CHM Blog

The path to homeownership hiding in plain sight

In your mind, what defines a “starter” home? A modest two-bedroom house with a yard and a manageable mortgage? Reality check: That home now costs over $1 million in most states, according to Realtor.com’s Allaire Conte. .

“Getting into one requires $250,000 for a down payment, a household income of nearly $225,000, and the ability to cover a $6,400 monthly mortgage,” she says. “It's no wonder first-time homebuyers made up a new historic low of just 24% of home sales in 2024,” she adds, citing the National Association of Realtors. .

But is there a middle ground that's been overlooked? Perhaps. Manufactured and modular homes are now shedding their outdated stigma and proving they can build wealth just as effectively as traditional homes. .

Hannah Jones, senior economic research analyst at Realtor.com, explains that many manufactured homes remain affordable in lower-cost markets while still experiencing strong price appreciation. According to the Urban Institute’s analysis of FHFA data from 2000 to 2024, appreciation rates of manufactured homes nearly matched those of site-built homes. And over the past decade, manufactured homes have actually outpaced traditional homes in appreciation. .

The key distinction is no longer whether a home was built in a factory. It's about the building code it follows, who owns the land, and how it's financed, says Conte. “Manufactured homes are built to federal HUD standards on a permanent steel chassis,” she says. “Modular homes follow the same state and local building codes as traditional houses. In other words, the end product is essentially the same. They’re just assembled differently.” .

Cost is where factory-built homes shine. While the National Association of Home Builders reports that the average new single-family home sold for more than $665,000 in 2024, factory-built homes cost a fraction of that, with construction timelines 2 to 4 times faster than traditional building methods. .

The caveat: manufactured homes on leased land typically appreciate less because land values have jumped — from 36% of total home value in 2012 to more than 57% in 2023, Conte reports. Simply put, buyers like to buy the land with the house, so those willing to buy one on rented land represent a smaller pool. This means that for manufactured homes to build equity effectively, they need to be titled as real property, which qualifies them for conventional, FHA, or VA financing. .

As long as affordable housing remains scarce and construction costs stay high, factory-built homes will continue offering a legitimate path to homeownership. For buyers planning to stay at least 5 years, these homes can build meaningful equity, serving as a stepping stone to future purchases — which is what “starter” homes were always meant to be.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +6 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week, 1) The Federal Reserve, 2) Geopolitical and 3) Central Banks.

The Federal Reserve

The Federal Open Market Committee’s latest policy statement and rate decision will be released on Tuesday at 2 pm ET, followed by a live presser with Fed Chair Powell at 2:30 pm. The market expects another 25 basis point cut at this meeting.

Geopolitical

It is now day 27 of the Government shutdown.

Central Banks

The Fed is not the only game in town. Key rate decisions are expected from the Bank of Canada, European Central Bank, and Bank of Japan.

There will also be some Treasury auctions on Monday and Tuesday, although they are not expected to move markets.

This Week's Potential Volatility: High

This morning markets are seeing some rocky trading near the top of our trading channel. Volatility has started at moderate levels but could become high later this week depending on the Fed or any Geopolitical changes.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.