Stop Saying Mobile Homes Don't Appreciate In Value!!!

Mobile Home Park Investing
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Stop Saying Mobile Homes Don't Appreciate In Value!!!

Logan M.
Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes

There are many myths in real estate real estate and I want to debunk one right now.

Many real estate professionals tell clients not to buy a mobile/manufactured home because they do not go up in value, this is a lie. The one caveat I will add is that it is extremely location-dependent. 

To prove my point I will take my market here in Utah, this may not be the same for your market but I would be surprised if we are the only location reacting this way.

Below is a graph from Q3 2019-Q3 2023. We will remove Q3 2019 because for some reason the data on our MLS is missing some quarters of mobile home data from that year but $42,000 was the median sales price of Mobile homes sold, we hit a peak of $89,000 in Q3 2021 but have stabilized with higher rates and a real estate slow down to between 79,000-85,000 this most recent quarter.

That is a 49% increase from Q4 2019 to Q3 2023, averaging it is almost 10% per year!

I would love others to look up their market stats but I am not seeing mobile homes as depreciating assets in regards to their resale value.

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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y

Here is the reality, your chart proves they do not appreciate because in the most recent data (March 2023) from the Census Bureau’s Manufactured Housing Survey (MHS), the average sales price nationwide for a new manufactured home was $128,300 or almost $45k higher than the current price from your chart).

Every set of data presented in the chart shows the value below the current cost of a new Mobile home.  What your data shows is that at some point mobile homes had depreciated more than their current depreciated level. 

I will also point out that the green line of total units sold is omitted.  Seeing 3rd quarter 2019 had zero sold, recognize this graph is on a small to very small sample size.

This is like buying a $50k car that depreciates to $10k then due to an event (such as Covid) the car is now $20k and saying the car has not deprecated.  No one would consider that car to have not depreciated yet some people are not noticing the similarities (or not thinking about it).  

I do not know the new mobile home price in 2019 but will use $110k (rough estimate) but in your market the average in 2019 q4 was $42k, 2023 q3 is $85k.   Both are significantly less than the new price.

So the data shows mobile homes do depreciate.  What is less clear is will the current pricing hold or will the prices fall to be pre-Covid price plus CPI (likely in the mid $50k).  I tend to believe it is more likely the prices to fall than hold the price in the $80k+.

Data can be deceiving.  It needs to be analyzed with a critical eye.


good luck

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    2y

    Mobile Homes and Modulars are a hidden gem that for years have fell below the radar when it comes to REI. Most of my investors have doubled if not tripled their value from 3-5 years ago in multiple states. Financing them is also not complicated but some banks/lenders have no desire to fund them.

    You can easily locate a decent lot and include that into the primary manufactured home purchase.  Just makes it easier to set your own price instead of being stuck in a market that is over priced or lacking inventory.

    [email protected]727-637-4289
    2Reply
  • Logan M.
    OP
    Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes
    2y
    Quote from @Jason Wray:

    Mobile Homes and Modulars are a hidden gem that for years have fell below the radar when it comes to REI. Most of my investors have doubled if not tripled their value from 3-5 years ago in multiple states. Financing them is also not complicated but some banks/lenders have no desire to fund them.

    You can easily locate a decent lot and include that into the primary manufactured home purchase.  Just makes it easier to set your own price instead of being stuck in a market that is over priced or lacking inventory.


     You're spot on, it is so overlooked and misunderstood!

    Affordable housing has more opportunities than any other segment of real estate.

    1Reply
  • Roger D Jones
    Member since 2023 · 178 posts · 122 votes
    2y

    Almost exact same graph for single family home prices for same time period.  There will always be demand for entry level homes particularly if tied to a little bit of real estate.  Always.

    2Reply
  • Mark Brogan
    Investor · Roanoke, VA · Member since 2012 · 1k+ posts · 374 votes
    2y

    @logan 

    @Logan M.
    don't tell these people the truth we don't need them in our niche, no competition is great 

    3Reply
  • Account Closed
    Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes
    2y
    Quote from @Logan M.:


    I would love others to look up their market stats but I am not seeing mobile homes as depreciating assets in regards to their resale value.

