Mobile Home Market is Hot

From Wednesday’s Wall Street Journal we learn that mobile (manufactured) homes are one of the top real estate sectors:

“I’ve been at this for about 10 years and I would say the demand right now for manufactured housing communities is at an all-time high,” said Jonathon McClellan, senior director of the national manufactured home communities group at Marcus & Millichap. Mobile homes are also called manufactured homes because they are built in a factory and shipped to a community.

The three real-estate investment trusts in the sector—Sun Communities Inc.,Equity LifeStyle Properties Inc. and UMH Properties Inc.—all are seeing strong gains in the number of properties owned and in revenue…

The key factor here seems to be affordability:

According to the National Association of Realtors, the median U.S. price for an existing single-family home was $202,600 in February. In contrast, the average price for a manufactured home was $64,200 as of November 2014. Meanwhile, apartment landlords have raised rent nearly 15% over the past five years, putting the average rent at about $1,131 at the end of the first quarter of 2015, according to REISInc., a real-estate research firm in New York.

For an average price mobile home purchased with a mortgage, the typical monthly costs can run about $800, with about half going to monthly mortgage payments and the other half going to the landlord of the mobile-home community where the house is parked. “Some people could no longer afford that traditional home in the suburbs but they could afford a mobile home,” said Paul Adornato, an analyst at BMO Capital Markets.