Manf. Housing Still Baffles Me

[Terrel L. Shields]

Analyzing some MH sales. One sale is a new unit placed on a small lot in a small town. I got the maker and model from the website of the Manufacturer. AI says the base cost is $80k. The lot sold for less than $40k. The engineered foundation is concrete, there were $3,000 in concessions, small entry stoop, hook up to water and sewer is <5k. And yet we question why the buyer wouldn't simply put this all together themselves (lots of lots available and some in that town much cheaper.) As I suspect the sellers pocketed about $30K...maybe a little more. That's pretty easy "builder" as they need no more than a phone and a few bucks to 'construct' this home.

Well, I suppose it could be anxious to have a home, or elderly and don't want to fool with it. But it was on the market about 80 days. And the only thing I really think is motivating these sales is that the price is a good $100,000 less than what a stick-built home there would cost.

But OTOH, if we have a serious downturn, I think these properties will see huge drops in prices. So, it is not risk free for a buyer. They can only hope they can cash out and not lose their jobs...which usually accompanies a drop in home prices. To me, manufactured home prices are another indication that prices are simply too high for all residential properties. These same homes were bringing $50,000 or more, less just 6 years ago. I mean as one agent told me, "Where can we find anything for less than $200,000?"

 

[sputnam]

As you well know, some people would rather pay for someone else to do something. Sometimes, they don't know how to do it or how to do it well. Sometimes, they are lazy. Sometimes, they make more per hour doing whatever they do than they have to pay to have the work done for them.

 

[J Grant]

Analyzing some MH sales. One sale is a new unit placed on a small lot in a small town. I got the maker and model from the website of the Manufacturer. AI says the base cost is $80k. The lot sold for less than $40k. The engineered foundation is concrete, there were $3,000 in concessions, small entry stoop, hook up to water and sewer is <5k. And yet we question why the buyer wouldn't simply put this all together themselves (lots of lots available and some in that town much cheaper.) As I suspect the sellers pocketed about $30K...maybe a little more. That's pretty easy "builder" as they need no more than a phone and a few bucks to 'construct' this home.

Well, I suppose it could be anxious to have a home, or elderly and don't want to fool with it. But it was on the market about 80 days. And the only thing I really think is motivating these sales is that the price is a good $100,000 less than what a stick-built home there would cost.

But OTOH, if we have a serious downturn, I think these properties will see huge drops in prices. So, it is not risk free for a buyer. They can only hope they can cash out and not lose their jobs...which usually accompanies a drop in home prices. To me, manufactured home prices are another indication that prices are simply too high for all residential properties. These same homes were bringing $50,000 or more, less just 6 years ago. I mean as one agent told me, "Where can we find anything for less than $200,000?"

Because the buyer might have to pay for the lot in cash, and many people do not have the cash to buy the lot plus other expenses, assuming they can get a construction loan. The buyer do not see the 30k profit, it is baked into the price as monthly payments and that is what they base their decision on. The finished manufactured home is move-in ready the day they close, versus having to wait months to finish building it, plus endure the headaches of building.

Whether manufactured homes are a good investment is another matter -

 

[Terrel L. Shields]

ecause the buyer might have to pay for the lot in cash, and many people do not have the cash to buy the lot plus other expenses, assuming they can get a construction loan.

Every bank around here will loan on a lot. Secondary market maybe not. Not every lender (conforming or not) will loan on a manufactured home, but many will. Again, this is not always a Fannie/FHA situation, although the one above was FHA. New unit. FHA won't lend on a unit that is used and moved to another site. All the manufactured homes I've done in the past 10 years were loans made by a small bank that does not even lend via FHA or FNMA. They are all in-house money loans.

I do agree with the idea that buyers are interested in not waiting, but they would not wait if buying a house already built. But I think price is a motivator as our "starter" homes are in the $300,000 range now. That's double the price of a MH almost. And I have seen 3 new RV parks built in the last 18 months and they are packed full year around already. People are opting for a cheaper and more mobile lifestyle.