As the U.S. housing market gradually returns to normal after a housing-feeding frenzy in 2021 and early 2022, Americans are adjusting the way they view a home for sale.
One long-overlooked home type in particular is becoming a popular property for homebuyers.
Mobile homes are attracting more interest as prices for smaller homes have risen, according to a new study by Lending Tree.
“Median values of mobile homes across the country increased an average of 34.58% from 2016 to 2021 — nearly as much as the average 35.44% increase for single-family homes,” the report said.
In general, mobile homes have appreciated in value almost as fast as single-family homes nationwide over the five years from 2016 to 2021, reports Lending Tree. States where mobile home prices are the cheapest include:
— Kansas
— Ohio
— Iowa
— Indiana
— Illinois
States where mobile homes are the most expensive include . . .
— Washington
— Nevada
— Oregon
— California
— Massachusetts
“Although mobile homes have increased in value significantly in recent years, they are still significantly cheaper than their single-family counterparts,” said Jacob Channel, senior economist at Lending Tree. “As a result, mobile homes can be an attractive option for those who cannot afford a single-family home in today’s high prices.”
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Are mobile homes a good deal for buyers?
As interest in mobile homes increases as both a lifestyle and investment asset, the jury is still out on its long-term impact on buyers.
“A lot of people, including millennials, just can’t afford a family home right now,” said Jon Sanborn, co-founder of SD House Guys. “Many mobile homes offer two or three bedrooms and often multiple bathrooms for less than exactly the same as a family home. For first-time home buyers, it can also feel like getting your foot in the door to the housing market. It’s also an affordable option for retirees looking to downsize.”
Mainstream homebuyers may lower their expectations of the home they are able to buy, but there are some perks to owning a mobile home.
“They’re cheaper, they can be well engineered, they have a different (and potentially appealing) tax structure, and we can see that they can add value,” Sanborn told TheStreet. “RVs give people the opportunity to own their own home and have a safer living situation.”
Other real estate experts are not on the same page.
“Increasing mobile home prices are eliminating the only benefit of a mobile home, which is reduced cost,” said Justin Draplin, Chief Executive Officer of Eclipse Cottages. “Long term, we believe this will be terrible for the industry.”
A big problem Draplin sees with mobile homes is that the financing is “awful”. “Part of that’s because lenders know they’re horribly built and depreciating in value,” he noted.
Ultimately, whether an RV is a good investment depends on what you are buying and where it is located. “If you’re buying a quality home, whether it’s prefab, park model or some other type of mobile structure, and it’s in a desirable neighborhood, you have some protection for your investment,” Draplin told TheStreet.
One area of concern for a buyer is the resale price of a mobile home. “There is a stigma attached to manufactured homes that could affect subsequent sales,” said Clint Coons, author of “Next Level Real Estate Asset Protection: Comprehensive Strategies for Investors.”
Despite this, Coons considers mobile homes to be “great investments”, especially for investors.
“Our legal and tax practice (Anderson Business Advisors) has slowly transitioned our portfolio to mobile homes,” said Coon. “As the cost of existing homes has increased, in certain markets we are able to purchase a mobile home at a good price compared to a 20-year-old home that has a significant maintenance delay.
Mobile homes or manufactured homes are not generally considered real estate by many government agencies and lenders.
They are typically acquired with furniture or personal loans as personal property rather than real estate mortgages. In some situations there are exceptions, e.g. B. If the house is on a foundation and the buyer owns the land on which the house is located.
However, owners of prefab communities or RV parks buy their properties with commercial real estate mortgages.
This scenario could become more pervasive as interest in prefabs increases.
“Freddie Mac and Fannie Mae have been trying to expand lending for prefabs since 2017,” Coons told TheStreet. “Buyers can purchase property on leaseholds and still qualify for preferential financing such as B. 5% for the First Time Homebuyer Program. I don’t see buyers necessarily shying away from these properties once they discover the options available.”
