The housing market can be quite challenging these days. Prices are soaring and mortgage rates are not favorable; many homeowners are reluctant to sell, leaving potential buyers feeling discouraged. A recent survey by Fannie Mae indicated that merely 17% of participants felt that now was a good time to buy a home.

In such trying times, it might be necessary to explore alternative options. Here are four creative suggestions for those still eager to achieve their dream of homeownership despite the difficulties of the traditional housing market.

Manufactured Homes

Think all manufactured homes look the same? Think again.

“As a Marine who has lived in various places, I can confidently say this is the best home I’ve ever lived in,” stated Hector Cardenas, who purchased one of the first homes in a new manufactured housing development near Richmond, Virginia, in 2023.

This home features four bedrooms, two bathrooms, and spacious yards at the front and back. Cardenas bought it for $240,000, estimating that a similarly sized traditional home would have set him back around $125,000 more.

According to Chad Reed, director of programs and growth at Ivory Innovations, a housing nonprofit based in Boston, Cardenas is part of a significant push that began a decade ago aimed at transforming manufactured homes to resemble traditional houses more closely.

The Manufactured Housing Institute has created a new classification known as “CrossMod,” denoting homes designed to compete with regular site-built single-family residences. These CrossMod homes are designed to look alike, offer similar energy efficiency and durability against weather, and are permanently affixed to a foundation.

Prospective buyers in the manufactured home market typically need to secure homeowners’ insurance from specialized insurers, Reed noted. Fortunately, one major obstacle that previously complicated the financing process has been resolved. Mortgages classifying manufactured homes as real estate rather than personal property are now much more accessible, thanks to the introduction of CrossMod.

Many leading builders, with Clayton Homes being the most prominent, are producing CrossMod homes. While these homes are generally found in newer developments, Reed highlights that more may soon be available on existing lots.

“Manufactured homes may not be seen as glamorous,” Reed remarked, “but when it comes to enhancing affordability, they’re hard to beat.”

Land Banks

Curious about what a “land bank” is? It’s not a traditional bank or simply land – it’s a relatively unknown entity that holds various properties for sale, making it a great option for those looking to settle down in a particular community.

“Most of these properties have some challenges, but many represent fantastic opportunities for first-time homebuyers,” explained Brian Larkin, director of the National Land Bank Network at the Center for Community Progress.

Across the United States, there are more than 300 land banks, primarily located east of the Mississippi River. They emerged following the subprime mortgage crisis when numerous communities struggled to manage the growing number of vacant and distressed properties.

Although land banks are not the-only public entities managing vacant properties for sale, they differ in a significant way. Their primary focus is on selling or managing properties in a manner that benefits the local community, while other agencies may be obligated by law to choose the highest bidder for sales.

However, Larkin cautions potential buyers about a few factors. Land banks tend to serve areas with a high number of abandoned properties, indicating there may have been a population decline. If you’re relocating from another area, it’s crucial to understand that the local economy and services may differ from what you’re accustomed to.

Additionally, properties managed by land banks usually require significant renovations due to their neglected condition – in some cases, if a building is too damaged to be repaired, a land bank may opt to demolish it and sell the vacant lot instead.

Katelyn Wright, executive director of the Greater Syracuse Land Bank in upstate New York, warns that many properties from land banks may not be appealing due to the level of necessary repairs.

One Syracuse local, NaDonte Jones, bought a fixer-upper through the land bank. Despite being a professional in the construction industry, owning a plumbing company, he found himself exceeding his initial budget. Nevertheless, he expressed satisfaction with the end result and sees great potential for increasing property values in Syracuse.

It might come as a surprise, but lower-priced properties don’t necessarily mean that mortgages are easier to acquire. In fact, banks frequently hesitate to provide “small dollar” loans, typically those below $100,000, due to their fixed costs, making the small monthly payments unattractive for them. When extensive repairs are needed, securing financing becomes even more difficult.

However, many land banks, such as Greater Syracuse, collaborate with Community Development Financial Institutions. These local or regional lenders aim to assist buyers of land bank properties with tailored financing options.

