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Manufactured Housing: Opportunities and Challenges

Posted By: Deric Young Manufactured Housing ,

With RHAWA’s expansion of their programs and services into the Manufactured Housing Community (“MHC”) arena, I thought I would share my perspective from twenty years of representing MHC owners in some of the unique opportunities and challenges facing owners today. 

Manufactured Housing is Affordable Housing. 

Manufactured Housing Community owners have an unparalleled opportunity to contribute to alleviating the affordable housing shortages, provide our communities and neighbors with quality housing, and enjoy a favorable rate of return on their investment.   

The shortage of affordable housing is one of the largest unresolved issues in our state today.  Mobile and manufactured homes communities provide more affordable single-family ownership and rental options. Workers and renters around the region are struggling to live within their means and the problem is only getting worse in the current economic environment.  Manufactured Home Community owners are well positioned to supply our communities and neighbors with the best housing available in today’s market.   

Manufactured Housing Communities are an Attractive Investment. 

Even in this time of economic uncertainty, manufactured housing is strong.  As property values started increasing once again after the recession of 2008, several owners were selling their communities to developers who would close a community to redevelop the land for more traditional housing or commercial use.  More recently, however, the industry has witnessed a dramatic increase in interest in purchasing manufactured home communities.  The market is beginning to recognize the investment potential of the land as a functioning manufactured home community, something veterans in the industry already knew.  Interest rates are low and demand for housing is high.  As a result, I am optimistic that manufactured housing will continue to be strong into the future.  

The barrier for entry is much lower than with other real estate choices.  A manufactured home community only needs land with access to water, sewer and electricity.  Because the homes are owned by the residents, the maintenance costs are limited to landscaping, common area maintenance and utility repair. With relatively lower acquisition and operating costs, manufactured housing can be a very attractive investment.   

There is no doubt that the COVID-19 pandemic has an impact on the manufactured home sector, just as it has had on other segments of the rental market.  Nevertheless, the rate of rent collection default is far less for my manufactured home community owner clients than it is for residential owners.  Anecdotally, I am hearing a roughly 5% default rate for manufactured home communities versus up to 30% for residential property clients.    

Several factors come together to explain the better high rent collection totals.  Rent is generally lower than for comparable residential properties, ranging between $500 and $1,100 per month depending on the quality and location of the property in the Puget Sound Region.  Nearly one-third of manufactured housing communities cater to seniors aged 55 and above. These tenants generally have more savings or are retired, so the employment cuts have a limited impact on rent collection.  Renters that receive assistance from local governments are also unlikely to have felt a financial impact from the shutdown and limited reopening.  Furthermore, longer terms of tenancy, often measured in decades, equate to lower rates of turnover.  Most homeowners sell rather than move their homes which also contributes to the stability of the cash flow.   

Manufactured Housing Challenges:   

The Manufactured Housing community segment is not without its challenges.  There are very few mobile home parks out there that were built later than the 1970s. I know of none in Washington since I have been practicing in the industry.  Many local land-use regulations prohibit manufactured housing outright, underzone land for manufactured housing, or impose stringent design requirements that are disproportionately burdensome to manufactured housing producers. Manufactured-housing developers can close local affordable housing gaps more quickly than traditional home builders, yet planners underestimate manufactured housing’s potential for alleviating affordable housing supply shortages. This remains a legislative priority. 

The availability of mortgage financing is another concern. After a rash of defaults during the 2007 -2009 recession, many lenders left the business.  The situation has dramatically changed with increased investment interest and now both government sponsored lenders such as Fannie Mae and private lenders stepping up financing for manufactured housing. Fannie Mae closed a record $5.5 billion in loans for manufactured homes in 2020, a 120 percent increase from $2.5 billion in 2019.   Additionally, recent Jones Lang LaSalle (JLL) data shows that the percentage of delinquent loans has barely exceeded 5 percent in the period following the last economic recession and remained at an all-time low when other asset classes experienced difficulties. 

The Manufactured Housing industry is still working to overcome some of the public perception problems that the sector has. According to the Manufactured Housing Institute (“MHI”), primary among them is the belief that the product is of low quality and that park owners are predatory. It cannot be disputed that manufactured housing today is quite different from the mobile homes of twenty or thirty years ago or more. "Mobile homes," as they are commonly thought of, are no longer being built, and "manufactured housing," homes built according to HUD standards, has taken their place. Manufactured housing is much more like traditional site-built housing than was the traditional mobile home, with a growing range of custom options similar to a site-built home, but at a much lower price point.  As existing homes age out, astute property managers are replacing homes with newer or new homes dramatically increasing the value of their investment as well as providing a nice place to live for less than half the cost of a site-built home.  

Finally, it is my observation that most park owners and property managers care about their residents.  It often takes work to balance the struggles many residents are facing economically with the owners’ interest in paying their bills.  However, I am thankful that for the most part I have had the privilege to work with clients who have approached the situation with resilience and compassion at a time when we have never needed it more. 


Deric Young practices law with Jack W. Hanemann P.S. in Olympia, Washington and has represented Manufactured Housing property management firms and community owners since 2000.