    We bought a mobile home Dec 31st 2017 for $55,000 because the guy needed cash before Jan 1st. It already had a tenant in it. The same tenant is still in it and has paid over $70,000 in rent and the property appraised at $105,000 this year. Cash cow....... I don't like that it is so hard to get mortgages on them though unless they are new. 
    2Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y
    Quote from @Account Closed:
    Quote from @Logan M.:


    I would love others to look up their market stats but I am not seeing mobile homes as depreciating assets in regards to their resale value.

    We bought a mobile home Dec 31st 2017 for $55,000 because the guy needed cash before Jan 1st. It already had a tenant in it. The same tenant is still in it and has paid over $70,000 in rent and the property appraised at $105,000 this year. Cash cow....... I don't like that it is so hard to get mortgages on them though unless they are new. 

    For me it wasn't the mortgage that was the problem, but the insurance. My insurance is more than double for what I pay for a SFH in the same area.

    0Reply
  • Account Closed
    Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes
    2y
    Quote from @Theresa Harris:
    Weird, our primary house insurance covers the mobile home. I worked really close with my insurance broker this year to make sure all of our properties were properly insured too because of rate increases and he assured me that my primary covers it and it’s listed on my primary and it’s also listed on the separate umbrella policy. 
    0Reply
  • Jeremy Horton
    Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
    2y

    So during that time period: the price of used cars, SFHs, land, groceries, wood, insurance, the stock market etc etc all went up as well 

    How do you know this is mobile homes specifically and not the land/location? Not the economy? Not the fact that literally the price of everything went up?

    I'm not saying mobile homes aren't a good investment - but really? And I'm not saying they don't appreciate - but relative to everything else (say a SFH in the same location) they will appreciate a lot less, if they do at all. It's the land/location increasing in value - not the home itself, in my personal experience and opinion

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y
    Quote from @Account Closed:
    Quote from @Theresa Harris:
    Weird, our primary house insurance covers the mobile home. I worked really close with my insurance broker this year to make sure all of our properties were properly insured too because of rate increases and he assured me that my primary covers it and it’s listed on my primary and it’s also listed on the separate umbrella policy. 

    The company that does my primary home insurance (and all of my other rentals-costs of those range in price), doesn't do mobile homes.

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    Playing devils advocate here

    This is also the time the government printed $5T and even NFT’s were of value.

    Take out the land and manufacturers homes and look at value

    2007 new sales price was around $65k

    That dropped for 10+ years into the 50’s and 50’s and is now $82,300 which is covid related.

    https://fred.stlouisfed.org/series/SPSNSAUS

    7e investments53 Reviews
    WebsiteView Page
    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    2y

    Here is the reality, your chart proves they do not appreciate because in the most recent data (March 2023) from the Census Bureau’s Manufactured Housing Survey (MHS), the average sales price nationwide for a new manufactured home was $128,300 or almost $45k higher than the current price from your chart).

    Every set of data presented in the chart shows the value below the current cost of a new Mobile home.  What your data shows is that at some point mobile homes had depreciated more than their current depreciated level. 

    I will also point out that the green line of total units sold is omitted.  Seeing 3rd quarter 2019 had zero sold, recognize this graph is on a small to very small sample size.

    This is like buying a $50k car that depreciates to $10k then due to an event (such as Covid) the car is now $20k and saying the car has not deprecated.  No one would consider that car to have not depreciated yet some people are not noticing the similarities (or not thinking about it).  

    I do not know the new mobile home price in 2019 but will use $110k (rough estimate) but in your market the average in 2019 q4 was $42k, 2023 q3 is $85k.   Both are significantly less than the new price.

    So the data shows mobile homes do depreciate.  What is less clear is will the current pricing hold or will the prices fall to be pre-Covid price plus CPI (likely in the mid $50k).  I tend to believe it is more likely the prices to fall than hold the price in the $80k+.

    Data can be deceiving.  It needs to be analyzed with a critical eye.


    good luck

    3Reply
  • Joshua ChristensenPro Member
    Real Estate Broker · Albuquerque, NM · Member since 2015 · 281 posts · 232 votes
    2y
    Quote from @Jeremy Horton:

    So during that time period: the price of used cars, SFHs, land, groceries, wood, insurance, the stock market etc etc all went up as well 

    How do you know this is mobile homes specifically and not the land/location? Not the economy? Not the fact that literally the price of everything went up?

