l l manufacturers have t h e i r own method they feel i s superior. 2. Panel. A panel k i t home usually means that the house i s constructed by cutting and manufacturing the wall i n large panel sections which are then trucked to the s i t e and erected s w i f t l y , usually with the use of a crane and large team. A panel house can be frame (stick) or s o l i d wall timber. 3. Pre-Cut Stick. A pre-cut s t i c k house refers to a frame type of construction where the studs and plywood are pre-cut but not erected i n the factory. Some dome manufacturers describe themselves as s e l l i n g pre-cut s t i c k homes as the domes have two by four's, connectors, pre-cut plywood, and in s u l a t i o n i n a package. There are not too many conventional pre-cut s t i c k packages; most have unusual shapes. 4. Panel and Pre-Cut Combination. This k i t type i s simply a k i t that combines pre-cutting and panel techniques. This i s a growing method of construction, as some portions of the house are pre-cut while other wall sections are easier to construct i n a factory and are trucked to the s i t e i n large panels. 167 5. Modular. These manufacturers prefabricate the entire house i n sections then set the* home on an owner-completed foundation. One category was l e f t t i t l e d "Other" for those that were unable to describe t h e i r k i t using the above t i t l e s . Only one manufacturer surveyed c l a s s i f i e d his k i t as "Other" (see Table 4). TABLE 4 KIT TYPE Ki t Type Number Log 17 Modular 4 Panel 4 Pre-Cut Stick 3 Pre-Cut and Panel 10 Other 1 Seventeen of the thir t y - n i n e k i t manufacturers defined t h e i r k i t s as log. This i s the expected response, as i t takes l i t t l e c a p i t a l to set up a log k i t home manu-facturing operation and there are many small-scale log k i t home manufacturers throughout North America. While numerically the log home k i t manufacturers are strong, they are usually small companies producing less than 100 homes per year. In contrast, the modular home builders 168 are usually large-scale operators requiring major expendi-tures i n c a p i t a l and equipment. Many mobile home manufac-turers produce a modular l i n e . One modular home manufacturer stated that they sold 3,100 homes l a s t year nationwide. One pre-cut s t i c k manufacturer was also a large company and reported s e l l i n g 2,000 homes thi s year alone. They had been i n business t h i r t y - f i v e years; 98 percent of t h e i r homes were dealer-financed. The k i t type response was expected, as log and panel/pre-cut manufacturers are the predominant types of k i t home dealers i n the country. Many pre-cut s t i c k manufac-turers frame the walls i n f a c t o r i e s ; thus, there are few true pre-cut s t i c k manufacturers i n business today although the few that ex i s t are often large and well established. Years i n Business A question on the survey asked how many years the manufacturer had been i n business. This information i s useful i n order to evaluate how well newer companies are doing compared to older companies, which w i l l be discussed in the obstacle chapter. Many k i t manufacturers responding had been i n business more than twenty-five years (see Table 5). The mean age of the t h i r t y - e i g h t cases responding was eighteen. Only three companies reported that they had been i n business less than seven years. 169 TABLE 5 YEARS IN BUSINESS Years i n Business Number 0- 6 3 7-14 17 15-22 5 20-29 5 30-39 ^ 7 The industry seems to be rapidly expanding. A boom for the industry seems to have occurred during the period 1962-1974. Seventeen companies began at t h i s time. A surge i n federal money occurred during t h i s period and s o c i a l housing programs flourished. Cutbacks occurred i n the US i n 1974 due to the need to put large sums of federal money into the Vietnam War e f f o r t . Few companies responding to the survey reported that they had begun since these cutbacks occurred. The l a s t few years have been d i f f i c u l t for the housing industry. When crosstabulating the years i n business with k i t type, there i s a tendency for the newer companies to be panel and panel/pre-cut type k i t s , while most pre-cut st i c k firms have been i n business over t h i r t y years. Panel and panel/pre-cut techniques are new, while s t i c k building techniques were developed more than f i f t y years ago (although improvements have been made since then). 170 A l l modular homes responding to the survey indicated that they began i n business seven to twenty-one years ago, while there seemed as many long-established log companies as new. Owner-Building P a r t i c i p a t i o n The l i t e r a t u r e indicated that most k i t home manufac-turers s e l l to the owner-builder market. A question on the survey asked whether the manufacturer offered i n s t r u c t i o n to the potential owner-builder. Thirty-two of t h i r t y - e i g h t dealer/manufacturers indicated that they offered i n s t r u c t i o n to owner-builders. The six who did not, correspond with the figure of the six who indicated that they sold only complete houses. The next question pertaining to owner-building on the survey asked what percentage of customers were f u l l owner-builders, p a r t i a l owner-builders, owners acting as general contractors, and those with no involvement i n construction. F u l l Owner Builders Responses varied widely. Some manufacturer/dealers indicated none of t h e i r customers selected t h i s option, while others stated that 75 percent of t h e i r customers were f u l l owner-builders (see Table 6). In order to e a s i l y evaluate the responses, i t i s necessary to break them into f i v e groups. TABLE 6 PRECENTAGE FULL OWNER-BUILDERS % Customers F u l l Owner-Builders # Firms Under 5% 4 5-14% 14 15-29% 9 30-49% 3 50-74% 4 75% + 3 F u l l owner-building was defined as a customer doing a l l or most of the construction of the home. The mean was 24.59% or approximately one-fourth of the customers industry-wide are f u l l owner-builders. P a r t i a l Owner-Builders Again, the range was wide for customers choosing to do some of the work themselves. The responses ranged from 0 percent to 70 percent (see Table 7). The mean, again, was approximately 25 percent. The responses were broken down into categories and the res u l t s are shown i n Table 7. Owners Acting as General  Contractors A way to save on the cost of a custom house i s to hire a l l the labor and oversee the construction. The results to the question of what percentage of customers act 172 TABLE 7 PERCENTAGE PARTIAL OWNER-BUILDERS % Customers Part Owner-Builders # Firms Under 5% ' 5 5-14% 8 15-29% 11 30-49% 7 50-74% 6 75% + 0 TABLE 8 PERCENTAGE NOT HIRING GENERAL CONTRACTORS % Customers Acting as General Contractors # Firms Under 5% 5 5-14% 15 15-29% 5 30-49% 3 50-74% 6 75% + . 1 as general contractors ranged from 0,percent to 80 percent (see Table 8). The mean was 21 percent. Customers Not Involved  in Construction The l a s t category asked what percentage of customers had no involvement with construction (see Table 9). TABLE 9 PERCENTAGE CUSTOMERS NOT INVOLVED WITH CONSTRUCTION % Customers Not Involved with Construction # Firms Under 5% 5 5-14% 3 15-29% 10 30-49% 3 50-74% 3 75% + 5 The mean was 27 percent; thus, less than one t h i r d of the customers of the manufacturers surveyed stated that they had no involvement with the construction of the i r home. Only four manufacturers reported that they never sold homes to owner-builders. These were the companies that offered only complete packages (modular, s t i c k ) . Owner-building was common with t h i r t y - f i v e firms responding. 174 The means for f u l 1. owners-builders, p a r t i a l owner-builders, owners acting as general contractors, and owners with no building involvement are shown i n Table 10. TABLE 10 OWNER-BUILDER INVOLVEMENT Customer Involvement Mean (%) F u l l Owner-Builders 25 P a r t i a l Owner-Builders 25 Owners Acting as General Contractors 21 Owners Not Involved with Construction 27 Other 4 It should be noted that six manufacturers reported that they sold only complete houses; thus, the percentages for the true k i t house that i s available for the owner-builder would be s l i g h t l y higher. Although these figures are estimates of the o v e r a l l responses, there was wide v a r i a t i o n . Some manufacturers seemed to s p e c i a l i z e i n s e l l i n g to owner-builders while others seemed to only tolerate i t with very few of t h e i r customers selecting t h i s option. In order to crosstabulate the owner-building information with other responses i t was necessary to categorize the manufacturers on the basis of customer p a r t i c i p a t i o n i n construction. The two owner-building question responses ( f u l l and p a r t i a l 175 owner-builders) were combined, according to the following s p e c i f i c s : X = % F u l l Owner-Builders + % Part Owner-Builders If X = 75% or more Category 1 If X = between 50% and 75% Category 2 If X = less than 50%. Category 3 Ten k i t home manufacturers stated that over 7 5 percent of t h e i r customers participated i n the construction of t h e i r k i t home i n order to save on construction costs (see Table 11). TABLE 11 LEVEL OF OWNER-BUILDING INVOLVEMENT Category Level of Owner-Building # Firms 1 75% or more 10 2 50-74% 8 3 Under 50% 18 With the information on owner-building now i n categories, i t can be crosstabulated with other responses. Ki t Type and Owner-Building Owner-building p a r t i c i p a t i o n i s not the same with a l l types of k i t home manufacturers (see Table 12). A l l panel and modular manufacturers reported that fewer than one half of t h e i r customers participated i n the 176 construction of th e i r homes. The log and pre-cut s t i c k manufacturers reported the largest number of customers building t h e i r own home but there were many other d i f f e r -ences between the various types of k i t s . TABLE 12 KIT TYPE AND OWNER-BUILDING Ki t Type Category 1 Category 2 Category 3 Pre-Cut Log 35% 23.5% 35% Panel 25% 0.0% 75% Pre-Cut Stick 50% 0.0% 50% Modular 25% 0 . 0% 75% Panel and Pre-Cut 10% 40.0% 50% Other 100% 0.0% 0% Owner-building w i l l be crosstabulated with price and income responses i n la t e r sections, when the k i t home industry's potential to provide low-cost housing i s analyzed. Owner-building p a r t i c i p a t i o n and s e l l i n g success w i l l also be compared when the obstacles to the development of the industry are discussed. K i t Price The k i t price question was structured s i m i l a r to the owner-building question. Manufacturer/dealers were asked to 177 estimate the percentage of t h e i r k i t s that sold i n the various price ranges. The means for the price categories are l i s t e d i n Table 13. TABLE 13 KIT PRICE RANGE Price Mean (%) Under $10,000 11 $10,000-$20,000 23 $20,000-$30,000 27 $30,000-$40,000 22 $40,000+ 18 In a l l cases the range was wide. Many companies did not offe r any k i t homes priced below $10,000, while others did not s e l l any k i t homes priced above $20,000. It i s important to note that each manufacturer offers a d i s t i n c t l y separate product. Some k i t home manu-facturers s e l l logs only packages while others o f f e r a completely b u i l t s t i c k frame house. Most k i t manufacturers o f f e r s h e l l packages but many may of f e r k i t s at various stages of completion. For example, one may fin d several prices for k i t homes at various stages of completion and di f f e r e n t quantities of materials included. One such company advertised one home with three prices, as follows: 178 Aloha Model (1,200 sq. f t . ) Exterior walls only $ 9,500 Exterior walls, roof $15,000 Exterior walls, i n t e r i o r walls, roof, windows, doors, f l o o r $23,000 It i s important to examine what the k i t includes i n order to evaluate whether the k i t i s low-priced or simply contains fewer materials. Of the t h i r t y - f i v e responding to the q.uestion "What does your k i t include?" twenty-one described t h e i r k i t as exterior s h e l l (no cabinets, plumbing, f i n i s h i n g ) . Five described t h e i r k i t s as walls only, two stated they sold only the walls.and roof, and six described t h e i r home as a "complete house." It i s important to keep i n mind t h i s factor of variations i n quantity of materials provided by the i n d i v i d u a l manufacturers when comparing price information between manufacturers. Because of the wide range of responses and the d i f f i c u l t y of working with f i v e d i f f e r e n t price categories and many responses, i t was necessary to re-code the data for the purposes of crosstabulation with other responses. The following formula was devised for the purpose of segregating the manufacturers who sold low-priced homes from those who sold higher-priced k i t s which p o t e n t i a l l y might be too expensive for lower-income families due to the use of higher q u a l i t y materials. The information obtained from the two questions on percentage of homes sold under $10,000 and $10,000-$20,000 were combined to form one response pri c e . Price = % Homes sold under $20,000 If Price i s greater # Firms than 4 0% = Category 1 12 If Price i s between 10% and 40% = Category 2 13 If Price i s less than 10% = Category 3 14 E a r l i e r examination of brochures, l i t e r a t u r e , and interviews revealed that the k i t price i s heavily dependent upon what i s included i n the k i t package. The price informa-ti o n was crosstabulated with information concerning what the k i t included. Not a l l of the manufacturers responded to both questions. Table 14 i l l u s t r a t e s the r e s u l t s . TABLE 14 PRICE BY KIT MATERIALS INCLUDED Category 1 Category 2 Category 3 5 Shell 8 Shell 8 Shell 4 Exterior walls 1 Exterior walls 1 Complete house 2 Complete house 3 Complete house 2 Roof and walls As expected, there i s a tendency for the price to r i s e as more materials are included. The walls only lower-priced package probably i s not a low-cost k i t house after other materials are included and purchased. Even after 180 eliminating the four walls only k i t home manufacturers from the lower-priced Category 1, f i v e k i t home manufacturers and one modular k i t manufacturer could be c l a s s i f i e d as s e l l i n g predominately low-priced k i t s . Examination of ind i v i d u a l responses indicates that three dome manufacturers sold s h e l l packages a l l priced below $10,000. One polydome manufacturer stated that 70 percent of the k i t s sold were priced under $10,000. A l l four dome manufacturers appeared to offer low-cost k i t s priced low enough for the lower-income market. Although some k i t s are priced very low, price alone does not determine a f f o r d a b i l i t y . Financing plays an important role i n the a b i l i t y to afford any home; thus, i t may be possible for a home to be low-priced yet unavailable to those i n lower-income brackets. Location The survey was sent only to manufacturers believed to be s e l l i n g homes i n Washington or B r i t i s h Columbia; thus, most fa c t o r i e s were located i n the western United States (see Table 15). Location information i s used l a t e r to evaluate whether certain i n s t i t u t i o n a l obstacles (l o c a l codes) are considered more serious i n certain areas and i f some firms are having a d i f f i c u l t time s e l l i n g homes i n s p e c i f i c areas of the country. 181 TABLE 15 FACTORY LOCATION Location Number Washington 2 B r i t i s h Columbia 3 Western US 17 Midwestern US 4 Southern US 3 Northeastern US 2 Canada 3 US and Canada 4 Income of Customers The income question i s important i n order to deter-mine i f lower- and middle-income families have access to k i t homes. The income question was phrased si m i l a r to the price and owner-building question. Several income categories were given and the manufacturers were asked to estimate what percentage of customers were i n the various categories. According to the data contained i n Table 16, approxi-mately 22 percent of the customers of k i t home manufacturers earn under $20,000. K i t homes are being purchased by low-and middle-income families i n spite of the financing d i f f i c u l t i e s . In order to compare income responses with other responses, i t was necessary to re-code income responses 182 TABLE 16 INCOME OF CUSTOMERS Income Mean (%) Under $12,000 4.1 $12-15,000 6.0 $15-20,000 12.0 $20-25,000 12.0 $25-30,000 17.0 $30-35,000 14.0 $35,000 + 35.0 TABLE 17 INCOME CATEGORIES Category # Firms Percentage of Customers Earning $20,000 or Less 1 7 . 25% 2 3 10-24% 3 3 Under 10% 4 17 0% i s : into four categories. By adding t o t a l s from the f i r s t three income levels one can obtain the t o t a l percentage of customers with incomes under $20,000 per year. Manufacturer/dealers can then be categorized on the basis of what percentage of t h e i r customers are less a f f l u e n t (see Table 17). While o v e r a l l the industry i s s e l l i n g k i t s to low-and middle-income fa m i l i e s , many manufacturers do not s e l l any k i t s to families earning less than $20,000 per year. This corresponds with the interview data which indicated that some firms consider themselves high l i n e firms and make no attempt to s e l l homes to less affluent families. K i t Type and Income of  Customer With the income responses re-coded into categories, i t i s possible to compare i t with other responses. It can be compared with k i t type to see i f certain types of k i t s are more available to lower-income groups. Many manufacturers did not know the income of t h e i r customers and the sample was not as complete as other responses, but i t i s obvious that most k i t types s e l l to some lower- and middle-income owner-builders (Table 18). It may be true that the higher l i n e , more elaborate k i t s are only available to upper-middle- and high-income famil i e but some of the more basic k i t s of a l l types are being purchased by a few less affluent families. 