Will Your Mobile Home Hold its Value?
Conventional Wisdom is Wrong on This One.
The old status quo of mobile homes losing value over time is no longer the case – here’s why.
In days gone by it was expected that a mobile home was a tradeoff of long-term returns for an obtainable retirement. No longer are the days of 1960s trailers lined up in some desolate lot off a highway! The modern mobile home has finally caught up with its brick-and-mortar counterpart in ability to appreciate in value.
According to the Urban Institute, a D.C.-based think tank, manufactured homes have appreciated an average of 3.4% compared to traditional homes at 3.8%. However, while the appreciation rated have close-in on each other, the number of new mobile homes has declined since the 70s. That’s actually a good thing.
The Market Meeting Demands
Hopefully we’re all acquainted with supply and demand and how they affect pricing. If you’re unfamiliar or want to brush up on this economics basic then go here.
The supply of new mobile homes has dropped annually from the late-seventies to the present day. While that initially seems like bad news, it’s good because it shows the market maturing. Manufactured homes are built better than in the past and thus cost more. Plus, the average buyer now demands a lot more of a mobile home park. Simply, the product has changed from a lower-quality alternative to one on-par. All the while, regular homes are just made more cheaply. If you want to know more about this, read here.
The increase in price has lowered low-income demand which has in-turn gentrified the market. The 55+ community of the modern age is made up of mostly middle-class people from northern climates, retired people who’ve downsized, and working people established in their career.
The lowered supply has had another benefit of bringing supply an demand into a sustainable equilibrium. Nowadays, the prohibitive cost of a new mobile home means buyers are looking at ones already on-site. This, coupled with superb build quality in the last few decades, has meant buyers are more confidant than ever.
The Old Woes are No Longer a Problem – or Never Were in the First Place…
Bad Weather isn’t That Bad Anymore
If you’ve been around long enough the name Hurricane Andrew might stand out. This 1992 hurricane battered Florida among other places and leveled a lot of homes – both mobile and traditional. In response, the State of Florida enacted numerous new building codes that culminated in Florida having the strictest codes by 2002. These codes apply to mobile homes too, and the industry stepped up.
You can read here about how codes have improved home safety, but rest assured knowing that by hurricane Irma in 2017 most mobile homes received minimal or no damage. The codes have worked and a modern mobile home is as sound as ever.
Another woe of mobile homes tossed up by the uninitiated is lot rent. Many homes are situated in parks that own the land and charge a monthly rent for land, utilities, park services, clubhouse membership, etc. What the pop journalists of the internet don’t realize is that lot rent works for you in the long run.
Mobile home parks are competitive… very competitive. They know that if you want to, you can sell your home and buy a new one fast. If you want to move to a different park it’s likely you will, losing your old park a revenue stream to a more affordable one. Hey, this sounds like economic competition!
Indeed, mobile home parks compete with each other to offer the most amenities at the best price, and since you’re living there they can’t cut corners like certain retailers nowadays. Lot rent is always going to be manageable because the 55+ market has a large group of fixed-income individuals. You can’t turn away retirees and run a mobile home park, can you?
Wait, Rent is Behind That Home Appreciation?
The value of your home is positively affected by your community having a rent. Rent directly goes into maintaining your community and adds a barrier of entry to certain uncouth types. Those that don’t have their stuff sorted out, even after 55+ years on this earth, won’t be your neighbor.
The well-managed and well-invested-in communities that charge a lot rent preserve the quality of the environment your home exists in. When future buyers go by your home to check it out, they’ll see manicured landscaping and clean homes and think that’s the place they want to be. As long as you can keep the home together, you won’t be dissatisfied in the long run.