    I'm not saying mobile homes aren't a good investment - but really? And I'm not saying they don't appreciate - but relative to everything else (say a SFH in the same location) they will appreciate a lot less, if they do at all. It's the land/location increasing in value - not the home itself, in my personal experience and opinion


     Hey Jeremy,

    Interesting enough, manufactured homes in parks don't appreciate as fast.  Where people get hung up is that much like a car, a new MH may lose value coming from the dealer in what you pay going into a park.  Adding it to land on a permanent foundation does preserve the value however.  

    Also keep in mind that as an affordable housing option that lands between renting and single famile detached housing, the manufactured home provides ownership.  When the housing market improves, the median home values increase.  These affordable manufactured homes also increase with the overall market.  They are still a segment of housing after all.

    Go back 40 years and the quality of the homes was terrible.  In 95 the construction standards improved and they have been improving more and more every year since.  The quality of construction on the newer manufactured homes is to a much higher standard than the old school tornado magnets.  

    0Reply
  • Logan M.
    OP
    Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes
    2y
    Quote from @Jeremy Horton:

    So during that time period: the price of used cars, SFHs, land, groceries, wood, insurance, the stock market etc etc all went up as well 

    How do you know this is mobile homes specifically and not the land/location? Not the economy? Not the fact that literally the price of everything went up?

    I'm not saying mobile homes aren't a good investment - but really? And I'm not saying they don't appreciate - but relative to everything else (say a SFH in the same location) they will appreciate a lot less, if they do at all. It's the land/location increasing in value - not the home itself, in my personal experience and opinion


     I think location is the biggest factor in mobile home and manufactured home pricing.

    0Reply
  • Paul Sofia
    Lender · Charlotte, NC · Member since 2016 · 371 posts · 172 votes
    2y

    Fact of the matter is the mfr home market(deeded to real property) trends like the site built market.  I've been in the business as a sales guy and owner since "97.  When I was extremely active in flips, they were the only homes I bought.  In fact, back in the day, I literally had no competition in the Charlotte MSA

    I think around 2014, the younger investors caught wind of these hidden gems.  I have only done 2 flips since then because of the margins but never in a million years did I imagine the market inflating as much since then.  If anyone ever needs assistance concerning one, feel free to contact me.

    1Reply
  • Jeremy Horton
    Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
    2y
    Quote from @Joshua Christensen:

    Interesting enough, manufactured homes in parks don't appreciate as fast.  Where people get hung up is that much like a car, a new MH may lose value coming from the dealer in what you pay going into a park.  Adding it to land on a permanent foundation does preserve the value however.  

    Also keep in mind that as an affordable housing option that lands between renting and single famile detached housing, the manufactured home provides ownership.  When the housing market improves, the median home values increase.  These affordable manufactured homes also increase with the overall market.  They are still a segment of housing after all.

    Go back 40 years and the quality of the homes was terrible.  In 95 the construction standards improved and they have been improving more and more every year since.  The quality of construction on the newer manufactured homes is to a much higher standard than the old school tornado magnets.  

    So this just solidifies the notion that mobile home appreciation has everything to do with land value as opposed the home itself. 

    If you separate the mobile home from the land, how much appreciation are we seeing after inflation? I'm going to guess it's very close to zero. This is unlike a 3/2 single family home 
    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Logan M.:
    Quote from @Jason Wray:

    Mobile Homes and Modulars are a hidden gem that for years have fell below the radar when it comes to REI. Most of my investors have doubled if not tripled their value from 3-5 years ago in multiple states. Financing them is also not complicated but some banks/lenders have no desire to fund them.

    You can easily locate a decent lot and include that into the primary manufactured home purchase.  Just makes it easier to set your own price instead of being stuck in a market that is over priced or lacking inventory.


     You're spot on, it is so overlooked and misunderstood!

    Affordable housing has more opportunities than any other segment of real estate.


     Is there more reading material regarding this aspect ?