184 TABLE 18 KIT TYPE AND INCOME Income Category Log Panel Pre-Cut Stick Modular Panel/ Pre-Cut 1 2 0 1 1 2 2 3 0 0 0 0 3 1 0 0 0 2 4 10 •1 2 0 4 In the next chapter, income data w i l l be cross-tabulated with owner-building, financing, and price responses i n order to further analyze the low-cost housing potential of the p a r t i a l l y manufactured house. Financing Financing i s often more c r i t i c a l than price when determining whether a lower-income family can afford a home. The questions on financing took four basic forms. The f i r s t question asked whether the manufacturer/dealer offered any financing aid. Then the manufacturer was asked to c i r c l e the type (contractor contracts, d i r e c t lending, bank arrangement, hints or r e f e r r a l s , e t c . ) . The next question asked what percentage of customers pay cash (not financed) for th e i r home. Then the manufac-turer was asked to indicate what percentage of customers financed t h e i r home through various sources (banks, savings and loans, mortgage companies, FHA). The l a s t question 185 asked what the t y p i c a l minimum down payment was for a loan on one of t h e i r homes. The responses varied widely. Many companies o f f e r no financing aid except perhaps to suggest a bank. Other manufacturers knew where the customers obtained the loan, and had helped obtain the financing. S t i l l others could not be s p e c i f i c , as no records were kept. It i s important to understand these l i m i t a t i o n s when evaluating the s p e c i f i c data. Financing Aid Many k i t home manufacturers offe r some form of aid in obtaining financing (Table 19). Some may just give hints or suggestions where a customer might secure a loan (see Table 20). Others become d i r e c t l y involved and make arrangements with s p e c i f i c banks to handle t h e i r customers at favorable terms. Four manufacturers indicated involve-ment with d i r e c t lending or contractor contracts where the manufacturer assumed some r i s k . Some contractor contracts involve the bank and the customer makes a contract with the manufacturer to complete the house. If the house i s not completed within a s p e c i f i e d time period, the dealer may complete the home for a set price. Some manufacturers interviewed admitted using contractor contracts on occasion but indicated that they did not involve the lending i n s t i t u -t i o n and were actually acting under the table i n that the bank did not know the owner was constructing the home. One 186 TABLE 19 MANUFACTURER/DEALERS OFFERING FINANCING AID Financing Aid Offered Number of Manufacturer/Dealers Yes 16 No 22 TABLE 2 0 TYPE OF FINANCING AID Type of Financing Aid Manufacturer/Dealers Contractor Contracts 3 Direct Lending 1 Bank Arrangement 8 Hints, Referrals 6 Other 1 187 k i t manufacturer stated that they d i r e c t l y financed the cost of the log k i t . The customer was making payments d i r e c t l y to the manufacturer. This type of d i r e c t lending does not seem common, as only one manufacturer i n the survey indicated p a r t i c i p a t i n g i n a d i r e c t lending capacity. Customers Paying Cash The question regarding the percentage of customers paying cash also showed wide v a r i a t i o n . Two manufacturers stated no customers ever-paid cash and nine indicated that a l l sales were cash only. The responses were divided into i n t e r v a l s (see Table 21). TABLE 21 PERCENTAGE CASH ONLY CUSTOMERS % Customers Paying Cash # Firms 0C; 5 2-15 7 16-40 5 41-60 9 61-99 3 100 9 The mean of the responses i s 46.89 percent, which indicated that nearly one half of the customers of k i t home manufacturers pay cash for the k i t and do not obtain any financing. When compared to new contractor-built homes, 188 t h i s figure i s high. There i s a wide range i n responses from the various manufacturers. Ten k i t home manufacturers seem to s e l l few homes on a cash basis, yet nine other manufacturers indicated that t h e i r customers a l l paid cash. This seems unlik e l y ; perhaps the manufacturer misunderstood the question and thought that "cash only" meant that the customer did not obtain financing from them. It i s important to note possible misinterpretations when analyzing data. If the nine misinterpreted the question and those nine are eliminated from the responses, one can estimate with reason-able accuracy that approximately one t h i r d of those purchasing k i t homes pay cash either because they have no need to finance the k i t or because they are unable to finance the k i t and are forced to li q u i d a t e a l l ' a s s e t s , borrow money from r e l a t i v e s , etc. Minimum Down Payment  Required The next two survey questions requested more s p e c i f i c information on where customers obtained financing and the approximate amount of cash placed as a t y p i c a l down payment. As discussed i n previous chapters, i t i s important to note that some manufacturers indicated that they never became involved with financing and had l i t t l e knowledge of where or how t h e i r customers paid for the k i t . Many manufacturers did not even know what the approximate minimum down payment would be. Eleven manufac-turers indicated that they had no idea what a bank's 189 minimum down requirements might be (Table 22). TABLE 2-2 FINANCING REQUIREMENTS—MINIMUM DOWN Minimum Down Required # Firms 0% 1 5% 1 10% 2 20% 12 25% 6 30% 6 Left blank or don't know 11 The t y p i c a l down payment required appears to be between 20 percent and 25 percent. The manufacturer stating that the minimum down payment required was 0 percent was the pre-cut s t i c k large-scale manufacturer who financed 98 percent of the homes purchased. This manufacturer also reported that they had been i n business t h i r t y - f i v e years and sold approximately 2,000 homes each year. This 0 percent down, successful, and reknown manufacturer reported that he sold more than one t h i r d of his homes to families earning under $20,000 per year. The three manufacturers reporting 5 percent and 10 percent down as the minimum required a l l indicated that a few of th e i r customers used VA loans. One sold modular, complete homes only, while the other two indicated 190 that t h e i r panel k i t s were occasionally completed by owner-builders. The t y p i c a l down payment for a regular bank, savings and loan, or mortgage company loan appears to be between 20 percent and 30 percent, which i s higher than required for most new home subdivision purchases yet similar to the down payment required for some mobile homes. Financing Source The source of financing question requested information on what percentage of customers obtained financing from a s p e c i f i c source. Many manufacturers did not know the source of customers' funds and l e f t t h i s question blank. Some just l e f t check marks, brackets in d i c a t i n g source but no percentages, and others misunderstood the question and the percentages did not add up to 100 percent. Because of the questionable accuracy, the results to the source of financing question cannot be examined i n terms of means. Examination of in d i v i d u a l responses indicates that a majority of k i t homes are financed through a variety of conventional sources but a few individual manufacturers (eleven) indicated that most of th e i r customers u t i l i z e d one s p e c i f i c category (usually mortgage company or savings and loan), which leads one to suspect that some manufacturers have made arrangements with s p e c i f i c lending i n s t i t u t i o n s to handle t h e i r loans. An examination of. the financing aid question reveals that seven of the eleven manufacturers 191 indicated they offered financing aid i n the form of a bank arrangement. Financing can play a key role i n a f f o r d a b i l i t y . The l i t e r a t u r e supported the b e l i e f that financing i s often more important than cost of the home i n determining whether a low- or middle-income family can afford a home. In the next section, responses to the price, owner-building, income of customer, financing, and s e l l i n g success w i l l be further analyzed i n order to evaluate the k i t home's potential to provide low-cost housing i n ru r a l areas. CHAPTER IX KIT HOME POTENTIAL TO PROVIDE LOW-COST HOUSING IN RURAL AREAS Chapter V i n Part I discussed the Self-Help Plus K i t Home as a potential for low-cost housing i n r u r a l areas. Literature was examined i n order to analyze whether the k i t home plus se l f - h e l p could p o t e n t i a l l y o f f e r a serious cost-savings housing option. The l i t e r a t u r e indicated cost savings i n both se l f - h e l p techniques and p a r t i a l manufacturing. Combining the two would r a t i o n a l l y seem a substantial cost savings for the potential rural home buyer. This section w i l l examine the interview and survey results i n order to analyze whether the k i t home industry i s currently providing low-cost housing for less affluent families or has the potential to do so. Examination of the owner-builder survey results from the 1983 New Shelter magazine"*" indicates that low-income owner-builders are constructing low-cost homes i n ru r a l areas. Over 24 percent of the respondents indicated that they earned under $15,000 per year. When comparing the reported average cost of the owner-built home with i t s completed resale value, the estimated cost savings was greater than 38 percent. With the limited information 192 193 presented i n the a r t i c l e , i t i s d i f f i c u l t to analyze-poten-t i a l for k i t s plus s e l f - h e l p to provide low-cost housing, as i t would be necessary to crosstabulate several responses. It i s apparent from the re s u l t s presented that some lower-income owner-builders ( k i t and non-kit) are building homes, but whether they can b u i l d the home without a substantial cash outlay (loan from r e l a t i v e s , cash savings, etc.) i s not possible to determine from the information provided. Interview Results The interview questions, unlike the New Shelter questions, were designed to obtain basic a f f o r d a b i l i t y data. Unfortunately, many manufacturers do not become involved with financing and were unable to answer the many income/financing questions. Five of the seven k i t home respondents knew approxi-mately the lowest-income c l i e n t to q u a l i f y for loan approval. Two of the f i v e stated that they had sold homes to families earning below $20,000. One even indicated they had sold a few homes to those earning about $15,000 per year but not below. The $15,000 income c l i e n t s had been successful i n obtaining VA or FHA loans. Whether the $15,000 income c l i e n t was able to construct the home without a contractor was not r e c a l l e d by the manufacturer, but considering the FHA/VA requirements, i t i s u n l i k e l y . This manufacturer was clear to point out that financing was the major problem and that potential customers must own the l o t before any financing could be considered. The manufacturer interviewed indicated that the firm was fortunate i n obtaining favorable terms from one s p e c i f i c bank: "There i s aid i n financing people do not r e a l i z e . . . . [Few] know of creative financing." The firm offered a 622 square foot cabin priced $8,000-$10,000 for the s h e l l k i t as the i r lowest-priced k i t that costs approximately $20,000 t o t a l l y con-structed. Although small, t h i s cabin was c l e a r l y within the affordable range of many lower-income small families i f financing could be obtained. The only other interviewed manufacturer indicating that homes were sold to customers earning less than $20,000 was a well-known higher l i n e k i t home manufacturer who had devised an owner contract. He stated that the company had hired an attorney to draft the contract and stated, " i f don't get i t done, have ri g h t to intercept, build home and pay for i t . . . and they can buy i t for $55,000." The lowest-priced s h e l l k i t offered was $7,000, with the cost of the completed house approximately $20,000. They stated that customers ra r e l y q u a l i f i e d for FHA or VA loans. The k i t home manufacturers interviewed were selected at random and most were higher l i n e , well known, and v i s i b l e . Four indicated that they offered at least one small, less elaborate k i t that could be constructed for under $30,000. One manufacturer offered a f u l l y constructed modular home for $33,000 and two other high l i n e manufac-turers indicated that t h e i r smaller home could be 195 constructed by the owner-builder for s l i g h t l y over $30,000. When discussing obstacles and problems to the development of the industry, most stated financing d i f f i c u l -t i e s were the major problem. Not one of the manufacturers indicated that t h e i r customers often u t i l i z e d VA, FHA, or any subsidized FmHA or HUD financing or assistance. Two manufacturers stated that they never had a customer obtain financing through any government program. Interview Income Responses The interview responses indicate that some less affluent families were able to purchase k i t homes but not i n any great numbers (Table 23). Most k i t manufacturers offered at least one low-priced model that would be a f f o r d -able to the less a f f l u e n t home builder. One might conclude from the responses that although some less affluent home-owners have been able to gain access to k i t s , there have not been the numbers one might expect considering the low cost of some k i t homes. Survey Responses The survey questions were also designed to obtain cost and a f f o r d a b i l i t y data. Because the survey was of a mail-in s t y l e , the questions l e f t less room for discussion and v a r i a t i o n . Many d i f f e r e n t types of information were requested i n order to analyze the k i t home industry's potential to provide low-cost housing. Questions on income of customers, price, financing, and owner-building 196 TABLE 2 3 LOWEST-INCOME CUSTOMER Manufacturer Lowest-Income Client A Unknown B $20,000 C $25,000 D $18,000 E $15,000 F Unknown G Unknown 197 cost-saving p a r t i c i p a t i o n were asked i n order to determine i f lower-income home builders currently had access to the k i t homes or i f the cost was low enough that they could have access i f financing and other obstacles were a l l e v i a t e d . In order to completely understand the responses, crosstabulations were necessary. Over f i v e questions on the survey form referred to financing, two pertained to owner-building, and two requested price and income data. The income of customer data are important i n order to determine whether the k i t home industry i s currently providing homes for lower-income customers. In t h i s section, income w i l l be compared with financing, price, and owner-building responses i n order to analyze the k i t home's potential to provide low-cost housing. From the responses i n Table 24, i t i s clear that the majority of k i t home customers earn over $20,000 per year but the responses indicate also that there i s wide v a r i a t i o n within the industry. In the l a s t section, the industries were categorized depending on the percentage of customers who earned under $20,000 (Table 2 3 ) . It i s clear that many firms do not s e l l any homes to less a f f l u e n t i n d i v i d u a l s . In t h i s chapter several responses w i l l be examined i n order to further understand and analyze the k i t home industry's potential to provide low-cost housing and explain why more lower-income families are not purchasing k i t homes. For example: 198 TABLE 2 4 INCOME OF CUSTOMER Income of Customer Mean (%) Under $12,000 4.1 $12,000-$15,000 6.0 $15,000-$20,000 12.0 $20,000-$25,000 12.0 TABLE 2 5 FIRMS SELLING TO CUSTOMERS WITH UNDER $20,000 INCOME Category # Firms % Customers with Income under $20,000 .1 7 2 5% or more 2 3 10-25% 3 3 1-10% 4 17 0% 199 .1. Do the many firms not currently s e l l i n g to lower-income families have the potential to do so? 2. Is c o s t / a f f o r d a b i l i t y of the product the only factor or are there other differences? 3. What are the noncost differences between those firms s e l l i n g to many less a f f l u e n t families and those never s e l l i n g to anyone earning less than $20,000? 4. What might the government/industry do to make k i t homes more accessible to lower-income families? In order to discuss and examine some of these questions, i t i s necessary to crosstabulate the income question with other responses. Many questions cannot be answered f u l l y or with certainty, but by comparing the differences i n responses between those currently s e l l i n g to less a f f l u e n t families and those not s e l l i n g any homes to the lower-income groups, some factors can be i d e n t i f i e d . Owner-Builder and Income One factor that might permit more less affluent families to own homes i s by building the home without expensive outside labor. One would expect that the firms reporting the highest percentage of low-income customers would also indicate high owner-builder p a r t i c i p a t i o n . Examination of the crosstabulation results of owner-building and income reveals the expected response. Five of seven manufacturers s e l l i n g the largest percentage of homes to less affluent families also reported s e l l i n g a large percentage of homes to owner-builders (Table 26). 