The prices of manufactured homes, or mobile homes, are appreciating at the same pace as those of traditional homes, which is counter to conventional wisdom, according to a new report.
That was the conclusion of a new report by the Urban Institute, whose researchers analyzed data about manufactured homes bought with loans guaranteed by Fannie Mae and Freddie Mac.
The Urban Institute’s researchers found that the price of an average mobile home appreciates at an annual growth rate of 3.4 percent, compared to 3.8 percent for traditional homes that are built on site. In addition, the researchers said that in some parts of the country, the price of mobile homes has risen at an even faster rate than the price of regular homes.
Analysts say this could be an issue because many experts have touted manufactured homes as a solution to the shortage of available homes to buy in many real estate markets, which are suffering from acute inventory shortages.
Manufactured homes are far more common in some parts of the U.S. than others, however. The states of Alabama, Florida, Louisiana, North Carolina and Texas account for about 41 percent of all mobile homes, the Urban Institute notes.
There are a few caveats to the Urban Institute’s data however. Many manufactured homes are financed using what’s called a chattel loan, or a personal loan similar to a car loan, instead of a mortgage. Also, in many cases, the homeowner may not own the land the manufactured home occupies. That means they often have to rent their lot in addition to paying for the home, and because many of these homes aren’t actually “mobile”, some can be forced to sell if the land rent gets too high.
Still, the Urban Institute says its findings suggest that manufactured homes could be a solid investment.
“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,” the Urban Institute researchers said in the report.