Larkin suggests that any potential home buyers seeking ownership through a land bank should reach out to the organization directly and ask as many questions as possible. Inquire about the condition of available homes and whether any special financing options are offered. It’s important to keep in mind that if you purchase a home that requires repairs, you’re typically required to sign a commitment at the closing, ensuring that all renovations will be finished within a specific timeframe.

ADU, Do U?

Ashley Wong and her husband, Eric, have been on the hunt for their ideal home for months. Living in the greater Seattle area, the Wongs desire more space, a sizable yard for their dogs, and eventually a living space for Eric’s aging parents.

“They are doing well currently,” Ashley noted, “but we want to be ready for any future changes. We want a place where they can feel at ease without being cramped.”

They discovered a “unicorn” house that features a walkout basement equipped with its own bathroom and kitchen, with access to the shared backyard, though it isn’t reachable from inside the main house.

This type of additional living space is often referred to as an Accessory Dwelling Unit, or ADU. It may also be called “granny flats,” “in-law suites,” “sidekicks,” or various other names. ADUs can exist as standalone structures or attached to an existing property, such as through a garage, basement, or attic.

While ADUs may not solve the affordability crisis swiftly, they offer unique solutions to a variety of housing issues, according to David Morley, research program manager at the American Planning Association.

Whether a homeowner builds a new unit in their backyard or converts part of their residence into an in-law suite like the Wongs found, the construction costs can be significant, Morley noted. ADUs, while generally less expensive than single-family homes, are smaller in size.

What they can provide is an opportunity for multiple generations to coexist — whether it’s accommodating aging parents, like the Wongs plan to do, or college-aged children who can’t afford their own place but desire a degree of privacy. Alternatively, they can generate income through short- or long-term rentals.

“Many people are increasingly interested in having flexible spaces they can utilize in various ways at different times in their home,” remarked Morley.

For home seekers, searching for properties with ADUs might not be an immediate answer to the challenge of finding affordable options. However, exploring properties that can accommodate an ADU for extended family members might provide a long-term solution to housing needs.

Buyers should also consult with their lender about the possibility of “house hacking” — purchasing a home that includes rental space to take advantage of income opportunities instead of buying a place solely for personal occupancy.

Community Land Trusts

Community land trusts (CLTs) function as nonprofit organizations that acquire land parcels and sell homes on them to individuals and families. Buyers attain complete ownership of their homes but agree to limit the resale value they can receive when selling their property. This framework not only makes homeownership affordable but also ensures its ongoing affordability.

“The concept is to offer you a chance to build some wealth, but with restrictions to keep it affordable for the next buyer,” explained Brian Stromberg, national policy director for Grounded Solutions Network, which provides guidance for CLTs. “The aim is to maintain affordability for future generations.”

Typically, CLTs incorporate a governance structure that includes community members’ input. “Owning the land allows you to influence what happens on that land more effectively than you could otherwise,” Stromberg noted.

Though the Elevation Community Land Trust in Denver has only been operational for about seven years, it has already witnessed a homeowner buy a property, sell it, and move on. ECLT imposes a 25% cap on appreciation: for instance, if a homeowner buys for $150,000 and sells for $200,000, they would receive $12,500 instead of the full $50,000 they would have received on the open market.

“This is an entry point into homeownership and stability,” stated Stefka Fanchi, the CEO of the organization. Fanchi views the CLT model as a “gateway into the housing market” that is more favorable than renting.

Elevation CLT operates at a statewide level, which is uncommon among community land trusts, as most tend to focus on a specific neighborhood or city. Nevertheless, wherever residents unite around shared values, a sense of community is preserved, she explained.

“It acts as a buffer against displacement, doesn’t it?” she asked. “It helps keep residents in their homes and fosters community through joint ownership and stewardship of the land over time.”

There has been a resurgence of interest in CLTs in recent years because of rising housing costs, Stromberg noted. However, CLTs can offer more than just a means to homeownership. The first CLT was established by civil rights movement veterans to secure farmland for Black families. Today’s versions might include green spaces, mixed-use developments, and more, and they can be found in urban, suburban, or rural settings.