200 TABLE 2 6 OWNER-BUILDING AND INCOME Homes Sold to Owner-Builders Customers Earning Less 25%- 10-24% Than $20 0-10% ,000 0% 75% . i • 5 0 0 4 50-75% 1 1 1 3 Less than 50% 1 1 2 8 One could conclude that i n order for many manufac-turers to s e l l k i t s to the less a f f l u e n t customers, they would need to re l y on the cost-saving properties of owner-building. It should also be noted that while a majority of those firms s e l l i n g to less affluent customers also reported high owner-building p a r t i c i p a t i o n , the inverse c o r r e l a t i o n did not hold true. If one examines those nine firms s e l l i n g over 75 percent of th e i r k i t s to owner-builders, four reported that they never sold to customers earning less than $20,000. This would be expected and supports the interview and survey results which demonstrated that there i s a strong high l i n e k i t home industry marketing to c l i e n t s who prefer to b u i l d t h e i r own home for more than cost considera-tions. The a b i l i t y for a firm to be able to offer the product to lower-income c l i e n t s seems related to th e i r a b i l i t y to of f e r owner-building as a cost-saving option. One might speculate that by encouraging access to the 201 owner-building option i n the industry, more lower-income families would have access to k i t homes. Obstacles to owner-building are large; f i n a n c i a l obstacles to low-income residents are s i g n i f i c a n t . By addressing these two issues and resolving the d i f f i c u l t i e s , one might expect more lower-income families to have access to homeownership. Income and Price Another cost factor related to k i t home potential to provide low-cost housing i s k i t p r i c e . Although the previous section discussed the l i m i t a t i o n s of r e l y i n g too heavily on k i t price as an indicator of a low-cost home, i t can be useful i n analyzing whether some lower-priced k i t s can be suitable for low-cost housing. Over 71 percent of the manufacturers reporting that they sold the lowest-priced k i t s also sold more k i t s to less affluent f a m i l i e s . The r e s u l t s demonstrate a c o r r e l a -t i o n between those s e l l i n g low-priced k i t s and those s e l l i n g to more lower-income f a m i l i e s . Of the seven firms reporting that they sold more than 25 percent of t h e i r homes to less affluent f a m i l i e s , f i v e reported s e l l i n g most of t h e i r k i t s at prices below $20,000 (see Table 27). The other two k i t manufacturers stated that few of t h e i r k i t s were priced below $20,000. Because price i s dependent on what i s included i n the k i t , a k i t could be low-priced and over $20,000 i f more materials or labor were included ( i . e . , modular home). 202 TABLE 2 7 PRICE AND INCOME; Homes Priced Customers Earning Less Than $20,000 Under $20,000 25% 10-24% 1-10% 0% 60% 5 0 0 3 40-59% 0 0 1 0 23-39% 0 0 0 1 10-24% 1 2 1 6 Less than 10% 1 1 1 7 Like the owner-builder responses, not a l l the manufacturers reporting t h e i r k i t s to be low-priced sold homes to low-income f a m i l i e s . Perhaps the three firms that sold 60 percent plus of t h e i r k i t s priced below $20,000, yet sold no k i t s to less a f f l u e n t f a m i l i e s , were s e l l i n g logs only packages and included less materials. Examination of the description of materials included from the three firms indicates that two described the k i t as walls only. Only one described the k i t as s h e l l . Although the price information does have l i m i t a t i o n s , i t appears that there are low-priced k i t s i n the market that are currently being purchased by less affluent f a m i l i e s . K i t Price and  Owner-Building A further comparison of k i t price by owner-building p a r t i c i p a t i o n confirms the conclusion that less affluent 203 customers are currently purchasing low-priced k i t homes that they are constructing themselves. Seven of ten manufacturers stating that they sold predominantly low-priced k i t s also stated that they sold a majority (75 percent plus) of th e i r k i t s to owner-builders (Table 28). Of thirteen manufacturers reporting that less than 10 percent of th e i r homes were low-priced, ten reported that less than one half of t h e i r homes were purchased by owner-builders. TABLE 2 8 KIT PRICE AND OWNER-BUILDING PARTICIPATION Customers Who- Are Owner-Builders.' Homes Priced Under $20,000 75% 50-74% 50% 60% + 7 2 1 40-59% 0 1 1 25-39% 0 0 1 10-24% 2 3 5 10% or less 1 2 10 One might conclude that firms s p e c i a l i z i n g i n low-priced k i t s s e l l predominantly to owner-builders and s e l l more homes to less affluent homeowners. This supports the l i t e r a t u r e and interview data that indicates there i s a potential for low-priced k i t s to be purchased by less affluent owner-builders. 204 The survey re s u l t s indicate that the industry as a whole has the potential of providing a low-cost k i t home that can be constructed by the less affluent owner-builder. At the current time some firms are s e l l i n g low-priced k i t s to low-income owner-builders, while others are not. While some firms may produce a high quality, extravagant k i t that i s t r u l y too expensive for less affluent potential customers, financing may be a major determining factor in a f f o r d a b i l i t y . Cost of materials i s important but the a b i l i t y to obtain financing for less affluent owner-builders may be the most important factor i n the industry continuing or improving i n i t s a b i l i t y to provide low-cost housing to less affluent owner-builders. Income and Financing Type The financing type information i s i n a percentage format and the responses are d i f f i c u l t to crosstabulate. In examining the responses of the f i v e manufacturers that sold many k i t s to lower-income families, i t was found that four admitted using FHA, VA, Federal Land Bank, or dealer financing. Two indicated that over 80 percent of business was through dealer financing or Federal Land Bank, while the other two indicated that 20 percent of the i r business was through FHA. Of the manufacturers stating that they never sold k i t s to those earning under $20,000 per year, f i f t e e n responded to both the income and financing type questions. 205 Nine of t h e f i f t e e n s t a t e d t h a t t h e i r customers never u t i l i z e d n o n c o n v e n t i o n a l s o u r c e s (FHA, VA, FmHA, d e a l e r , e t c . ) . Only s i x of t h e f i f t e e n i n d i c a t e d t h a t t h e i r customers ever u t i l i z e d t h e s e n o n c o n v e n t i o n a l s o u r c e s and f o u r o f t h e s i x f i r m s s t a t e d t h a t t h e s e s o u r c e s were u t i l i z e d by fewer t h a n 5 p e r c e n t of t h e i r customers. The p o t e n t i a l f o r s e l l i n g t o lower-income customers seems t o be r e l a t e d t o a f i r m ' s a b i l i t y t o o f f e r nonconven-t i o n a l s o u r c e s o f f i n a n c i n g . F i r m s i n v o l v e d w i t h f i n a n c i n g a i d f o r customers were a l s o more l i k e l y t o use n o n c o n v e n t i o n a l s o u r c e s o f f i n a n c i n g i n o r d e r t o a i d t h e i r customers o b t a i n f i n a n c i n g ( T able 29). I f more n o n c o n v e n t i o n a l s o u r c e s o f f i n a n c i n g were a v a i l a b l e o r used by t h e k i t home cus t o m e r s , i t i s l i k e l y t h a t t h e r e would be more l e s s a f f l u e n t customers. I t i s n e c e s s a r y t o e x p l o r e t h e ty p e o f f i n a n c i n g q u e s t i o n f u r t h e r i n o r d e r t o a n a l y z e p o s s i b l e e x p l a n a t i o n s why more m a n u f a c t u r e r s do not use n o n c o n v e n t i o n a l s o u r c e s o f f i n a n c i n g f o r t h e i r c ustomers. TABLE 2 9 FINANCING AID AND FINANCING TYPE '" Source o f F i n a n c i n g  O f f e r 15%+ F i n a n c i n g 85%+ 85%+ FHA, VA, FhMA, A i d ? D e a l e r C o n v e n t i o n a l Fed.: Land Bank Yes No 1 9 10 5 1 206 Source of Financing and  Owner-Building It has already been established that firms o f f e r i n g more nonconventional financing options to t h e i r customers are s e l l i n g more k i t homes to lower-income families. Examination of owner-building and source of financing responses can esta b l i s h differences i n financing source (type) between those firms s e l l i n g predominately to owner-builders and those firms s e l l i n g to customers h i r i n g contractors. Of the six firms u t i l i z i n g nonconventional sources of financing, to a s i g n i f i c a n t degree, four were high owner-builder p a r t i c i p a t i o n firms (Table 30). The results indicate that some, firms that ,sel1 predominately to owner- • builders are able to obtain conventional and: nonconventional sources of financing for t h e i r customers. There i s no way to determine i f any FHA, VA, or FmHA loans were made to owner-builders. Most regulations indicate that t h i s i s not possible but the interview data revealed many creative ways around the "owner-builders not welcome" bank and government rules, and the survey results demonstrate that at least a few customers and firms are able to overcome the obstacles. It should be noted that although eight firms responded to the owner-building and financing type questions, s i x high owner-huilding firms indicated that they did not know the source of customer financing and were uninvolved with financing i n any capacity. TABLE 3 0 OWNER-BUILDING AND FINANCING TYPE 207 Financing Type (Source 85%+ 15%+ Homes Sold to Dealer- 85%+ FHA, VA, Owner-Builders Firms Financed Conventional FmHA, etc 75% 8 1 4 3 50-75% 5 - 5 Under 50% 10 - 8 2 Industry Potential for Increasing the  Number of Low-Income Customers Many firms not currently s e l l i n g to low-income families appear to have the potential i f creative financing and greater owner-building i s encouraged. There are some k i t homes that are more expensive than others due to the use of higher quality materials. These firms may not be able to of f e r a k i t at a price low enough to be affordable to the lowest-income customer. This i s an area that requires further study and analysis. The cost of materials i s an important component i n the cost of a completed home but labor costs to construct the home and a v a i l a b i l i t y and cost of financing may be more c r i t i c a l . Firms that encourage and a s s i s t owner-building, a s s i s t customers i n obtaining financing, and have developed cost-saving pre-cutting/manufacturing techniques are currently o f f e r i n g k i t homes to less affluent f a m i l i e s . Some firms i n the industry do not encourage or a s s i s t 208 customers i n owner-building. Many firms f a i l to aid, o f f e r assistance, or encourage owner-builders i n obtaining nonconventional or favorable term financing. If greater numbers of firms would or could become involved with financing and owner-building, i t i s l i k e l y that greater numbers of low-income families could purchase and construct k i t homes. In s t i t u t i o n a l Involvement To place the t o t a l r e s p o n s i b i l i t y for financing and encouraging owner-building on the industry does not seem f a i r . The industry i s responsible and can make changes i n costs that a f f e c t the price of t h e i r product. Improvements i n manufacturing techniques that increase e f f i c i e n c y i s a major goal of the industry. The a b i l i t y to offe r a competi-t i v e , quality product i s an industry r e s p o n s i b i l i t y . Changes i n sales/marketing techniques that can reduce costs and k i t prices are an industry r e s p o n s i b i l i t y . Encouraging owner-building i s something the industry can develop and control, but making changes i n financing available to customers involves factors often beyond the control of an individual manufacturer. Banks and governmental i n s t i t u t i o n s make the rules with regard to financing. It i s true tnat some manufac-turers are able to bend or break a few rules. In addition, a few lending i n s t i t u t i o n s are currently making exceptions to the "owner-builders not welcome" t r a d i t i o n , and some 209 manufacturers are able to obtain favorable financing for the i r less affluent customers. But financing a v a i l a b i l i t y and terms are not under the control of an individual manufacturer. Lending i n s t i t u t i o n s and the government are primarily responsible for the terms and a v a i l a b i l i t y of financing. An individual manufacturer with e f f o r t may be able to improve or influence the l o c a l s i t u a t i o n for his business but change i n any major form requires i n s t i t u t i o n a l change. In the next section, the problems and obstacles to the development of the k i t home industry w i l l be explored further using the survey r e s u l t s . 210 Notes Roger Rawlings, "Anyone Can Build a Home," Rodales  New Shelter, A p r i l 1983, p. 22. CHAPTER X OBSTACLES TO THE DEVELOPMENT OF THE KIT HOME INDUSTRY Introduction and Limitations The l a s t section discussed the k i t home industry's potential to provide a low-cost housing alternative i n r u r a l areas. In analyzing various responses to the survey, i t i s obvious that the industry i s not problem-free or without many obstacles to overcome. There are always obstacles to the development of any industry and the k i t home industry i s not unique i n facing i n s t i t u t i o n a l obstacles. The construction industry i n general has been experiencing one of the most d i f f i c u l t slumps i n a quarter century. Interest rates continue to remain high and housing st a r t s are not what they could be i n spite of the increased need to house the "baby boom" generation. Although the many problems and obstacles to the development of the k i t home industry are similar to the housing industry i n general, some s p e c i f i c obstacles may impact the k i t home industry s p e c i f i c a l l y due to the ch a r a c t e r i s t i c s of the industry. In t h i s chapter, problems and obstacles to the development of the k i t home 212 industry w i l l be discussed with p a r t i c u l a r emphasis on those obstacles that are i n d u s t r y - s p e c i f i c . The previous chapter on obstacles discussed the problems based on information received from the l i t e r a t u r e . In t h i s chapter, the interview and survey results are analyzed as they relate to problems and obstacles the industry faces. The survey questionnaire d i r e c t l y requested informa-ti o n on industry obstacles as perceived by the k i t manufac-turer. This information i s important and useful but not without l i m i t a t i o n s . Anytime one addresses questions about problems to one clos e l y involved with the s i t u a t i o n , perceptions of the problem and ideas on possible solutions d i f f e r . Usually, k i t home manufacturers are neither economists nor experts i n how the housing market operates. Their perception i s limited to th e i r experiences and th e i r level of understanding of the housing process and th e i r role i n that process. P o l i t i c s can play a ro l e , as can a manufacturer's world view. An individual's personal b e l i e f of how society should function i n the ideal can play a major role i n the perception of the problems and selection of the solution. For example, i f an individual manufacturer or dealer believes everyone should pay cash for t h e i r home and build i t without financing any cost, one might expect t h i s manufacturer/dealer to consider inter e s t rates, no government financing aid, mortgage requirements, etc. 213 unimportant i n spite of the fact that, with these obstacles mitigated and overcome, the manufacturer/dealer would s e l l more k i t homes. Many of the obstacle questions involved p o l i t i c s , world view, and values of how the world (and k i t home industry) should function. Because of the l i m i t a t i o n of di r e c t questions, other responses on the survey w i l l be discussed and analyzed. The responses pertaining to s e l l i n g success, income of customers, owner-building, and financing w i l l be crosstabulated and examined i n order to further analyze and outline potential obstacles to the k i t home industry. Interview Results Of the seven manufacturers interviewed, f i v e i n d i -cated financing as the major obstacle to th e i r business. One commented that i t was "not l i k e i t was one year ago"; another stated."Banks w i l l not lend for s h e l l . " Many blamed the s i t u a t i o n on high inter e s t rates and banks not lending on s h e l l homes, while others stated that the sluggish economy was the primary problem. Only one mentioned a "cedar s t r i k e , " while another high l i n e k i t manufacturer stated that t h e i r product was a more expensive higher quality home that placed them at a disadvantage i n the market. The l a t t e r manufacturer stated that they never sold to lower-income owner-builders. When asked i f t h e i r customers ever u t i l i z e d FmHA, HUD, or other subsidized programs, most (five) stated that 214 they had financed a few homes through VA, FHA, or the Federal Land Bank. One stated that the reason for not u t i l i z i n g these programs was that they only sold constructed s h e l l homes and that the programs could only be u t i l i z e d with complete turnkey houses. When asked questions regarding financing, a l l seven responded that most customers needing financing u t i l i z e d conventional sources. One manufacturer stated that i n the past, s h e l l home financing was easier: "Before finance s h e l l through American Savings & Loan, were financing the s h e l l . . . not anymore." Another higher-priced k i t home manufacturer stated that the banks required "1/3 down . . . 