MH News and Views: Mobile Home Parks Sparking Billions In Sales, New Bills Aimed At Making Financing More Available for Manufactured Home Buyers
With three recent acquisitions in the mobile home park industry taking place over the past 90 days, causing optimism for some and ecstasy for others, each transaction closed escrow for approximately $2 Billion. Yes, you read that correct – Billion. With a big-ol-capital “B.” Meanwhile in Washington DC, our political representatives passed a bipartisan amendment meant to preserve access to financing for the manufactured housing industry, while pushing forward critical changes aimed at strengthening the FHA title I program.
It’s Monday, June 20, 2016, and those are just a few of your more interesting manufactured housing headlines occurring over the past seven days … Now let’s exercise a little due diligence on those stories.
Consolidation and Foreign Investment Lead to Trio of Mobile Home Parks Selling For $6 Billion … in just 3 month – according to NuWire Investor, financial speculators are realizing that manufactured home land-lease communities are indeed an affordable lifestyle preference for millions of American homeowners and have become an attractive source of cash revenue. As the popularity of affordable housing continues to increase, the mobile home sectors is witnessing a consolidation amongst competitors, an end to the stigma wall, a horde of anxious foreign investors looking to get into the market, and most important of all – sizable returns on their overall investment. Per NuWire’s Frank Wolf, “Mobile home parks are all about housing people at low cost, when compared to single-family homes and apartments. In many markets we serve, the median home price is $150,000, the average apartment rent is $1200 per month, and yet they can live in a 3 bedroom/2 bath and have a yard for only $600.00 per month. As the U.S. economy has declined over the past eight years (following the 2007 start of the Great Depression), it has made inexpensive housing a huge boom industry, just as it has propelled the “dollar store”. Essentially, the mobile home park business is “hot” right now, and has no signs of dissipating.”
Oregon Manufactured Home Park Sells for $10.4 million – Joining the recent sale of a manufactured home community in the coastal town of Waimea, Hawaii, for $13.8 million, Eugene Oregon’s Summer Oaks manufactured home community closed escrow on April 29 for $10.4 million, according to the Register-Guard. Paying approximately $102,000 per manufactured home pad, FollettUSA purchased the 55 and over community from Zacron LLC. According to Alex Cheng of Colliers International’s Portland office, Summer Oaks is an “exemplary community akin to SongBrook, which we sold at a similar valuation in 2015,” Cheng said. “Both sales demonstrate an insatiable appetite among investors for quality parks.”
Manufactured Home Financing Preserved By House Vote: 31-17 – Explaining that his amendment was intended to “preserve access to affordable housing for millions of hard-working American families,” Rep. Chuck Fleischmann (R-TN) persuaded his good and honorable colleagues in the House Appropriations Committee to pass an amendment intended to strengthen access to safe, affordable, and available financing for today’s manufactured home buyers; while simultaneously preserving important consumer protections. “Modeled after H. R. 650, the Preserving Access to Manufactured Housing Act, the amendment was passed by a bipartisan vote of 31-17 by Appropriations Committee members who voted in favor of the amendment, which was made to the Fiscal Year 2017 Financial Services and General Government Appropriations bill.”
MHI to FHA, Change Title 1 Program – In an Open letter to Federal Housing Administration (FHA), Manufactured Housing Institute proposed a series of commonsense recommendations to strengthen FHA’s Title 1 Mortgage Insurance Program. The title Title 1 program covers both home improvement and chattel loans. Currently, FHA is attempting to streamline its guidance memoranda and regulations into a comprehensive handbook on how to improve the Title 1 program. FYI, in Fiscal Year 2014, FHA only endorsed $24 million in Title 1 manufactured home loans. Considered wholly inadequate by many … according to Ginnie Mae, there are only 3900 active manufactured housing chattel loans in Ginnie Mae’s securitization pools. As manufactured homes comprise approximately 7% of the total occupied housing units in the United States, improvements to the FHA program are long overdue and would help ensure families have access to financing for manufactured homes through the Title 1 Program.