(NewsNation) — Manufactured homes have historically been considered a solution to affordable housing shortages, but ballooning rent and financing costs are creating new barriers.

Sometimes referred to as mobile homes, they are built entirely in manufacturing plants and transported to the property where they’ll stay. It’s an option that’s 35% to 47% cheaper per square foot than traditional housing, which is built on-site on a permanent foundation, according to data from the Urban Institute.

“The puzzle is why there’s so little (manufactured housing) being shipped when it’s a much better product than it used to be,” said Laurie Goodman, an Urban Institute fellow.

Just as they’ve done with traditional houses, prices have gone for manufactured homes.

By January 2022, the average sales price rose to $122,500, influenced by demand, inflation and labor shortages, according to the Urban Institute. That’s compared to the $108,000 manufactured homes went for on average in 2021, according to US Census Bureau data.

Even so, manufactured homes can be hundreds of thousands of dollars cheaper than site-built homes, which, excluding the cost of land, sold for an average of $365,900 in 2021.

Manufactured home owners aren’t safe from rent hikes

Zoning restrictions, rent increases and financing challenges are stymying manufactured home production, Goodman said. Additionally, many municipalities don’t allow or make it difficult to build new communities and parks.

Those who can secure them may struggle with financing.

“Financing on (manufactured housing) is very complex,” Goodman said. “There’s manufactured housing where you own the underlying land and that can qualify for a regular mortgage (and) there’s manufactured housing where you don’t own the underlying land and that requires home-only financing…”

Although the credit standards for home-only financing are more achievable, it’s often a more expensive option since the homeowner also has to pay rent on the land.

That land, often manufactured home communities or parks, is appealing to investors who may have short-term interests that don’t include long-term affordability for homeowners.

In Massachusetts, residents at American Mobile Park are facing rent increases of about 40%, according to the Boston organization Lawyers for Civil Rights.

At the end of November, residents who rent learned their monthly payments would increase from less than $1,000 to more than $1,300. Those who own would also be paying about 25% more, bringing their fees from less than $500 to about $600.

The park’s management company Parakeet Communities did not immediately reply to NewsNation’s request for comment.

Lawyers for Civil Rights issued a cease-and-desist letter on Jan. 17, demanding that the park’s landlord halt what the group called “illegal and exorbitant rent increases.”

“These cost increases are exorbitant for such a vulnerable population living on low and fixed incomes,” the letter stated. “In fact, they have hit some tenants so hard that a group of residents have taken it upon themselves to set up a food bank for those who are now struggling to afford basic necessities.”

A drop in manufactured home production

Manufactured homes flooded the market in 1999 as foreclosures and repossessions became more common, but production fell off as credit standards became stricter and the housing bubble and Great Recession set in.

By the first half of 2022, however, shipments were back up 12%, according to an Urban Institute analysis.

The industry hasn’t fully recovered, however. Inflation and labor shortages during the pandemic contributed to rising prices. Additionally, the lack of access to financing and higher costs for home-only loans has made manufactured homes more expensive over time and, in turn, reduced demand, according to the analysis.

“If you look from 1977 to 1994, we shipped about 240,000 units of manufactured housing each year,” Goodman said. “The last few years we’ve shipped just over 100,000.”

Making affordable manufactured homes more attractive

The shortage of affordable housing is hardly a new challenge in the United States, but high-interest rates and limited inventory in recent years have pushed home ownership further out of reach for many people, according to the U.S. Government Accountability Office.

The median income for manufactured home buyers in 2021 was $57,000, compared with the $93,000 median income for borrowers moving into site-built homes, according to Home Mortgage Disclosure Act data.

Palmer and his team have been pushing for legislation in Illinois aimed at making manufactured homes a better housing option. Proposals include limits on rent hikes and allowances for local governments to pass rent control ordinances for manufactured home parks.

“As you can imagine, there’s a lot of opposition to both those pieces of legislation from the industry and interest groups that represent the actual park owners and those bills haven’t been passed in the Illinois General Assembly yet.”

The National Manufactured Home Owners Association is also calling for federal legislation that would incentivize park owners to sell their property to the homeowners, housing authority or a nonprofit that can guarantee long-term tenure.

It’s also encouraged HUD to earmark some of the affordable housing funds granted on the state level specifically for manufactured housing community preservation.

As for financing, the Urban Institute has recommended that government-sponsored enterprises enter the space to incentivize lenders to offer financing at better terms. The group additionally suggested that HUD increase home-only loan limits to reflect market prices and create a process for annual increases that are in step with home price appreciation.