16 3/4 . . . want l o t paid off . . . not allow to do i t yourself unless few subcontractors." Most manufacturers indicated that many customers paid with cash and did not u t i l i z e any construction financing. When asked about l o c a l government approval problems, a l l seven responded that they had no problems meeting or exceeding codes. When asked, the manufacturers seemed reluctant to discuss how many homes had been sold t h i s year. Two stated that they did not know, while other estimates ranged from ten to si x t y homes sold from t h e i r p a r t i c u l a r dealership/factory. One commented quite honestly that "[business] has been down l a s t two years." This was c l e a r l y the most sensi t i v e question and the one most were uncomfortable answering. The manufacturer who responded so openly about the d i f f i c u l t i e s the l a s t few years had a 215 large k i t home display and i s no longer i n business at the same location. Most l i k e l y , he went out of business. The interview r e s u l t s c l e a r l y indicate substantial problems with financing the homes. Many k i t s were low-priced; most offered s h e l l k i t s under $20,000, some as low as $8 ,500. Most firms stated that t h e i r basic 1 ,000-2,000 square foot home could be constructed on the owner-builder's l o t for well under $40,000, or approximately the same cost as some FmHA sel f - h e l p owner-built homes. Cost of materials did not appear to be the major obstacle. Financing and the lack of bank and government (FmHA, HUD, etc.) acceptance and assistance to the owner-builders appeared to be the most s i g n i f i c a n t i n d u s t r y - s p e c i f i c obstacle. The interview questions were not as s p e c i f i c and comprehensive as the survey questions. Although the i n t e r -view results allow for i d e n t i f i c a t i o n and analysis of the major obstacles, the survey results permit further detailed analysis. In the next section, the responses to several questions w i l l be examined i n order to further i d e n t i f y potential obstacles to the k i t home industry, which can la t e r be compared to the survey opinion questionnaire. Survey Results One method to analyze k i t home obstacles i s to examine the responses to the objective questions on the survey that r e l a t e to s e l l i n g success. Manufacturers were asked to indicate the si t u a t i o n of the i r business compared to the l a s t few years. 216 S e l l i n g Success The following question was asked of manufacturers: "What i s the current s i t u a t i o n of your company compared with the l a s t few years?" Responses indicate that, i n general, about half (48 percent) of the companies are doing poorly compared with the l a s t few years (Table 31). This i s not surprising considering the overa l l condition of the housing industry. What i s somewhat surprising i s the fact that more than one-third of the companies reporting are actually s e l l i n g more homes. TABLE 31 KIT HOME SELLING SUCCESS Response # Firms Percent Same 6 16 S e l l i n g More 14 36 S e l l i n g Fewer 12 32 Hurting Greatly 6 16 Some firms must be doing something right and over-coming the many obstacles. This information on s e l l i n g success can be crosstabulated and compared to other responses i n order to further analyze and understand what might be causing some firms to succeed while others f a i l . Many variables and combinations impact s e l l i n g success i n any industry. The examination of s p e c i f i c factors l i k e k i t type, owner-building p a r t i c i p a t i o n , financing aid, low versus high income of customers, price, etc. can be h e l p f u l , but the limi t a t i o n s must also be re a l i z e d . Many factors impact success i n any business and many of these factors are not discussed i n the survey. For business e f f i c i e n c y , marketing techniques, quality control, and reputation a l l impact s e l l i n g success, yet the survey did not request information on these topics. Because of the impact of many factors that involve s e l l i n g success, i t i s u n l i k e l y that any one factor can impact a l l companies equally. One would not expect a l l companies to be successfu or unsuccessful due to one s p e c i f i c factor. S e l l i n g success information was crosstabulated with most of the other responses. S i g n i f i c a n t differences were found between those firms doing well and those firms doing poorly i n several categories. K i t type and s e l l i n g success. The type of a k i t a manufacturer s e l l s can a f f e c t many aspects of business. The panel and pre-cut companies appear to be s e l l i n g fewer homes and many of t h i s type were reported to be i n trouble (Table 32). The pre-cut, modular, and panel manufacturers appear to be doing f a i r l y well. Roughly half the log manufacturers are doing well or "OK." Type does appear to af f e c t s e l l i n g success, although i n a l l categories, some firms were doing well while others were doing poorly. 218 TABLE 3 2 KIT TYPE AND SELLING SUCCESS About S e l l i n g S e l l i n g Hurting K i t Type Same (%) More (%] \ Fewer (%) Greatly(%) Pre-Cut Log 17.6 35.3 41.2 5.9 Panel 0 75.0 0 25.0 Pre-Cut Stick 66.7 0 0 33.0 Modular 0 66.7 33.3 0 Panel and Pre--Cut 10.0 30.0 30.0 30.0 Other - - 100.0 -Years i n business and s e l l i n g success. The number of years a company has been i n business seemed to be an important factor when compared to s e l l i n g success. When examining the frequencies, i t i s apparent that few new companies responded to the survey. Only three firms responding to the survey indicated they had been i n business less than seven years (Table 33). One possible explanation for t h i s low response might be that the new manufacturers are so l i t t l e known that they were not on any of the established l i s t s used to compose the survey mailing l i s t . This i s one p o s s i b i l i t y , but of the 100 manufacturer/dealers sent surveys, nearly one-fourth were returned "address unknown" or "moved, l e f t no forwarding address." One survey was returned with a l e t t e r explaining the recent bankruptcy of a newer log home manufacturer i n 219 Colorado. Other explanations for the lack of success with "new k i t s " seem more l i k e l y . Of the seven manufacturers formally interviewed, three were f a i r l y new dealerships. Only one of the three s t i l l appeared to be i n business one year l a t e r . The industry i s highly competitive and the interview r e s u l t s indicate that the l a s t few years have not been good for the industry as a whole. TABLE 3 3 YEARS IN BUSINESS Years i n Business # Firms 0- 6 3 7-14 17 15-22 5. 20-29 5 30-39 7 A boom for the industry seems to have occurred during the period 1962-1974. Seventeen companies began during t h i s period. Interestingly, t h i s corresponds with the surge i n federal money into housing programs and the healthy economic period when housing starts increased each year. In 1974 i n the US, Ex-President Nixon cut or eliminated most of the s o c i a l housing subsidy and finance programs that had made i t possible for so many to become homeowners. Only three of the thirty-seven companies 220 responded that they had been i n business since these cutbacks came into existence. Of the three newer companies, only one reported s e l l i n g more t h i s year than l a s t (Table 34), but i t had only been i n business two years. TABLE 3 4 SELLING SUCCESS AND YEARS IN BUSINESS Years i n Business S e l l i n g More S e l l i n g Fewer Hurting 2 1 -4 - 1 -6 - - 1 The l a s t few years does not appear to have been a good time to enter the k i t home industry. After eliminating the three newest companies, one can see that the newer (seven to twenty years) companies reported that they were doing s l i g h t l y better than the older well-established companies (Table 35). TABLE 3 5 YEARS AND PERCENTAGE SELLING SUCCESS Years i n :; Business reselling Same (%) S e l l i n g More (%) S e l l i n g Fewer (%) Hurting Greatly(%) Over 20 years 20 20 40 20 Under 20 years 14 45 28 14 7 to 14 years 17 52 23 5 221 With so l i t t l e data available, i t i s d i f f i c u l t to speculate why newer companies (especially seven to fourteen years.) are doing better. Perhaps newer companies doing poorly are more l i k e l y to f o l d and close down, while older, well-established companies have greater resources (capital) to stay i n business during hard times. It i s i n t e r e s t i n g to note that the seven- to fourteen-year-old companies are doing better than any other group, and t h i s could explain t h e i r large numbers. These companies began t h e i r business when cr e d i t and federal money flowed e a s i l y and cost-cutting technological advances in housing were also recently developed. Reasons for k i t home success with these seven- to fourteen-year-old companies and the f a i l u r e of the newest companies can only be speculative at best. However, as does k i t type, these factors do bring up i n t e r e s t i n g industry c h a r a c t e r i s t i c s and allow for discussion of potential industry obstacles and problems that may have caused newer firms to f o l d . S e l l i n g success and income of customers. It would be l o g i c a l to expect those firms able to s e l l to lower-income families to be s e l l i n g more homes. The results demonstrate that a b i l i t y to s e l l to less affluent families usually means greater sales. The majority of k i t home manufacturers able to s e l l t h e i r k i t s to the under $20,000 income group were s e l l i n g more homes (Table 36). Of seven 222 TABLE 3 6 SELLING SUCCESS AND INCOME OF CUSTOMERS Homes Sold to Customers Earning S e l l i n g S e l l i n g S e l l i n g Hurting under $20,000 Same More Fewer Greatly 24% or more 2 4 1 0 10-24% 2 0 1 0 1-10% 0 0 0 3 0% 2 6 8 1 manufacturers s e l l i n g 25 percent of th e i r k i t s to less affluent f a m i l i e s , only one was s e l l i n g fewer homes. S e l l i n g success and k i t price. One would expect k i t price to a f f e c t s e l l i n g success. One might expect manufac-turers able to o f f e r the least expensive homes to be s e l l i n g more homes. A s l i g h t majority of k i t manufacturers s e l l i n g over 60 percent of t h e i r k i t s priced under $20,000 were.selling more homes, while 28 percent of manufacturers s e l l i n g less than 10 percent of homes priced below $20,000 reported that they were s e l l i n g more homes (Table 37).- Four manufacturers s e l l i n g low-priced k i t s reported s e l l i n g fewer homes. One would expect t h i s r e s u l t , as k i t price i s often determined by other factors ( i . e . , materials included, average size of. k i t home sold, consumer preference) and low k i t price does not always indicate a p o t e n t i a l l y low-cost house. The e a r l i e r crosstabulation demonstrated that two of the manufac turers i n d i c a t i n g that they sold mostly low-cost k i t s were only s e l l i n g walls, and that with other materials included, those k i t s would not be included i n the low-priced category. TABLE 3 7 SELLING SUCCESS AND KIT PRICE Homes Sold Priced Under S e l l i n g S e l l i n g S e l l i n g Hurting $20,000 Same More Fewer Greatly 6 0% or more 1 5 4 0 25-60% 0 2 0 0 10-25% 3. 3 3 1 Under 10% 2 4 5 3 S e l l i n g success and owner-building. One might expect that manufacturers s e l l i n g a greater number of k i t s to owner-builders could be doing s l i g h t l y better as the cost savings involved might allow a greater number of families to own homes. Kit home companies that s e l l a greater number of homes to owner-builders seem to be doing s l i g h t l y better. Not one company i n the 7 5 percent or above category reported that they were hurting greatly (Table 38). Se l l i n g success and financing. Preliminary analysis and l i t e r a t u r e study revealed that financing d i f f i c u l t i e s were the most s i g n i f i c a n t obstacle for the k i t home industry 224 TABLE 3 8 SELLING SUCCESS AND OWNER-BUILDING Homes Sold to Owner-Builders S e l l i n g Same (%) Selling" More (%) Se l l i n g Fewer (•'%) Hurting Greatly (%) 75% or more 20 40 40 0 50-75% 25 37 12.5 25 Under 50% 12 35 35 17.6 225 to overcome. Part of the reason for th i s d i f f i c u l t y i s the reluctance of financing i n s t i t u t i o n s (bank and government) to support owner-builders, who comprise over half the customers of k i t home manufacturers. The other financing d i f f i c u l t i e s (interest rates, sluggish economy) were less s p e c i f i c to the industry and encountered by the housing industry as a whole. It i s inter e s t i n g to examine whether there are differences between the financing aid and type responses and s e l l i n g success. S e l l i n g success and financing a i d . Since financing has been demonstrated to be a s i g n i f i c a n t obstacle to the industry, one might expect that firms o f f e r i n g financing assistance to be s e l l i n g more homes. The two responses, s e l l i n g success and financing aid, were crosstabulated. The results are shown i n Table 39. TABLE 3 9 SELLING SUCCESS AND FINANCING AID Offer financing S e l l i n g S e l l i n g S e l l i n g Hurting aid? Same More Fewer Greatly Yes 4 8 • 5 2 No 2 6 8 4 Although not a l l firms stating that they offered financing aid were doing well, more companies o f f e r i n g some type of financing assistance were doing better as a whole 226 than those firms f a i l i n g to become involved with financing of the k i t s . Sixty percent of firms o f f e r i n g financing aid were s e l l i n g the same or more, while only 40 percent of those not involved with financing were doing well. Of the firms reporting that they were hurting greatly, two-thirds stated they offered no assistance with financing. S e l l i n g success and type of financing. The type of financing aid the nineteen firms o f f e r i n g assistance provided can be examined i n order to determine i f the type of financing assistance ( i . e . , contractor contracts, d i r e c t lending, bank arrangement, or hints and r e f e r r a l s ) can af f e c t s e l l i n g success. Since the respondents often indicated more than one type of financing aid i n most categories, there were more items checked than there were firms. When examining the responses of the three firms indicating that they had devised some type of contractor contract, a l l three indicated that they were s e l l i n g more homes (Table 40). In the other categories of financing type, some firms reported s e l l i n g more while others reported s e l l i n g l e ss. The categories "Other" and "Direct Lending" did not have enough respondents for one to draw a conclusion. Both firms that were doing poorly indicated they offered only bank arrangements, and hints and r e f e r r a l s . Neither offered a contractor contract or d i r e c t lending. One indicated that the si t u a t i o n was 227 changing too rapidly when requested to elaborate on the type of aid. Perhaps the bank arrangement, and hints and r e f e r r a l s categories were too vague for analysis. Some firms may o f f e r good bank deals while others may simply say, " i s a good bank; Mr. Jones was able to obtain a loan." TABLE 4 0 SELLING SUCCESS AND TYPE OF FINANCING Type of S e l l i n g S e l l i n g S e l l i n g Hurting Financing Aid Same More Fewer Greatly Contractor Contracts 0 3 0 0 Direct Lending 1 0 1 0 Bank Arrangement 1 4 2 2 Hints and Referrals 2 6 3 2 Other - 1 - -Regardless of the type of financing aid offered, some assistance appears to be better than no assistance, and the more types the better. Contractor contracts appear to be very successful, but some firms o f f e r i n g only bank arrangements, hints and r e f e r r a l s , and d i r e c t lending also indicated that they were doing well. S e l l i n g success and source of financing. As expected, the source of financing appears to a f f e c t s e l l i n g success. In the l a s t section, i t was apparent that firms 228 offe r i n g nonconventional sources of financing were s e l l i n g to a larger number of less affluent f a m i l i e s . With one exception, firms using nonconventional sources of financing were s e l l i n g more homes or the same. The majority of firms r e l y i n g heavily on conventional sources indicated that they were s e l l i n g fewer homes or hurting greatly (Table 41). Only f i v e of eighteen firms r e l y i n g on conventional sources alone were doing well. TABLE 41 SELLING SUCCESS AND SOURCE OF FINANCING S e l l i n g S e l l i n g S e l l i n g Hurting Loan Source Same More Fewer Greatly 80% Dealer 1 - - -85% + Conventional - 5 9 4 15% + FHA, VA, Fed. Land Bank, FmHA 2 3 1 — Owner-building and type of financing aid. Seven of twelve high owner-builder p a r t i c i p a t i o n firms stated that they offered no financing assistance (Table 42). Of the f i v e o f f e r i n g some type of financing aid, only one reported to be s e l l i n g fewer homes t h i s year, while three indicated that they were s e l l i n g more. Of the seven stating that they offered no help with financing, three stated that they were s e l l i n g fewer homes thi s year. In the 50-74 percent category, six of ten manufacturers offered no financing TABLE <%2 OWNER-BUILDING AND TYPE OF FINANCING AID Type of Financing Aid . Contractor Direct Bank Hints and % Owner-Builders # Firms Contracts Lending Arrangements Referrals None 75% or more 12 1 1 1 3 7 50-74% 10 - - 3 2 6 Less than 50% 13 3 - 3 7 4 Note: Some manufacturers offer more than one type of help. 230 assistance. Four of the six indicated that they were s e l l i n g fewer homes or hurting greatly. Of the four indicating that they offered financing assistance, only one was s e l l i n g fewer homes. In the under 50 percent owner-builder category, most (nine of thirteen) k i t home manufacturers indicated that they offered some financing aid. Of the four not o f f e r i n g any aid, three indicated that they were s e l l i n g fewer homes or hurting greatly. The r e s u l t s indicate that the firms that s e l l a majority of t h e i r homes to owner-builders also o f f e r less financing assistance to t h e i r customers. This factor i n turn impacts t h e i r s e l l i n g success. The