Occupancy remains strong across the U.S. at 92.7%
MINNEAPOLIS (APRIL 4, 2019) — NorthMarq has published its first market research report for Manufactured Housing, one of the few reports in the country to analyze occupancy, pricing, and sales volume of Manufactured Housing sector. Key findings include 17 years of rent growth, and a strong 92.7 percent occupancy.
Don Vedeen, vice president of NorthMarq’s National Manufactured Housing group, said, “Despite the consistent rent growth, which makes these assets attractive to investors, other housing options continue to become less affordable due to rising construction costs in traditional multifamily properties. Manufactured housing remains an appealing option for affordable housing investors given its consistency compared to the apartment sector.”
“One of the key findings of the report is that transaction activity is receiving a boost from the establishment of Opportunity Zones in the 2017 tax law as well as some parks being sold for redevelopment into other residential uses,” said Pete O’Neil, director of research.
Key findings for the Manufactured Housing market:
- The manufactured housing market had a very strong year in 2018, with occupancy rising across all regions of the country and rents posting healthy increases. Supply growth is accelerating in response to strengthening demand.
- Occupancy in manufactured housing communities rose 110 basis points from 2017 to 2018, reaching 92.7 percent. This marked the seventh straight year of occupancy improvements in the sector.
- Rents have had an even longer run of increases, rising in each year since 2002. Average rents rose 3.9 percent in 2018, reaching $530 per month.
- Investment activity in manufactured housing spiked by nearly 20 percent in 2018, the median price rose and cap rates compressed. The median price reached $33,900 per space in 2018, an increase of 11.7 percent.
The report also showed that demand for manufactured housing strengthened in 2018, supported by accelerating economic growth and rising housing costs. Sale prices for single-family homes rose more than 5 percent in 2018, and apartment rents increased by 4.9 percent. As a result, housing became less affordable at the same time construction costs continued to rise. Manufactured housing beneﬁts in these conditions, with occupancy rising and rents pushing higher, albeit at a more modest pace than in the apartment sector. These trends are expected to continue in 2019, although employers are not predicted to add jobs at the same pace they did in the past year.
NorthMarq will conduct this research quarterly to evaluate trends and market changes in the Manufactured Housing sector. In addition, Vedeen will use this report as the basis for a presentation at the MHI Congress & Expo in early May.