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Studies: Manufactured homes gain value

Manufactured homes have suffered from the widespread perception that, like a car or a truck, they will all fall in value. New federal data suggests that is not the case.

According to the Federal Housing Finance Agency (FHFA), manufactured homes titled as a real property have consistently gained value since the recovery at close to the same rate as site-built houses.

manufacturehomeFHFA, the regulator of the government-sponsored enterprises Fannie Mae and Freddie Mac, recently published sales-price data for the first time on manufactured homes. The agencies are jointly exploring ways to increase access to loans for manufactured housing, which are generally more affordable for people. However, little is known about the credit risk involved in this market.

FHFA used two methodolgies to produce “experimental price indices” that tracked price and valuation changes back to 1995. These suggest that manufactured homes, when titled as real property, have tracked pretty closely with the trends in the general housing market.

The FHFA index for manufactured homes that was based on sales-transaction prices has increased by 120 percent since 1995, which compares to 140 percent for FHFA's standard index.

According to an Urban Institute analysis, this translates into average annual growth of 3.4 percent for the manufactured-homes index, compared to 3.8 percent annual growth for the regular housing index.

Lesli Gooch, executive vice president for government affairs for the Manufactured Housing Institute, said the FHFA's new indices suggest that manufactured homes can be competitive with other housing types. She also said the FHFA's willingness to track the asset prices boosts the credibility of the entire industry.  

"We are trying to get more attention to manufactured housing," Gooch said. "I do think the fact that FHFA is including this manufactured housing data is helpful, and it does shed some light about how manufactured housing does perform."

The Urban Institute, a Washington, D.C.-based think tank, called the indices a major breakthrough in understanding price trends. Urban researchers say the perception that all manufactured homes will lose value as they age has made it more difficult on people to obtain loans to purchase or refinance a manufactured home.

“The data is brand new,” said Laurie Goodman, co-director of the Urban Institute's Housing Finance Policy Center. “No one else had ever produced this data on the national level.”

Urban Institute researchers said there are some limitations to the FHFA’s studies, though.

FHFA had only limited data from states. Some states with an abundant supply of manufactured homes, such as Alabama and Texas, were over-represented in the index, whereas states with a relatively small percentage of manufactured homes, such a California, were underrepresented. This likely skewed the numbers to make the gains by manufactured homes seem smaller than they really are. States and cities with fast-appreciating prices tend to be underrepresented in the manufactured-home price index, and Southern states with below-average home-price appreciation are over-represented in the index.  

The FHFA indices also don’t shed light on the prices of untitled manufactured homes, or those sold as chattel to an owner who doesn’t own the property. The GSEs already bankroll and securitize manufactured-home loans titled as real property, but won't purchase chattel loans, which are secured only the home itself.

Chattel loans represent a far larger share of the market. Most advocates say there needs to be a more stable, standardized chattel-loan market that would draw a wider array of lenders. The GSEs have introduced pilot programs, however, and have pledged to eventually purchase and securitize a small number of chattel loans.

In a brief published last week, Urban Institute researchers said untitled manufactured homes also would likely appreciate in value, but at a far slower pace than the homes titled as real property. The brief cited data from the Lincoln Institute of Land Policy indicating that land appreciated at a rate of 204 percent, and structures by 87 percent, from 1995 to 2016. 


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