high owner-building firms that do manage to offer aid with financing also seem to be doing well. Results indicate that firms s e l l i n g a greater number of t h e i r k i t s to owner-builders do s l i g h t l y better on the whole i n business, but firms that also o f f e r financing aid are doing best. A large number of k i t home manufacturers that s e l l predominately to owner-builders tended not to of f e r any assistance with customers obtaining financing. S l i g h t l y more than half of the high owner-builder p a r t i c i p a t i o n companies offered no aid with financing, while less than 30 percent of the firms s e l l i n g fewer k i t s to owner-builders f a i l e d to offe r financing a i d . There may be several explanations for so many owner-buidling-oriented k i t manufacturers to neglect 231 financing assistance for th e i r customers. Perhaps many of the i r customers do not need financing, as the k i t price i s so low and without h i r i n g labor the cost i s kept low enough to make financing unnecessary. The survey results demon-strated that many customers needed to finance some of the cost of materials. Certainly the less affluent owner-builder would need some costs to be financed. It i s also possible that the predominant owner-builder firms were less able to o f f e r assistance to th e i r customers, as banks and f i n a n c i a l i n s t i t u t i o n s would not work with them as ea s i l y as they would work with a manufacturer o f f e r i n g a labor-included package or with a contractor i n charge of construction. It has been established that owner-builders run into substantial obstacles when applying for a loan. It would be l o g i c a l for manufacturers attempting to arrange deals with banks on behalf of th e i r owner-building customers to run into substantial obstacles. They would l i k e l y have greater bank opposition than those firms s e l l i n g to owners h i r i n g bonded professionals to complete the home. The results of the analysis demonstrate that many factors impact s e l l i n g success but most are related to a f f o r d a b i l i t y . Financing obstacles are the industry's major concern, p a r t i c u l a r l y financing d i f f i c u l t i e s for owner-builders. Some firms have been able to overcome i n s t i t u t i o n a l bias against owner-builders by of f e r i n g financing assistance to customers. These firms have been able to s e l l the k i t homes to a wider income range and thus 232 do b e t t e r i n b u s i n e s s . The a n a l y s i s of responses i n d i c a t e d t h a t i n s t i t u t i o n a l o p p o s i t i o n t o o w n e r - b u i l d i n g f i n a n c i n g i s a s i g n i f i c a n t o b s t a c l e t o the k i t home i n d u s t r y . In t h e nex t p o r t i o n of t h i s c h a p t e r , the manufac-t u r e r s ' r e s p o n s e s t o q u e s t i o n s about problems and o b s t a c l e s w i l l be d i s c u s s e d and e v a l u a t e d . O b s t a c l e Q u e s t i o n n a i r e A s h o r t l i s t of t e n p o t e n t i a l o b s t a c l e s t o t h e development o f t h e k i t home i n d u s t r y was d e v e l o p e d . Each m a n u f a c t u r e r was r e q u e s t e d t o i n d i c a t e the importance of each o b s t a c l e by p l a c i n g and "X" i n t h e a p p r o p r i a t e column. The i n s t r u c t i o n s s t a t e d s i m p l y : "The f o l l o w i n g l i s t s t a t e s s e v e r a l p o t e n t i a l o b s t a c l e s o r problems t o the development of your i n d u s t r y . P l e a s e r a t e t h e i r i mportance by p l a c i n g an 'X' i n t h e a p p r o p r i a t e column." The o b s t a c l e s were then l i s t e d , as f o l l o w s . Most Important Important I n t e r e s t r a t e s Lack o f government f i n a n c i n g a i d Lack o f government s u p p o r t t o owner-b u i l d e r s Mortgage r e q u i r e m e n t s L o c a l government o p p o s i t i o n B u i l d i n g a p p r o v a l / d e l a y U n s t a b l e lumber p r i c e s High overhead c o s t s M a r k e t i n g c o s t s / problems P r o p e r t y t a x c o s t s Not Important 233 The f i r s t four obstacles involve basic a f f o r d a b i l i t y . Lower inter e s t rates, less r e s t r i c t i v e mortgage requirements, government financing aid, and support to owner-builders would mean more people could afford to purchase the k i t s . Three of the four a f f e c t a l l aspects of the housing construc-ti o n industry. The lack of government support to owner-builders i s a potential obstacle unique to the k i t home industry. The d i f f e r e n t treatment owner-builders receive from lending i n s t i t u t i o n s and federal financing programs can make k i t homes even less affordable to some individuals than a higher-priced contractor-built home. Local government opposition and building approval delays also a f f e c t the contractor-built large-scale subdivi-sion industry but approvals of a contractor-built house are usually handled i n d i f f e r e n t ways than an owner-built home. Individual custom designed homes may b a f f l e l o c a l plan checkers and cause delays. Many k i t homes u t i l i z e unconven-t i o n a l and unique building techniques ( i . e . , dome, log) and some lo c a l building requirements ( i . e . , energy e f f i c i e n c y ) and design controls make approval more d i f f i c u l t . Unstable lumber prices a f f e c t a l l aspects of the building construction industry. Although a k i t home manufac-turer normally w i l l guarantee a k i t price at the time of sale, he may purchase the lumber at a la t e r date i n order to m i l l and pre-cut the timber to the k i t s p e c i f i e d . Unstable lumber prices can eliminate the k i t manufacturer's p r o f i t e n t i r e l y . 234 High overhead and marketing costs can plague any industry. K i t home manufacturers usually have greater d i f f i c u l t y exposing t h e i r product to the public. They cannot set up a temporary model v i l l a g e and then r o l l the homes away when sold as a mobile home dealer can. Many customers purchase homes they never see. Many marketing and overhead costs and problems are unique to the k i t home industry. Property tax costs were mentioned i n some of the readings. In some areas a low-cost k i t , owner-built home i s assessed upon completion as custom designed. This can work to the owner-builder's disadvantage. For example, i f an owner-builder purchases a $20,000 k i t to place on a $10,000 l o t and elects to construct the house with l i t t l e paid labor, i t i s possible to have a completed house for $40,000. The house could be worth, upon completion, twice t h i s figure and i f assessed at t h i s level the taxes could be p r o h i b i t i v e to a lower-income family. While the owner-builder may have an expensive house and p r o f i t upon s e l l i n g i t , the high property taxes i n the meantime could place a s t r a i n on his a b i l i t y to ret a i n the house. In such circum-stances a $30,000-$40,000 mobile home could be more appealing to a low-income family. General r e s u l t s . Nearly a l l the survey participants responded to the questions on obstacles. The responses varied widely, as they represented the b e l i e f s , opinions, 235 and judgments of i n d i v i d u a l s . Every obstacle was perceived as "most important" and "not important" by at least one manufacturer. An attempt to investigate some of the "why's" for the wide d i v e r s i t y w i l l be explored l a t e r . A l l but one manufacturer (97 percent) considered inter e s t rates to be an obstacle (Table 43). Mortgage requirements (80 percent) and building approval delays (76 percent) are the next two perceived important obstacles. High property taxes were only perceived as obstacles by 36 percent of the manufacturers, which would be the expected response as most rural areas have low tax rates. S l i g h t l y more than half of the manufacturers f e l t that no government aid to owner-builders, l o c a l government opposition, and unstable lumber prices were important obstacles. High overhead and marketing obstacles were reported by most manufacturers. In a l l categories, a minimum of three (8 percent) manufacturers indicated an obstacle as "most important." There were wide variations i n the responses. Only the inte r e s t rate obstacle received overt recognition by most k i t home manufacturer/dealers. In a l l other categories, at least 20 percent of the manufacturers f e l t that the obstacle was "not important." If one statement could be made regarding the ov e r a l l r e s u l t s , i t would be that the industry, i s not homogeneous. Each manufacturer or dealer i s a separate individual conducting his business i n a d i s t i n c t l y individual manner, i n a d i s t i n c t location, and 236 TABLE 4 3 OBSTACLE RATINGS Obstacle Most Important Moderately Important Not Important Interest Eates 87% (34) 10% (4) 3% (1) Lack of government financing aid 8% (3) 34% (13) 58% (22) Lack of government support to owner-builders 14% (5) 38% (14) 48% (18) Mortgage requirements 31% (11) 49% (17) 20% 17) Local government opposition 16% (6) 35% (13) 49% (18) Building approval/ delays 22% (8) 54% (20) 24% (9) Unstable lumber prices 7% (3) 47% (8) 46% (17) High overhead costs 28% (10) 28% (10) 44% (16) Marketing costs/ problems 24% (9) 43% (16) 32% (12) Property tax costs 14% (5) 22% (8) 64% (23) 237 under a variety of circumstances and conditions ( i n s t i t u -t i o n a l or otherwise). Generalities and conclusions are d i f f i c u l t to make with only the " o v e r a l l " r e s u l t s . A greater depth of analysis i s necessary to understand the responses and the wide variations. Examination of the responses from manufacturers located i n d i f f e r e n t areas may explain some of the d i f f e r -ences. Some problems could be more serious i n s p e c i f i c regions. One would also expect some differences due to k i t type. Log home manufacturers could be expected to have d i f f e r e n t concerns and problems than dome manufacturers. Manufacturers s e l l i n g predominately to owner-builders or lower-income families may also perceive some problems and obstacles as more serious than those s e l l i n g to customers who hire contractors. While the survey did not inquire about p o l i t i c a l philosophy of values, i t did inquire about k i t type, location, income of customers, percentage of customers who are owner-builders, and k i t price. This information can be compared and crosstabulated with the responses to the obstacle question i n order to note differences. Several crosstabulations were performed by the S t a t i s t i c a l Package for Social Sciences (SPSS), and the responses noted. Many differences were revealed as the responses from k i t manufacturers located i n d i f f e r e n t areas and s e l l i n g d i f f e r e n t types of k i t s to d i f f e r e n t types of customers. 238 Regional differences. Most manufacturers considered the inte r e s t rate obstacle important regardless of the factory location. The no government financing rate obstacle involved p o l i t i c a l philosophy. Not one of the manufacturers i n conservative Washington or the Midwest considered the lack of government financing aid important, yet half of the Northeastern manufacturers considered the no government financing aid "most important" (Table 44). Since the Northeast i s known l i b e r a l t e r r i t o r y and Washington State and the Midwest conservative, t h i s question probably does not r e f l e c t anything except p o l i t i c a l philosophy and world view. If p o l i t i c s were not involved with t h i s question, one would not expect locati o n a l differences as the lack of government financing aid should a f f e c t everyone. The lack of government aid to owner-builders showed similar regional differences (Table 45), and p o l i t i c a l philosophy may be the major factor for these differences. One would expect the lack of federal government aid to owner-builders to a f f e c t a l l areas equally. Mortgage requirements were rated an obstacle by twelve of the thirteen responding Western US manufacturers. No s i g n i f i c a n t regional differences were noted. This was not the case with the more l o c a l obstacles such as l o c a l government opposition (Table 46) and building approval delays (Table 47) . The responses show d e f i n i t e regional differences. Over 7 5 percent of the manufacturers i n the Western US 239 TABLE 4 4 NO GOVERNMENT FINANCING AID Location Most Important Important Not Important Washington B r i t . Columbia Western US Midwest South Northeast Canada National 3 3.3% 33.3% 50.0% 33. 3% 50.0% 3 3 • 3 % 50.0% 100.0% 33.3% 50.0% 100.0% 66.6% 50.0% 66.6% 50.0% Total 8.0% 34.0% 58. 0% TABLE 4 5 NO GOVERNMENT AID TO OWNER-BUILDERS Location Most Important Important Not Important Washington - 50.0% 50.0% B r i t . Columbia 66.7% 33 . 3% Western US 16.0% 45.0% 39.0% Midwest - 50.0% 50.0% South - 3 3.3% 66.7% Northeast 50.0% - 50.0% Canada - 33.3% 66. 7% National — 25.0% 75.0% Total 14.0% 38.0% 48.0% 240 TABLE 4 6 LOCAL GOVERNMENT OPPOSITION Location Most Important Important Not Important Washington - - 100.0% B r i t . Columbia - 33.3% 66.7% Western US 33.03% 46.7% 20.0% Midwest - 75.0% 25.0% South - - 100.0% Northeast - 50.0% 50.0% Canada 33.3% - 66.7% National - - 100.0% TABLE 4 7 BUILDING APPROVAL DELAYS Location Most Important Important Not Important Washington 50.0% 50.0% B r i t . Columbia - 66.7% 33.3% Western US 33.3% 46 .7% 20.0% Midwest 75.0% - 25.0% South - 66. 7% 33.3% Northeast - 100.0% -Canada - 100.0% -National - 50.0% 50.0% 241 (except Washington) reported major delays. Building approval delays present problems to the majority of manufacturers i n most areas but they seem to pose the greatest problem to manufacturers i n the Northeast, Canada, and to a less s i g n i f -icant degree, the Midwest. Other obstacles showed regional differences. Unstable lumber prices seemed to be of the greatest concern in Canada and the least concern to manufacturer/dealers i n the Northeastern US. Both Washington State manufacturers responding to the question, rated i t as "important." Factory location i s not the same as source of lumber, which might be more d i r e c t l y related to lumber price i n s t a b i l i t y . Overhead and marketing problems showed regional variations as well. A l l manufacturers i n B r i t i s h Columbia and the Midwest rated overhead and marketing costs an obstacle. Not one manufacturer/dealer i n the South consid-ered overhead an obstacle but 66 percent considered marketing costs a problem. Marketing costs were considered an obstacle by both Washington manufacturers. Property taxes vary regionally. While th i s obstacle was not perceived a major problem o v e r a l l (36 percent rated i t important), 66 percent of the non-British Columbia Canadian manufacturers considered i t a problem and 40 percent of the Western US manufacturers rated i t an obstacle (Table 48). Of the f i v e manufacturers rating i t very important, one was i n B r i t i s h Columbia, two i n the Western US, and two 242 were located i n the Midwest. None of the Southern manufac-turers considered property tax a problem. TABLE 48 PROPERTY TAX Location Very Important Important Not Important Washington 50.0% 50.0% B r i t i s h Columbia 33.3% - 66 .7% Western US 13.3% 26.7% 60.0% Midwest 50.0% - 50.0% South - 100.0% Northeast - - 100.0% Canada - 66.7% 33. 3% National - - 100.0% Total 14.0% 22.0% 64.0% Obviously, t h i s small sample does not offer abso-lute proof that some obstacles are more s i g n i f i c a n t i n certain areas than i n others. It i s known that high property taxes and r i s i n g land values are a s i g n i f i c a n t problem i n C a l i f o r n i a , yet not as great a problem i n Alabama. High costs of labor and distance to markets may explain the greater problems of overhead and marketing for Midwest and B r i t i s h Columbia firms. One can only speculate why regional differences appeared to a f f e c t the responses. With such a small sample and so many variations, one cannot draw 243 absolute conclusions but the survey results do pose some inte r e s t i n g questions that perhaps could be investigated further i n another study. Type. While locational variations i n obstacles are i n t e r e s t i n g to note, there are many other potential factors that may a f f e c t the responses. Different problems may a f f e c t s p e c i f i c types of k i t s . Information on k i t type was combined and the obstacle responses compared. The i n t e r e s t rate obstacle rated high with most k i t home types. Only one manufacturer among thirty-nine rated i t unimportant, and he was a modular home manufac-turer. A l l panel and pre-cut s t i c k manufacturers and over 80 percent of the log and panel and pre-cut combination manufacturers f e l t i t was the most important obstacle. The no government financing aid obstacle was f e l t the least important by the panel manufacturers--75 percent f e l t i t was not a problem, but there were only four respon-dents (Table 49). Of the three manufacturers rating no government financing aid as most important, two were log manufacturers and one was a panel and pre-cut combination manufacturer. Table 50 i l l u s t r a t e s responses from manufacturer/ dealers with regard to the question of no government aid to owner-builders. Mortgage requirements were seen as an obstacle to most k i t home manufacturers. A l l pre-cut s t i c k manufacturers rated i t most important. 