Surprising Rate of Mobile Home Appreciation

This article first appeared in the November 2018 issue of Pro Builder.

Some mobile homes are appreciating in value nearly as much as traditional site-built houses, according to new analysis of Federal Housing Finance Agency (FHFA) home price index data by the Urban Institute, a think tank for social and economic policy research. This is upending commonly held stereotypes about the value of manufactured single-family homes.

Nationally, price appreciation for traditional site-built homes averages 3.8 percent compared with 3.4 percent for manufactured homes. The quarterly report is the first time FHFA’s price index, based on purchases by government-backed lenders Fannie Mae and Freddie Mac, has included manufactured homes data.

Fannie and Freddie underwrite financing for manufactured homes when both land and structure are included in the sale, despite the fact that about 80 percent of manufactured home purchase financing is for the structure alone through chattel lending. As a result, lenders underwrite only a small share of manufactured homes that are typically high-end.

Geographically, data on manufactured home value appreciation is under-represented in some markets that have strong traditional home price growth. For example, California represents 18 percent of the total housing market but constitutes just 4 percent of shipped manufactured homes. In Alabama, Florida, Louisiana, North Carolina, and Texas, which have the most manufactured homes in the U.S., price appreciation is below the national level.

Despite underrepresentation by region, Urban Institute researchers conclude that manufactured homes are appreciating similarly to site-built homes and that future, closer examination of manufactured home values is warranted, as the accepted view that these homes are a depreciating asset negatively impacts purchase financing and isn’t supported by the data.