    0Reply
  • Logan M.
    OP
    Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes
    2y
    Quote from @Carlos Ptriawan:
    Quote from @Logan M.:
    Quote from @Jason Wray:

    Mobile Homes and Modulars are a hidden gem that for years have fell below the radar when it comes to REI. Most of my investors have doubled if not tripled their value from 3-5 years ago in multiple states. Financing them is also not complicated but some banks/lenders have no desire to fund them.

    You can easily locate a decent lot and include that into the primary manufactured home purchase.  Just makes it easier to set your own price instead of being stuck in a market that is over priced or lacking inventory.


     You're spot on, it is so overlooked and misunderstood!

    Affordable housing has more opportunities than any other segment of real estate.


     Is there more reading material regarding this aspect ?


     I don't think so it could be created though

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Logan M.:
    Quote from @Carlos Ptriawan:
    Quote from @Logan M.:
    Quote from @Jason Wray:

    Mobile Homes and Modulars are a hidden gem that for years have fell below the radar when it comes to REI. Most of my investors have doubled if not tripled their value from 3-5 years ago in multiple states. Financing them is also not complicated but some banks/lenders have no desire to fund them.

    You can easily locate a decent lot and include that into the primary manufactured home purchase.  Just makes it easier to set your own price instead of being stuck in a market that is over priced or lacking inventory.


     You're spot on, it is so overlooked and misunderstood!

    Affordable housing has more opportunities than any other segment of real estate.


     Is there more reading material regarding this aspect ?


     I don't think so it could be created though

    For example how the above chart is created and why it started from zero ?
    0Reply
  • Samuel CoronadoPro Member
    Investor · Huntsville, AL · Member since 2016 · 334 posts · 181 votes
    2y
    Quote from @Mark Brogan:

    @logan 

    @Logan M.
    don't tell these people the truth we don't need them in our niche, no competition is great 


     This is what I'm saying lol 

    0Reply
  • Shaun Gentry
    Member since 2024 · 1 post · 0 votes
    2y
    Quote from @Jeremy Horton:
    Quote from @Joshua Christensen:

    Interesting enough, manufactured homes in parks don't appreciate as fast.  Where people get hung up is that much like a car, a new MH may lose value coming from the dealer in what you pay going into a park.  Adding it to land on a permanent foundation does preserve the value however.  

    Also keep in mind that as an affordable housing option that lands between renting and single famile detached housing, the manufactured home provides ownership.  When the housing market improves, the median home values increase.  These affordable manufactured homes also increase with the overall market.  They are still a segment of housing after all.

    Go back 40 years and the quality of the homes was terrible.  In 95 the construction standards improved and they have been improving more and more every year since.  The quality of construction on the newer manufactured homes is to a much higher standard than the old school tornado magnets.  

    So this just solidifies the notion that mobile home appreciation has everything to do with land value as opposed the home itself. 

    If you separate the mobile home from the land, how much appreciation are we seeing after inflation? I'm going to guess it's very close to zero. This is unlike a 3/2 single family home 
    I am not sure I quite understand your argument here. Single family homes - as a structure - also generally depreciate. What appreciates is the land beneath the single family home. Try comparing a 1,250 sqft home on .5 acres but built in the 1980s to a newly built 1,250 sqft home on .5 acres in the same area. The newer home is almost always going to be worth more. Why? Because it is the LAND that appreciates over time not the home attached to it. The older house ends up being worth less than a newer house even though it appreciated OVERALL because the structure itself has depreciated over time.

    Unlike manufactured homes, single family homes are ALWAYS permanently attached to land making them part of the real estate - thus you rarely see single family homes depreciate. Manufactured homes, on the other hand, are not always permanently affixed to land and are not always considered part of the real estate so you will much more frequently see manufactured homes depreciate than you will single family homes. It doesn't mean they CAN'T appreciate - the only thing keeping a manufactured home that is permanently affixed to owned land from appreciating, from what I can tell, is the general stigma surrounding manufactured homes caused by poor quality builds from the 1970s - 1980s and the misconception that ALL manufactured homes depreciate because of those that are not permanently attached to land.
    0Reply
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