244 TABLE 4 9 NO GOVERNMENT FINANCING AID Kit Type Most Important Important Not Important Pre-Cut Log 11.8% 29.4% 58.8% Panel - 25.0% 75.0% Pre-Cut Stick - 50.0% 50.0% Modular - 50.0% 50.0% Panel and Pre-Cut Combination 10.0% 30.0% 60.0% Other — 100.0% _ TABLE 50 NO GOVERNMENT AID TO OWNER-BUILDERS Ki t Type Most Important Important Not Important Pre-Cut Log 11.8% 41.2% 47.1% Panel — 3 3 - 3 % 66.6% Pre-Cut Stick 50.0% - 50.0% Modular - 25.0% 75.0% Panel and Pre-Cut Combination 20.0% 40.0% 40.0% 245 Local government opposition only posed a problem to one modular manufacturer (Table 51). Over 60 percent of the panel and pre-cut combinations (mostly dome) manufacturers reported l o c a l government opposition a problem. A majority of the log home manufacturers also reported t h i s as a s i g n i f i c a n t obstacle. TABLE 51 LOCAL GOVERNMENT OPPOSITION BY TYPE Ki t Type Most Important Important Not Important Pre-Cut Log 17.6% 35. 5% 47.1% Panel - 33. 3% 66.7% Pre-Cut Stick - 50.0% 66.7% Modular 25 .0% - 75.0% Panel and Pre-Cut Combination 10.0% 50.0% 40.0% Other 100.0% The problems involved with building approval posed the greatest obstacle to the panel and pre-cut combination (mostly dome) manufacturers (Table 52). Of the panel and pre-cut combination manufacturers, 90 percent reported building approval delays as an important obstacle. It should be noted that a strong majority of log home and modular home manufacturers also reported building approval delays as s i g n i f i c a n t . 246 TABLE 5 2 BUILDING APPROVAL DELAYS Kit Type Most Important Important Not Important Pre-Cut Log 11.8% 52.9% 35.6% Panel 33.3% 66.7% -Pre-Cut Stick - 50.0% 50.0% Modular - 75.0% 25.0% Panel and Pre-Cut Combination 50.0% 40.0% 10.0% Unstable lumber p o l i c i e s seem to a f f e c t the majority of a l l k i t home types except the modular homes; 75 percent of the modular home manufacturers reported lumber prices as not important. If pr i o r discussion about the marketing benefits of the k i t homes versus modular or mobile homes proves true, one would expect modular manufacturers to rate overhead as not important. An examination of the responses revealed t h i s to be true. A l l the modular home manufacturers rated overhead and marketing costs as not important (Table 53). In contrast, the majority of a l l the k i t type manufac-turers reported marketing costs as important and the majority of a l l but panel manufacturers rated high overhead as an important obstacle. The breakdown for overhead and marketing costs i s shown i n Table 53. It should be noted that a l l pre-cut and panel manufacturers had marketing problems. 247 TABLE 5 3 OVERHEAD/MARKETING COSTS V e r y Not K i t Type Important Important Important P r e - C u t Log 23. 5 /17 . 6% 35. 3 /47 . 1% 41 . 2 / 3 5 . 5% Pane l 33. 3 /33 . 3% 0. 0 /33 . 3% 66 . 7 / 3 3 . 3% P r e - C u t S t i c k 0. 0 / 0. 0% 50. 0 /66. 7% 50 . 0 / 3 3 . 3% Modular 0. 0 / 0. 0% 0. 0/ 0. 0% 100 .0/100 .0' Pane l and P r e - C u t Combinat ion 44. 4 /44 . 4% 33. 3 /55 . 6% 22 . 2 / 0. 0% The modular homes are t r a n s p o r t e d and f r e q u e n t l y marketed through a network of mobi l e home d e a l e r s . Manufac-t u r e r s do not have to m a i n t a i n c o s t l y k i t home model v i l l a g e s . Examples of t h e i r homes can be p l a c e d e a s i l y on a mobi l e home l o t . o r i n a lumber y a r d and then l a t e r p l a c e d on the cus tomer ' s l o t . L i t t l e c a p i t a l e x p e n d i t u r e i s r e q u i r e d . K i t home m a n u f a c t u r e r s do not have the advantage of a network of d e a l e r s d i s p l a y i n g t h e i r p r o d u c t on hundreds of l o t s n a t i o n w i d e . The m a r k e t i n g / o v e r h e a d problem seems to be a k i t home—not modular home—obstac l e . The p r o p e r t y tax problem was not p e r c e i v e d as a s i g n i f i c a n t o b s t a c l e to the m a j o r i t y of manufac turers f o r a l l types o f k i t homes. As e x p e c t e d , not one of the modular manufac turers p e r c e i v e d of i t as an o b s t a c l e . Both s t i c k home manufac turers a l s o i n d i c a t e d p r o p e r t y taxes were not an o b s t a c l e , but the over 40 p e r c e n t o f the l o g , and p a n e l 248 and pre-cut combination manufacturers stated that property taxes were an important obstacle to the development of th e i r industry. Four manufacturers of log or panel (pre-cut) homes responded that the property tax obstacle was a very important obstacle. The differences between various k i t types and location are only two of the many factors that could explain the wide variations i n the perception of various obstacles. It has been discussed previously that some manufacturers appeared to s e l l "low end," less expensive k i t s while others spec i a l i z e d i n the higher qualit y , fancier homes. Some manufacturers s e l l few homes to lower-income families and displayed l i t t l e i n t e r e s t i n t h e i r product becoming a low-cost housing a l t e r n a t i v e . Information on income of customers and k i t price was obtained from the manufacturers. Responses of the higher-priced/higher-income manufacturers were compared with those s p e c i a l i z i n g i n lower-priced k i t s and/or s e l l i n g a larger percentage of k i t s to lower-income families. It i s apparent that the perception of obstacles and problems of the lower-priced/lower-income manufacturers are d i f f e r e n t from those s e l l i n g top l i n e , high-cost homes to upper-income fa m i l i e s . An examination of the responses to the obstacle question revealed the following: 249 Category 1 Low-Priced Most Not Important Important Category 5 High-Priced Most Not Important Important Interest Rate Lack of Govern-ment Aid Lack of Govern-ment Aid to Owner 90% 60% 60% 10? 40? 40? 100% 56% 57% 0% 46% 43% Responses to the various price categories were combined and grouped into f i v e categories based on the percentage of homes (kits) sold that were priced below $20,000. % of Homes Sold Priced Below $20,000 60% or more 40%-50% 26%-40% 10%-25% Less than 10% Low-Priced Kits (10 mfg.) Not Important Important Category 1 2 3 4 5 High-Priced Kits (12+ mfg.) Not Important Important Mortgage Req. 75% Local Government 70% Building Approval 90% Lumber Prices 20% Overhead 66% Marketing Cost 78% Property Tax 44% 25% 30% 10% 80% 33% 22% 55% 75% 58% 66% 54% 41% 54% 25% 25% 42% 33% 46% 58% 46% 75% 250 Some differences can be spotted between those s e l l i n g lower-priced and high-priced k i t s . The l o c a l government problems and building approval seem to plague the low-priced k i t s more than those s e l l i n g higher-priced homes. Perhaps t h i s i s due to the innovative use of materials ( i . e . , dome) or less conventional designs of the lower-priced k i t s . Overhead marketing costs and even property tax also seem to plague the lower-priced k i t manufacturers. Perhaps they operate at a lower mark-up level and thus do not have as much ca p i t a l as the higher-priced k i t s . Property taxes were a problem only with the higher-priced k i t s , yet the lowest-priced k i t s reported i t a significant: problem' for: almost one-half the manufacturers. The lack of government financing support and the lack of support to owner-builders were s l i g h t l y more important to the lower-priced k i t manufacturer, but there i s not a s i g n i f i c a n t difference. One might expect a greater response from those s e l l i n g lower-priced k i t s , but low price and high percentage of low-income customers are not highly correlated. Some manufacturers s e l l i n g low-priced k i t s do not s e l l to many lower-income ind i v i d u a l s . Of the manufacturers responding to both questions and s e l l i n g the largest percentage of lower-income homes, three reported they never sold homes to families earning less than $20,000 per year. While f i v e of the eight manufacturers were i n the lowest-income category (25 251 percent or more of business to those earning less than $20,000), three were l i s t e d i n the high-income group (0 percent homes sold to those earning less than $20,000 annually). With three of the eight manufacturers never s e l l i n g homes (and perhaps not caring to) to lower-income i n d i v i d -uals, one would not expect a great response to the government aid questions. An examination of the income group might show a greater response to t h i s question, but one should remember "government aid" i s a v o l a t i l e p o l i t i c a l issue. Even i f greater government support would mean more individuals could purchase k i t homes, many manufacturers might be opposed to i t i n p r i n c i p l e . It i s in t e r e s t i n g to note before continuing with the income obstacles crosstabulation that int e r e s t rate was perceived as less an obstacle to those s e l l i n g the lowest-priced k i t s . Obviously, the lower the k i t price, the less money needed to finance. Interest rates become somewhat less important with the low-cost k i t owner-builder housing option. Income/obstacles crosstabulation. An examination of the response to the income of customers and "obstacles" questions displayed the following r e s u l t s . Income Category l(low) 2 5 percent or more of custo-mers earn less than $20,000. Income Category 4(high) 0 percent of customers pur-chasing k i t s earn less than $20,000. 252 Even with the v o l a t i l e p o l i t i c s involved with the question of government aid, 86 percent of the low-income groups reported that the lack of government aid was a major obstacle to the development of the i r industry (Table 54). In contrast, only 20 percent of manufacturers i n the highest-income customer category considered government aid a major obstacle. Responses concerned with the lack of government support to owner-builders also displayed d i s t i n c t d i f f e r -ences between the low- and high-income manufacturers, although not as d i s t i n c t . Of the manufacturers s e l l i n g over one-fourth of th e i r homes to the lowest-income customers, 71 percent reported the lack of government support to owner-builders as an important obstacle to the development of t h e i r businesses. A majority of the companies never s e l l i n g to customers earning less than $20,000 f e l t the lack of government support to owner-builders was not important. Thus, government support i s more important to the companies s e l l i n g k i t s to the low- and middle-income groups than to those marketing k i t s to higher-income groups that need no support. The higher-income group manufacturers marketing to the higher-income groups reported s i g n i f i c a n t problems with the mortgage requirements, and unstable lumber prices and marketing costs. The high l i n e k i t homes frequently have extravagant brochures and large model v i l l a g e s . The lower k i t homes usually have no v i l l a g e s or models. Most high 253 TABLE 5 4 INCOME AND OBSTACLES Low-Income High-Income Category Category  Imp. Not Imp. Imp. Not Imp. Interest rate 100% 0% 100% 0% No government aid 86% 14.3% 20% 75% No government aid to owner-building 71% 28% '44% 55% Mortgage requirements 6 3% 36% 88% 22% Local government 58% 42% 50% 50% Building department 71% 29% 75% 25% Lumber price 29% 71% 59% 41% Overhead 57% 43% 50% 50% Marketing cost 57% 43% 77% 23% Property tax 29% 71% 31% 69% 254 li n e k i t homes are lumber-intensive ( i . e . , cedar double wall 2-8" t h i c k ) , which might explain the higher lumber price response. Most of the other obstacles—property tax, overhead, l o c a l government opposition, and interest rate—were perceived as obstacles with approximately the same percen-tage of low-income as high-income manufacturers. The percentage of low-income customers had a major impact on the perception of obstacles of the problems faced by the various manufacturers. Ki t manufacturers that s e l l to more lower-income customers appear to have d i f f e r e n t problems than those who s e l l to a higher-income c l i e n t e l e . Manufacturers, that s e l l lower-priced k i t s also have d i f f e r e n t problems and security than those who s e l l higher-priced k i t s . There are many other factors that can af f e c t the problems a manufacturer may have i n marketing the k i t s or that a f f e c t the perception of obstacles. Certainly the s i t u a t i o n of business af f e c t s obstacle perception. Companies i n poor shape would be expected to report greater d i f f i c u l t i e s and would l i s t more problems and important obstacles. For the purpose of thi s study, only obstacles to the development of k i t homes as a low-cost option were examined. The potential low-cost i n d i c a t o r s — p r i c e and income of customers—are.important to separate i n order to i s o l a t e problems and obstacles to the development of 255 the low-cost k i t industry. Locational and k i t variations are important to note also, as problems may be regional in nature and could be solved or mitigated with regional solutions. Since the k i t home industry has the potential to increase the amount of low-cost housing i n rural areas, the obstacles to t h i s industry should be noted and discussed by governmental agencies developed for the purpose of increasing and improving the housing conditions of low-income r u r a l residents. It i s i r o n i c that the various agencies developed for the purpose of improving housing conditions do not examine the impact of th e i r regulations and financing requirements on s p e c i f i c elements of the housing industry. Banks also do not appear to be able to deal with the non-turnkey home. Further study i s needed to evaluate the r i s k s i t u a t i o n and i d e n t i f y ways to reduce r i s k to the lending i n s t i t u t i o n s , thus permitting greater numbers of nonsubsidized loans for less affluent owner-builders i n rural areas. CHAPTER XI CONCLUSIONS, FINDINGS, AND RECOMMENDATIONS General Conclusions Rural areas of North America s t i l l lag behind urban areas with respect to housing quality and e f f e c t i v e new construction delivery mechanisms. Rural areas have unique housing problems. Financing a home i s frequently more d i f f i c u l t i n r u r a l areas. There are fewer contractors that b u i l d less expensive r u r a l subdivisions which frequently of f e r good low down payment financing packages. Condominiums and cooperatives are rare. Rural areas frequently also have higher numbers of lower-income families that r e l y on seasonal/ temporary and odd jobs as t h e i r sole source of income. Even for those fortunate enough to find steady employment, wages are often exceptionally low when compared to urban l e v e l s . The demand for low-cost housing i s very high i n many ru r a l areas. The exi s t i n g housing market i s frequently high i n price and low i n quality—when one considers the low cost of land evident i n most r u r a l areas. There are few low-cost housing options i n r u r a l areas. Choice i s limited and the low-cost housing options have narrowed i n recent years. Many less a f f l u e n t r u r a l residents prefer to b u i l d a new home on t h e i r own 256 257 inexpensive selected l o t . While i t used to be possible to place a substandard "tar paper" shack on a rur a l l o t , t h i s i s no longer possible i n most r u r a l regions due to current building codes and enforcement (Figure 20). The mobile home has f i l l e d t h i s gap for needed low-cost housing. The manufacturing process allows for substantial savings i n materials and labor, which have brought the cost of a new home within the reach of many less affluent residents. The owner-building cost-saving process i s not new to rur a l areas and represents another major method by which the less affluent can achieve homeownership. The combination of manufacturing plus owner-building i s re f l e c t e d i n the p a r t i a l l y manufactured " k i t " home. This pre-cut/ prefabricated option has received the least study and yet may have the greatest potential i n the future as technology improves ,and the industry matures. The analysis of these low-cost housing options and cost-saving processes was undertaken i n order to better understand and evaluate the new construction housing s i t u a -t i o n in r u r a l areas. Each option i s d i s t i n c t and possesses i d e n t i f i a b l e advantages and disadvantages. The mobile home industry offers instant housing without great dependence upon the owner to pa r t i c i p a t e in construction. The mobile homes are sold off v i s i b l e lots from which they are then moved onto the owner's s i t e . Mobile homes i n some areas have been said to depreciate or appreciate at a lesser degree than a "standard home." 258 Figure 20. Alternative L i f e - S t y l e Non-Code Owner-Built Rural Home (California) 259 The financing of a mobile home used to be d i f f i c u l t but now i t i s much easier, as mobile homes have achieved wide-spread acceptance from both the f i n a n c i a l and governmental i n s t i t u t i o n s . Self-help alone without using a p a r t i a l l y manufac-tured " k i t " can save thousands off the price of a rur a l home. Self-help does involve a great deal of time, know-how, a b i l i t y , and cash (or l i q u i d assets). Most f i n a n c i a l i n s t i t u t i o n s regard the owner-builder as a greater r i s k and require s t i f f e r financing terms. Self-help requires s i g n i f -icant owner r e s p o n s i b i l i t y but the end product can be worth thousands more than the home costs to bui l d . There also may be greater s a t i s f a c t i o n i n ownership and sense of accomplishment, but these intangibles are d i f f i c u l t to quantify. The p a r t i a l l y manufactured pre-cut " k i t " home i n combination with owner-building can re s u l t i n s i g n i f i c a n t construction/time savings and usually requires less construc-tion a b i l i t y . The giant puzzle usually goes together quickly and time i s not spent on purchasing and cutting materials. K i t homes usually save thousands off the cost of a contractor-built home, yet usually look "custom" after completion. Most of the benefits and many of the disadvantages are the same as the non-kit owner-built home. Banks and other lending i n s t i t u t i o n s