Manufactured Housing Community Occupancies Hold Steady in Q2 2024, While Rents Surge

The national manufactured housing market is being fueled by an extended period of elevated and rising occupancies. The occupancy rate rose 40 basis points during the past year, finishing the second quarter at 94.8 percent. This is a continuation of a decade-long pattern of improving conditions across the sector. Occupancy finished 2014 at 86.5 percent, and the rate has risen by an average of 90 basis points per year in the decade that followed. These tight occupancy conditions have led to rapid rent growth in recent years. Annual rent growth first topped 5 percent two years ago, and gains have accelerated from that point. Asking rents advanced 7.7 percent during the past year, marking the steepest annual rent increase recorded in the sector.

The higher interest rate environment has dragged on manufactured housing sales velocity to this point in 2024, despite strong operational performance. In the transactions that have occurred to this point in the year, two distinct trends have emerged. The first is that cap rates have pushed higher in response to elevated borrowing costs. The second trend is per-space pricing has trended higher. This is due in large part to the sector's rapid rent increases and strong occupancy conditions, as well as many of the properties that have traded being concentrated in high-cost states. Florida and California have been among the top states in the country for transaction volume during the first half, and both states also recorded an upswing in pricing in recent quarters. The median price to this point in the year in California is $78,300 per space, up 50 percent from last year. Florida is recording a median price of $49,100 per space, up 16 percent from 2023.

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