Dispelling Myths About The Appreciation of Manufactured Homes
Homeownership has long been a tenant of the American Dream: a place to put down roots, feel secure and—if you’re lucky—get a little equity out of the deal. For years, though, conversations about the financial benefits of buying a house, from starter homes to retiree units, have centered almost exclusively around site-built homes, with the notion that manufactured houses don’t increase in value in the same way.
Turns out? Manufactured homes appreciate practically just as well as their site-built counterparts.
According to a bit of number-crunching from the Urban Institute (a Washington D.C.-based think tank), the home price index for manufactured homes had an average annual growth rate of 3.4 percent versus 3.8 percent for site-built homes in 2017. (Read: It’s basically the same.)
“The Federal Housing Finance Agency’s (FHFA) new manufactured housing (MH) index, still in the experimental stage, indicates that the prices of the MH purchased…perform similarly to those of site-built properties,” the Urban Institute notes. “Although there are limits to what the data can tell us, the index suggests a need to reevaluate the presumption that manufactured homes do not appreciate at the same rate as site-built homes.”
What’s more, the Urban Institute notes that geography might play a pivotal role in the chronic undervaluing and underestimation of manufactured housing. Because markets that have seen strong recoveries since the 2008 crash (like California) tend to have a lower concentration of manufactured housing, the perception becomes that manufactured housing hasn’t appreciated in the same way as site-built homes. In reality, this has more to do with housing location than actual numbers.
“Given that the appreciation rates for [manufactured homes] were only marginally lower than the rates for site-built homes and given the tendency for geographic differences to understate manufactured home performance, we believe the appreciation of manufactured homes and site-built homes are actually similar after adjusting for geographic differences,” the report notes.
Yet another reason to celebrate manufactured housing as the affordable, ever-burgeoning housing of today and tomorrow.