consider a l l owner-building ( k i t or non-kit) a substantial r i s k . The k i t home industry has yet to be recognized as a d i s t i n c t type 260 of housing. Unlike the mobile home industry, where most manufacturers produce thousands of homes each year, the k i t home industry i s characterized with hundreds of small-scale ( f i f t y homes per year) manufacturers. Many of these dealers go bankrupt each year and i t i s important to purchase a k i t from a r e l i a b l e dealer, as no federal licensing procedure e x i s t s . Unlike the mobile home with the large sales lots i n most r u r a l small towns, the k i t home dealers are d i f f i c u l t to f i n d . Few representatives or dealers handle more than one k i t l i n e . One may need to subscribe to a k i t home publication or write to several manufacturers in a directory out of the l i b r a r y i n order to obtain addresses of l o c a l dealers, and view several d i f f e r e n t types of k i t s . There are many obstacles to the development of ru r a l housing. Few sophisticated development corporations do business i n r u r a l areas. Many s k i l l e d tradesmen prefer to work on large-scale projects i n the c i t y rather than do piecemeal work i n the small towns. Some banks i n r u r a l areas often prefer not to t i e up large amounts of loan money on home loans and financing for a l l types of r u r a l housing may be d i f f i c u l t when money i s needed for other purposes. The federal housing policy has always been accused of having a d i s t i n c t preference for urban areas. The FmHA Program and the Rural and Native Housing Programs were s p e c i f i c a l l y addressed to meet the needs of the unique ru r a l s i t u a t i o n . S t i l l , r u r a l areas lag behind urban 261 centers i n quality and choice of housing. Not a l l types of rural housing are treated equally with regard to Federal Housing Program funding. While the mobile home o r i g i n a l l y received l i t t l e support from federal subsidy/home purchase/insurance programs, the s i t u a t i o n has now changed. The industry changed (made physical/design/ material alterations) and lobbied hard to obtain federal and bank i n s t i t u t i o n a l acceptance. The mobile home i s now perceived as a viable and acceptable low-cost housing option. The sel f - h e l p cost-saving process and k i t home option have yet to achieve recognition and acceptance. Few federal housing programs involve self-help i n any form. "Kit" homes are treated as too great a r i s k i f owner-building i s involved. The k i t home industry has yet to obtain recognition as a d i s t i n c t housing option. There are no national building standards, l i c e n s i n g , or inspection. No s p e c i f i c housing program addresses the k i t home s i t u a t i o n . The obstacles to the k i t home industry and self-help cost-saving process have yet to be overcome on a large scale so greater numbers of less affluent rural residents can afford t h i s option. If a goal i s to offer the greatest number of housing options and choices at a given price range, one must inves-tigate what might be done to change the s i t u a t i o n . Examina-tio n of potential solutions involve change at i n d u s t r i a l , f i n a n c i a l , and governmental l e v e l s . The owner-building and k i t home options are successful with most higher-income 262 groups, yet only a few less affluent families appear to be able to become owner-builders. Rural residents i n general l i k e to build t h e i r own homes, yet only a few less a f f l u e n t families without cash appear to be able to accomplish t h i s task. In order to suggest possible solutions, i t i s helpful to examine those k i t home industries and less affluent owner-builders that are overcoming the obstacles. Some owner-builders have been successful i n obtaining financing by concealing the fact from CMHC, FHA, FmHA, or lending i n s t i t u t i o n s that they are owner-builders, often with the k i t manufacturer's assistance. Some also have been able to convince individual banks to relax t h e i r standards and accept a greater r i s k . Some k i t home dealers have made deals with s p e c i f i c banks and assumed some of the d i r e c t r i s k . Guarantees of completion and owner/ manufacturer contracts do exist and appear to be successful. The k i t home industry has demonstrated that i t i s possible for the r i s k to be shared between the owner, manufacturer, and lending i n s t i t u t i o n . The owner-building opposition problem does appear to be a real obstacle but many overcome t h i s obstacle. The k i t home industry's role i n owner-building may provide the major key to overcoming the self-help obstacle and "greater r i s k " problem. If arrangements can be worked out between the k i t manufacturer, owner-builder, and governmental or financing i n s t i t u t i o n i n a way that r i s k 263 to the lender i s decreased, then th i s major stumbling block may be overcome and "larger numbers of less affluent r u r a l residents may have greater housing choice. S p e c i f i c Findings c The Part I study and analysis of the overall r u r a l housing s i t u a t i o n resulted i n s p e c i f i c problems and obstacles being c l e a r l y i d e n t i f i e d for the new construction housing options. Because the k i t home sit u a t i o n has been studied so l i t t l e , independent research was necessary. The survey and interview procedures added additional information that was essential to understand the ove r a l l s i t u a t i o n and reach the general conclusions outlined. In thi s subsection, k i t home s p e c i f i c findings obtained through the survey/ interview process w i l l be discussed. Finding #1 The k i t home industry has the potential to provide low-cost housing for less affluent r u r a l residents i f the purchaser elects to contribute some "sweat equity" and become an owner-builder. Although some k i t s are c l e a r l y "high l i n e " and too costly, most are priced within the reach of the less a f f l u e n t . If the buyer elects to construct the house with a modest amount of hired labor, many homes can be b u i l t for s i g n i f i c a n t l y less than a "low end" s i m i l a r l y sized contractor-built subdivision home. Depending upon the k i t selected and amount of s k i l l e d labor hired, the 264 price may even be as low as a comparably sized mobile home. For example, some dome and low end st i c k k i t s s e l l for under $10,000 and the completed house may be b u i l t for as l i t t l e as $15,000-$20,000, not counting the l o t and preparation costs ( u t i l i t i e s , septic, slab/foundation),: \ which apply to both the k i t and mobile homes (Figure 21). Finding #2 The k i t home industry i s currently s e l l i n g homes to low- and modest-income owner-builders. Although the survey results indicated that many k i t manufacturers never s e l l k i t s to low- and moderate-income (under $20,000) fa m i l i e s , some currently s e l l k i t s to families earning as low as $10,000 per year. The way that they manage to overcome the financing obstacles i s extremely varied. A few o f f e r d i r e c t loans. Others involve owner contracts, while s t i l l others involve above or below board financing arrangements or government assistance. Many low-income k i t purchasers simply pay cash for k i t s , borrow from r e l a t i v e s , or mortgage other e x i s t i n g assets ( i . e . , land, farm equipment, e t c . ) . Regardless of the method used, many less a f f l u e n t r u r a l residents are building k i t homes. Finding #3 There i s a wide variety of k i t construction tech-niques, s t y l e s , designs, quality of materials used, and methods of conducting business. 265 BUILD-IT- YOURSELF &SAVE! Stop in any Diamond location for a FREE brochure on all our pre-cut Homes, Cabins & Garages. ECO NOSH EL T h i s s t r u c t u r e It e n g i n e e r e d for 20 1040 lb . * 100 l b . l ive l oad s . C h a n g e s a n d SQ. FT. m o d i f i c a t i o n s a r e a v a i l a b l e at a d d i -t iona l c o s t . It's finally here! Yes, an affordable 2 bedroom starter home that includes all the quality material you'll need to close the house in; like premium resawn 5/8" reverse board and baft siding, insulated exterior doors, dual glaze energy efficient windows. 20 year fiberglass shingles (15 yr. comp shingles in Ore., Idaho & Washington), interior wads and an energy effi-cient Heatilator fireplace with an outside air fan kit. Note: Due to different lot elevations the slab foundation is not included' ONLY * 6 , 5 9 9 Figure 21. Low-Cost Stick Frame K i t Advertisement from C a l i f o r n i a Lumber Yard Sales Flyer 266 The k i t home industry i s not homogenous. There are many types of k i t homes. Some are pre-cut log or a form of stacked timber. Others are constructed i n panels, while others are of pole or s t i c k frame construction. The selection of styles and designs equal or exceed those offered by custom builders. There are round houses, domes, hexagons, pedestal homes, multi-story frame, and r u s t i c log homes. Each manufacturer has developed a unique style and construction technique for the home. Some of f e r a selection of materials (pine, cedar) and e x t e r i o r / i n t e r i o r f i n i s h i n g . The choice i n designs i s large, with few companies o f f e r i n g fewer than twenty d i f f e r e n t models and fl o o r plans. Inexpensive custom design services are also usually offered for those wishing to build t h e i r "dream home *." Each manufacturer conducts business i n a d i s t i n c t manner. Some are involved with extensive advertising and have a nationwide dealer network. Others operate out of the main factory location only and have no extensive network to aid i n construction or handle l o c a l l e vel problems (financing, permits). Most do offer some type of owner-building (on-site or classroom) in s t r u c t i o n and financing assistance even i f the assistance i s only a name of a good lender. Some k i t manufacturers have construction teams that w i l l p a r t i a l l y or completely construct the home for a reasonable fee and are i n a position to aid the owner-builder with any problems. There are no standard business 267 practices i n the k i t home industry. There are as many methods of running a k i t home business as there are businesses. Some s p e c i a l i z e i n s e l l i n g to owner-builders (the average i s 50 percent owner-builder customers) and off e r extensive i n s t r u c t i o n . Others s p e c i a l i z e i n s e l l i n g homes to affluent professionals who can afford to hire a l l help. Few k i t manufacturers reported using any FmHA, FHA, VA, CMHC, or other federal assistance program, but there were a few who reported substancial success i n obtaining federal financing. Unique financing assistance i s not atypical i n the industry. Owner contracts, dealer construc-t i o n financing, and special bank arrangements do occur but many dealers o f f e r no d i r e c t assistance. The k i t home industry i s highly varied, with experimentation and new ways of building and doing business the norm. Finding #4 There are many obstacles to the development of the k i t home industry. The most s i g n i f i c a n t problem that the survey and interview revealed involved financing the k i t home. The anti-self-help/owner-building climate on the part of f i n a n c i a l and governmental i n s t i t u t i o n s has created a major obstacle to k i t industry development. Firms that are able to solve t h e i r financing d i f f i c u l t i e s and s e l l to a wider income range reported that they were s e l l i n g more homes. 268 Other obstacles involved the marketing problems and l o c a l government d i f f i c u l t i e s . Log and s o l i d timber wall homes have had d i f f i c u l t y with codes designed to optimize energy e f f i c i e n c y . Unusual construction techniques ( i . e . , dome, trapezoid) are also used to a greater extent i n the k i t home industry and t h i s often confuses the l o c a l inspectors/plan checkers. The k i t homes cannot be r o l l e d onto a l o t temporarily and then moved to the purchaser's s i t e . K i t v i l l a g e s are expensive to maintain and the investment can not be e a s i l y recaptured. Few manufacturers can afford to display t h e i r homes i n more than one location, and thus, fewer people are aware that the firm e x i s t s . The k i t home industry has many unique c h a r a c t e r i s t i c s and problems. The industry i s not homogenous and each s p e c i f i c company addresses the d i f f i c u l t i e s of doing business in a d i s t i n c t way. The next section outlines some recommen-dations based on t h i s analysis. The recommendations are only suggestions and possible solutions to th i s industry's d i f f i c u l t i e s i n terms of low-cost hou'sing p o t e n t i a l . Further study should follow before any implementation i s attempted. Recommendations Industry 1. Focus on customer financing d i f f i c u l t i e s . Locate agreeable lending i n s t i t u t i o n s and attempt to work with federal programs i f possible. Be w i l l i n g to share 269 some of the r i s k of owner-building i n exchange for better construction financing terms. Do not fear d i r e c t involve-ment and be persistant i n s e l l i n g benefits, reputation, and r e l i a b i l i t y to lenders. 2. Take steps as an industry and unify to achieve greater i n d u s t r i a l recognition and lobby for bureaucratic change.that w i l l benefit a l l . Focus on s e l l i n g , p a r t i a l manufacturing benefits (lower cost, a d a p t a b i l i t y ) , and not on one•technique's su p e r i o r i t y over another. Lobby for federal q u a l i t y standards and programs designed for owner-builders. 3. Consider d i f f e r e n t marketing techniques such as m u l t i - k i t dealer representation where more than one k i t type i s sold by a p a r t i c u l a r dealer. Increase the number and a c c e s s i b i l i t y of k i t home d i r e c t o r i e s , and increase the amount of un i f i e d p u b l i c i t y ( k i t home shows, expeditions). Consider making agreements with l o c a l subdi-v i s i o n developers where k i t s are constructed by the manufac-turers and then sold with l o t i n a subdivision. Greater v i s i b i l i t y , customer assurance of quality, and recognition as an e f f e c t i v e cost-saving industry are keys to successful marketing. Financial I n s t i t u t i o n s 1. Consider the owner-builder using a k i t separate from the non-kit s e l f - h e l p builder. Kits standardize quali t y , cut construction time, and require less s p e c i a l i z e d 270 s k i l l to construct. They should be a lesser r i s k and terms should r e f l e c t t h i s . Consider packages that involve sharing the r i s k with the owner, manufacturer (who may be w i l l i n g to guarantee completion), and lending i n s t i t u t i o n . 2. Formulate a rating system or evaluation c h e c k l i s t based on s p e c i f i c company performance and k i t resale value. Develop working relationships with k i t manufacturers i n similar ways to the developer/contractor and lending i n s t i t u t i o n r e l a t i o n s h i p . Federal Governments 1. Recognize the k i t home industry as a d i s t i n c t entity, d i f f e r e n t from the contractor subdivision and mobile home industries. 2. Develop u n i f i e d construction standards (much l i k e the mobile home) and issue licenses, c e r t i f i c a t e s of quality, or rating to individual manufacturers. Inspect factories for quality and performance assurances. 3. Design housing programs that w i l l work with t h i s d i s t i n c t industry. Accept the fact that owner-building i s an int e g r a l part of the industry and must be incorporated into the program. a. Consider a package that allows the manufac-turer to lower the r i s k by guaranteeing completion and working as an intermediary. For example, an agreement/contract between FHA, VA, FmHA, CMHC (etc.), the owner, and the dealer/manufacturer could be 271 devised, whereby i f the owner-builder quit and walked away from a half-completed house, the manu-facturer would be responsible for locating another q u a l i f i e d owner-builder. If no q u a l i f i e d party could be found, the manufacturer could perhaps complete the home at a preagreed small-scaled fee and then be responsible for s e l l i n g the completed house. Any p r o f i t could perhaps be s p l i t between the manufacturer and guarantor (HUD, CMHC, FmHA), thus covering the added expense and possible loss from other "defaulted" homes. b. Consider adapting FmHA self-help technical assistance grant program to include k i t manufacturers, with t h e i r e x i s t i n g contractor i n s t r u c t i o n networks. For example, many k i t home dealerships have extensive contractor assistance networks for the i r owner-building customers. Some even provide some technical assistance i n the form of on-site t r a i n i n g and classroom i n s t r u c t i o n which has some s i m i l a r i t i e s to the FmHA sel f - h e l p program. These networks p o t e n t i a l l y might be adapted to a "group" structured program s i t u a t i o n at a reasonable cost per unit. Certainly not a l l manufacturers would p a r t i c i p a t e , as many contractor/developers refuse to deal with FHA, but i f the terms were f a i r and r e a l i s t i c i t i s l i k e l y that some would become involved. The two examples given require greater f i s c a l 272 analysis but any program designed should work with (not against) the industry and i t s unique charac-t e r i s t i c s , benefits, and r i s k s . These general conclusions, s p e c i f i c findings, and recommendations are presented i n order to stimulate thought on how to better address the unique d i f f i c u l t i e s faced i n rur a l areas. During the 1960s and 1970s, then-current federal housing p o l i c y and practices were challenged and change occurred. New goals were set and expensive programs devised. Most of these programs have been substantially cut so very few benefit and most of the need goes unmet. The goals are unlike l y to ever be met at the current pace. One answer may c e r t a i n l y be to increase expenditures but another answer may l i e i n sel e c t i n g less costly more co s t - e f f e c t i v e programs that achieve the desired r e s u l t yet benefit greater numbers of needy i n d i v i d u a l s . It i s hoped that t h i s presen-tati o n and analysis w i l l i n some small way evoke creative thinking to deal with the many complex r u r a l housing issues in North America today. 