Kevin Clayton, CEO of Clayton, invited guests to the new Hawthorne home design on display at the RV/MH Hall of Fame in Elkhart, Ind., an example of the latest CrossMod product, and what the manufactured housing industry can do to provide more much-needed affordable homes.
Following the opening of the home and new Manufactured Housing Museum in mid-August , Clayton attended the 50th Anniversary celebration at the RV/MH Hall of Fame, during which 10 new inductees were honored and Kevin and Jim Clayton, his father and founder of the company, accepted the Darryl Searer Spirit Award.
While touring, mingling, and showing his appreciation for the more than 500 manufactured housing professionals in attendance, Clayton took some time to chat with MHInsider on new developments with the CrossMod product, and thoughts on the direction of the industry.
A CrossMod home is a HUD Code manufactured home with attributes such as a permanent foundation, 5/12 roof pitch, dormers, a porch or garage, as well as interior features such as increased insulation, drywall, and hardwood cabinets. The home is designed to be permanently placed in nearly any residential neighborhood and can be financed with a conventional mortgage backed by Freddie Mac or Fannie Mae. The home is built in a factory, transported, and finished on-site.
MHInsider: What are the latest developments on the CrossMod front?
Kevin Clayton: CrossMod homes offer an affordable manufactured housing solution that can appraise to site-built comps and qualify for conventional financing and zoning. Currently, FHA, Fannie Mae and Freddie Mac say CrossMod homes “may” be appraised against site-built but many have defaulted to other manufactured homes, which is not an accurate comparison.
With the simple change expected in a few months of it saying it “must” be compared to CrossMod or site-built, in five years you could double the supply of new homes below $300,000.
In that case, the lenders can be financing through FHA Title II. It will be right where we’ve wanted these homes to be considered all along.
We also recently highlighted two other CrossMod home innovations: the single-section CrossMod and the net-zero energy home.
The unique layout of the single-section CrossMod home makes it an ideal size and shape for many city lots or established neighborhoods. We estimate the single section CrossMod would typically cost under $200,000 including land and set up of the home. This price point would help even more families and individuals achieve homeownership.
At the 2022 Berkshire Hathaway Shareholders meeting, we also unveiled our first net-zero CrossMod home. This home showcased energy-efficient features currently available, as well as new, future technologies Clayton is considering, such as solar.
The net-zero home demonstrates Clayton’s dedication to building homes that uphold our commitment to affordability, sustainability, and design innovation.
There was some early skepticism on how CrossMod might take hold, what’s your feeling on the pace now?
You’re seeing a much more intense effort to get these finance issues solved and solved quickly. The focus is to prioritize needs in the industry and work with HUD and the Enterprises to get them addressed, so we can better serve families searching for affordable housing.
What does bringing this product to market do for the industry?
It is a big boost in doubling our industry’s historical 9-10 percent of home starts. I am extremely confident that within the next 10 years, if not the next five, we will be able to double the size and productivity of our industry.
Every area in the country is in absolute need of more affordable housing.
The average sale price of a home in the U.S. last year was nearing $500,000, whereas a CrossMod home on land, like the Hawthorne from Clayton, is below $300,000 in most markets, a price point more families can afford.
Beyond design and financing, what has Clayton been doing to prepare for a ramp up in CrossMod home sales?
Building relationships with site builders and developers. CrossMod allows us to help developers add a housing tool to their toolbelt. With a CrossMod home, we build the house, relieving some of a developer’s labor pressure. In addition, CrossMod homes are primarily sold by developers through realtors. Educating realtors about CrossMod homes and available financing options is important in increasing access.
Our industry is also working closely with municipalities across the country to educate community leaders and the public on CrossMod to ensure zoning accommodates CrossMod homes.
Retail locations are increasingly interested in stocking CrossMod homes. This will gain traction as the appraisal language updates happen later this year.