273 BIBLIOGRAPHY BIBLIOGRAPHY B r i t i s h Columbia. Department of Industrial Development. Mobile Homes in B r i t i s h Columbia—A Socioeconomic  Study. V i c t o r i a , B.C.: B r i t i s h Columbia Department of Industrial Development, March 1971. B r i t i s h Columbia. Department of Industrial Development. Trade and Commerce Economics and S t a t i s t i c s Branch. Mobile Homes i n B r i t i s h Columbia: A Socio-Economic  Study. March 1971. B r i t i s h Columbia. Interdepartmental Study Team on Housing and Rents. A Comprehensive Social Housing  Policy for B r i t i s h Columbia, by Emily Paradise Achten-berg, Peter Larmour, and P a t r i c i a Streich. V i c t o r i a , B. C. : n. d. Buyer, Glenn, and Rose, J. Hugh. Farm Home. New York: John Wiley and Sons, n.d. Canada. The Report of an Inquiry Conducted for the Government of the Province of B r i t i s h Columbia, Mobile  Homes--Problems and Prospects, by Michael Audain. V i c t o r i a , B.C.: Queen's Printer, November 1975. Canada. Ministry of Treasury. Economic and Inter-governmental A f f a i r s . Mobile Homes in O n t a r i o —  Construction Costs. Ottawa, Ontario: Ministry of Treasury, Economic and Intergovernmental A f f a i r s , 1973. Canada Mortgage and Housing Corporation. R e v i t a l i z i n g North  American Neighborhoods: A Comparison of Canadian and US  Programs for Neighborhood Preservation and Housing  Re h a b i l i t a t i o n . NHA Publication 5237. Ottawa, Ontario: CMHC, 1979. Canada Mortgage and Housing Corporation. Unpublished data, n.d. Cantwell, Brian. "Self-Help Housing Giving Families Control over Lives, Says Director." The Argus (Mt. Vernon, Washington), February 21, 1980. The Center for Auto Safety. Mobile Homes, the Low Cost  Housing Hoax. New York: Grossman, n.d. 274 275 Chandler, John Noel. "Shelter: Planning for Self-Help Housing." Arts Canada, no. 208/209 (October/November 1976):31-34. Chisum Industries. The Chisum Log M i l l . Grand Island: n.d. (Brochure.) Clark, Richard. An Introduction to the Whatcom County  Housing Survey. Bellingham, Wash.: Whatcom County Opportunity Council, 1977. Coffee, Frank. The Complete Kit House Catalog. N.p.: n.p., n.d. Davidson, Harold. Housing Demand: Mobile, Modular or  Conventional. New York: Van Nostrand, 1973. Davidson, Harold Alan. "An Analysis of the Demand for Mobile Homes with Implications for the Financial Struc-ture of the Mobile Home Industry through 1975." Unpublished d i s s e r t a t i o n , University of Southern C a l i f o r n i a , Los Angeles, 1974. Dennis, Michael, and Fish,:oSusan. Programs i n Search of Policy Low Income Housing i n Canada. Toronto, Ontario: Hukkert, 1972. Dietz, Albert G. H., and Cutler, Laurence S. Building  Systems for Housing. Cambridge, Mass.: MIT Press, 1971. Drury, Margaret. Mobile Homes--The Unrecognized Revolution  i n American Housing. New York: Praeger, 1972. Edmonton (Canada) Planning Department. Mobile and Modular  Housing i n Edmonton, a Demand Assessment. Edmonton, Alberta: Edmonton Planning Department, May 1978. Fried, Joseph. Housing C r i s i s — U S A . New York: Praeger, 1971. F u l l e r , Mr. Canada Mortgage and Housing Corporation. Telephone interview, Vancouver, B.C., March 12, 1982. Hammond, Carole. Whatcom County. Interview, Everson, Washington, 1981. Hedman, David. "Report on Rural and Native Housing Policy and Program and B r i t i s h Columbia Remote Housing Associ-ation." Vancouver, B.C.: Spring, 1979. (Xeroxed.) Hedman, David. University of B r i t i s h Columbia. Interview, Vancouver, B.C., 19 81. 276 Herman, Kim; Gutierrez, Nina; and Hammond, Carole. Housing  Resource Handbook. Spokane: Washington C o a l i t i o n for Rural Housing, 1980. v Housing Assistance Council. Looking for a Home. Washington, D.C: Housing Assistance Council, 1971. Houston, Lawrence. "The New Non-Metropolitan Growth: Where Do Blue Co l l a r Residents F i t In?" Small Town 2 (March/ A p r i l 1977 ) . Interreligious C o a l i t i o n for Housing (ICH). Housing Costs  and Housing Needs, by Alexander Greendale and Stanley F. Knock. New York: Praeger, 1976. Justus Homes. Advertising publication. Tacoma, Wash.: Justus Homes, n.d. Log Home Guide for Builders and Buyers. Gardenvale, Quebec: Muir, 1983. Los Angeles Times, December 1982, p. 4. Mann, E r i c a . "An Innovative Approach to Planning i n Rural . Areas: The Self-Help Layout." E k i s t i c s 46, no. 279 (n.d.);388-392. Marantz, Janet; Case, Karl E., II; and Leonard, Herman B. Descrimination i n Rural Housing. Lexington, Mass.: Lexington Books, 1976. Marcuse, Peter. "The Determinants of Housing Policy." Papers i n Planning (PIP), v o l . 22, June 1980. Graduate School of Architecture and Planning, Columbia University. Matthews, Deonald, and Smith, Lawrence. Report on Canada  Mortgage and Housing Corporation. Ottawa, Ontario: Task Force on CMHC; published under the authority of the minister responsible for CMHC, October 1979. McGuigan, Peter. "No Wood i n Cairo." Habitat 22, no. 2 (1972):49-. Monterey Domes, Inc. Monterey Domes Geodesic Homes for  Li v i n g . Riverside, Ca.: Monterey Domes, Inc., n.d. (Brochure.) Native Council of Canada. Br i e f , Submitted to the Honorable  R. S. Bashford, PCMP, Minister of State for Urban  A f f a i r s , Board of Directors of the Native Council of  Canada. Ottawa, Ontario: n.d. 277 Nutt-Powel1, Thomas; Furlong, Michael; and Pinkington, Christopher. The States and Manufactured Housing. N.p.: June 1980. Oklahoma :State University of agriculture and Applied Science. Rural Housing i n G a r f i e l d County, Oklahoma, a Study of  Process, Images and Values, by James Montgomery, Sara Sutter Smith, and Marie Nygen. S t i l l w a t e r : Oklahoma State University of Agriculture and Applied Science, School of Home Economics, Department of Housing and Design, August 1, 1959. Owens/Corning Fiberglass. Barriers to Greater Sales Growth,  An Investigation of Consumer Shelter Decision-Making  As It Impacts the Mobile Home Industry. Pan Adobe Cedar Homes. Pan Adobe brochure. Renton, Wash.: n.d. Parna, R. P.; Angel, S.; and DeGorda, J. H. Low Income  Housing—Technology and Policy. Vol. 1: Proceedings  of the International Conference on Low Income Housing-- Technology and Pol i c y . Bangkok: Asian Institute of Technology, n.d. Pre-Cut International. K i t home brochure. Woodinville, Wash.: Pre-Cut International, n*.d. Qadeer, Mohammad. "Issues and Approaches of Rural Community Planning i n Canada." Plan Canada 19 (June 1979):106-121 . Rabb, Judith, and Rabb, Bernard. Good Shelter, a Guide to  Mobile, Modular and Prefabricated Houses Including  Dome. New York: Quadrangle, 1975. Rawlings, Roger. "Anyone Can Build a Home." Rodales New  Shelter, A p r i l 1983, p. 22. Real Estate Corporation. Costs of Sprawl--Environmental  and Economic Costs of Alternative Residential Develop-ment Patterns at the Urban Fringe. Prepared for CEO/f HUD, and EPA. Washington, D.C.: Government Printing O f f i c e , A p r i l 1974. Remillard, Andrew. "Mobile Home Image: Study of Some Design Deta i l s . " Unpublished thesis, University of B r i t i s h Columbia, Vancouver, 1975. Roberts, John, and Grey, George. Mobile Homes and Mobile  Home Parks i n Dane County: A Report of Responses from  Mobile Home Residents and Local Government O f f i c i a l s . N.p.: n.p., February 1974. 278 Rosenham, Tim. Skagit Self-Help. Interview, Mt. Vernon, Washington, 1981. Ryan, Michael, and Associates. "Rural and Remote Housing in B r i t i s h Columbia: A Program Evaluation." Unpublished paper, n.d. Schoenauer, Norbert. "Fermont—A Design for Sub-Arctic Li v i n g . " Habitat 21, no. 3 (1978), p. 17. Skagit County Self-Help Housing. A Grant Proposal, 1981- 1983. Mt. Vernon, Wash.: Skagit County Self-Help Housing, n.d. Sonoma County. Department of Planning. "Staff Report." Prepared for the Sonoma County Planning Commission. Santa Rosa: March 19, 1981. (Xeroxed.) Swanson, Bert, and Cohen, Richmond. The Small Town i n America—A Guide for Study and Community Development. Rensselaerville, N.Y.: The Institute on Man and Science, 1976. Timberline Geodesic Homes, n.d. (Brochure.) Topsider Homes. The Home That Is a Vacation. Yadkinville, N.C.: Topsider Homes, n.d. (Brochure.) Tremblay, Kenneth, J r . ; Dillman, Don; and Dillman, Joyce. Housing S a t i s f a c t i o n and Preferences of Washington  Residents, a 1977 Statewide Survey. Bellingham: Washington State University, College of Agriculture Research Center, 1977. Trend, M. G. Housing Allowance for the Poor. Boulder, Colo.: Western Press, 1978. Turner, John F. C , and Fichter, Robert, eds. Freedom  to Build, Dweller Control of the Housing Process. New York: Macmillan, 1972. Turner, John F. C. Housing by People Towards Autonomy i n .Building Environments. New York: Pantheon, 1976. United Community Service of the Greater Vancouver Area. Policy and Research Department. Mobile Home Living  in the Lower Mainland. Vancouver, B.C.: United Community Service of the Greater Vancouver Area, January 1971. U.S. Department of Agriculture. Economic Research Service. Status of Rural Housing i n the United States, by Ronald Byrd, Beverly Lucia, and Ann Simmons. Washington, D.C: Government Printing O f f i c e , 1968. 279 U.S. Department of Agriculture. Economic Resource Service. Rural Housing: Trends and Prospects, by Robert Freeman. Washington, D.C.: Government Printing O f f i c e , 1970. U.S. Department of Housing and Urban Development. Afford-able Housing. HUD-623-PDR(3). Washington, D.C.: Government Printing O f f i c e , June 1983. U.S. Department of Housing and Urban Development. Annual  Report, 1978. Washington, D.C.: Government Printing O f f i c e , 1978. U.S. Department of Housing and Urban Development. Depart-mental Programs, 1978-80., Washington, D.C.: Government Printing O f f i c e , 1980. U.S. Department of Housing and Urban Development. Develop-mental Needs of Small C i t i e s , by P a t r i c i a Harris. Washington, D.C.: Government Printing O f f i c e , n.d. U.S. Department of Housing and Urban Development. Fact sheet. November 3, 1983. U.S. Department of Housing and Urban Development. The Joint Venture for Affordable Housing. HUD-624-PDR(2). Washington, D.C.: Government Printing O f f i c e , 1983. U.S. Department of Housing and Urban Development. Putting  the Roof on Housing Costs. Washington, D.C.: Government Printing O f f i c e , n.d. U.S. Department of Housing and Urban Development. Report of the Task Force on Rural and Non-Metropolitan Areas. Washington, D.C.: Government Printing O f f i c e , July 1978. U.S. Department of Housing and Urban Development. S t a t i s t i -cal Yearbook, 1973. Washington, D.C.: Government Printing O f f i c e , 1971. U.S. Department of Housing and Urban Development. Housing and Home Finance Agency, Office of Program Policy. The  Unfinished but Habitable Home, by William Shenkel. Washington, D.C.: Government Printing O f f i c e , 1965. U.S. Department of Housing and Urban Development. Office of Policy Development and Research, Division of Housing and Demographic Analysis. HUD Condominium/Cooperative  Study. Vol. 1: National Evaluation, by Clara H i l l s . Washington, D.C.: Government Printing O f f i c e , October 1975. 280 U.S. Department of Housing and Urban Development. Office of Policy Development and Research, Division of Housing and Demographic Analysis. 1980 National Housing Produc-tion Report. Washington, D.C.: Government Printing O f f i c e , February 1980. U.S. Department of Housing and Urban Development. Office of Policy Development and Research. Proceedings of the  HUD National Conference on Housing Costs: Reducing the  Development Costs of Housing Actions for State and Local  Governments. Washington, D.C.: Government Printing O f f i c e , 1979. U.S. Department of Housing and Urban Development. Office of Policy Development and Research. The Tenth Annual  Report on the National Housing Goal. Washington, D.C.: Government Printing O f f i c e , 1977. U.S. Department of Housing and Urban Development and U.S. Department of Commerce. Annual Housing Survey, Urban  and Rural Housing Ch a r a c t e r i s t i c s . Washington, D.C: Government Printing O f f i c e , 1977. U.S. Housing Assistance Council. Housing Programs for Rural America. Washington, D.C: Government Printing O f f i c e , n.d. U.S. Housing Assistance Council. Looking for a Home. Washington, D.C: Government Printing O f f i c e , n.d. U.S. Office of Economic Opportunity and Rural Housing. A Report on OEO's Rural Housing A c t i v i t i e s and Achieve-ments, as Indicated by Study of Five Selected Rural  Housing Development Corporations. Washington, D.C: Government Printing O f f i c e , n.d. Vischer, Jacqueline. Rural Residential Subdivisions i n B r i t i s h Columbia. V i c t o r i a , B.C.: Ministry of Municipal A f f a i r s , 1981. Washington. Housing: The Problems i n Washington State. Olympia: Washington State Planning and Community A f f a i r s Agency, Local Government Services Division, 1980. Washington. Department of Community Development, Office of the Governor. Demand for Housing Units i n the  State of Washington, 1972-1980: An Essential Component  of Housing Need. Olympia: Washington, Department of Community Development, 1973. Watkins, A. M. The Complete Guide to Factory-Made Housing. New York: E. P. Dutton, 19 80. 281 Wexler, Harry, and Peck, Richard. Housing and Local Govern-ment; A Research Guide for Policy Makers and Planners. Lexington, Mass.: Lexington Books, 1975. Whatcom County. "Whatcom Self-Help Housing." Linden, Wash.: Whatcom County, 1980. (Unpublished grant.) Whatcom County Council of Governments. Overall Economic Development Plan and Comprehensive Economic Development  Strategy. Bellingham, Wash.: Whatcom County Council of Governments, 1979. Williams, H. A. "Small Towns Look to the Future; Strategies for Growing Up Small." Sma11 Town 2 (July/August 1980). Wing, Kenneth, and Melniker, Nancy. Evaluation of Maine's  Improving Rural Homes Project. Orono: University of Maine, 1977. Wolman, Harold. Housing and Housing Policy i n the U.S. and  the U.K. Lexington, Mass.: Lexington Books, n.d. APPENDIX SAMPLE QUESTIONNAIRE General Information 1. Please c i r c l e the category(ies) that best describe your k i t home. Pre-Gut Log Panel Pre-Cut Stick Modular Panel and Pre-Cut Comb. Other ( l i s t ) Please describe simply what i s included i n your product ( i . e . , roof, f l o o r s ) . 3. Location of factory Origin of lumber_ Number of years i n business Owner-Building/Financing Information 4. Do you of f e r i n s t r u c t i o n for those who wish to construct th e i r own home? (Please c i r c l e . ) Yes No 5. Many individuals wish to do part i f not a l l of the work in constructing t h e i r home. What percentage of your customers would you c l a s s i f y i n the following categories? % F u l l owner-builders (do a l l or most of the construction % P a r t i a l owner-builders % Owners acting as general contractors % No involvement with construction, contractor-b u i l t % Other (state) • Do you of f e r any financing aid? (Please c i r c l e ) Yes No If yes, please c i r c l e type(s): Contractor contracts Direct lending Bank arrangement Hints, r e f e r r a l s Other Please explain b r i e f l y the financing arrangements or a i d : 283 284 7. What percentage of your customers pay cash for your home? (not financed) 8. How do the others finance t h e i r home? Please estimate the percentage. % Dealer/mfg. financed % Savings and loan % Commercial banks % Mutual savings banks % Mortgage companies _% FHA % VA % Farmers Home % Other ( l i s t ) What minimum down payment (percent) i s t y p i c a l for a loan on one of your homes? (please c i r c l e ) 5% 10% 15% 20% 25% 30% Other % 10. Of the homes you've sold t h i s year, please estimate how many you have sold i n each price range (FOB) (Kit price) % Under $10,000 % $10,000-$20,000 % $20,000-$30,000 % $30,000-$40,000 % $40,000 and over Does t h i s price include labor? (Please c i r c l e . ) Yes No 11. What percentage of your customers, would you estimate, are i n the following income categories? % Under $12,000 % $12,000-$15,000 % $15,000-$20,000 % $20,000-$25,000 % $25,000-$30,000 % $30,000-$35,000 % Over $3 5,000 12. The following l i s t states several potential obstacles or problems to the development of your industry. Please rate t h e i r importance by placing an X i n the appropriate column. 285 Most Moderately Not Important Important Important Interest rates Lack of government financing aid Lack of government support to owner-builders Mortgage requirements Local government opposition Building approval/ delays Unstable lumber prices High overhead costs Marketing costs/problems Property tax costs Other ( l i s t ) 13. What i s the current s i t u a t i o n of your company compared with the l a s t few years? (Please c i r c l e . ) About the same. S e l l i n g more. S e l l i n g fewer. Hurting greatly. 14. Approximate number of homes sold t h i s year la s t year 15. Number of homes sold i n Washington State (this year) . Number of homes sold i n B r i t i s h Columbia (this year) . 16. Comments or suggestions which could aid i n the growth and development of your industry. » 

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