Manufactured Housing’s Steady Growth
- Jun 04, 2021
After wrapping up last year with encouraging numbers, the manufactured housing sector closed the first three months of 2021 on a similar note, a recent NorthMarq report shows.
Many states are easing restrictions and opening their economies as the COVID-19 vaccination rollout is expanding. This helped employment numbers increase by 1.5 million jobs compared to the previous quarter, when only 640,000 new jobs were created.
The first quarter recorded a 33 percent decrease in sales activity compared to the same period in 2020 and a 40 percent drop since the end of last year. While larger deals still closed, a notable drop of 65 percent year-over-year was recorded in the mid-tier sales, between $5 million and $10 million. At the end of last year, a NorthMarq team brokered the sale of Circle T RV and Manufactured Housing Park in Mission, Texas.
On a year-over-year basis, the median sale price in the first quarter was 9 percent lower, reaching $35,900 per space. The median price for deals ranging from $10 million to $40 million in primary markets was considerably higher, reaching roughly $85,000 per space. Cap rates compressed in the second half of last year and the trend continued in the first three months of 2021, averaging nearly 6.5 percent, a 50-basis point drop from the average cap rate for 2020.
California topped the list in terms of sales, with several assets trading in the areas surrounding the Inland Empire. The median price in the state in the first quarter was $62,100 per space, with a cape rate of roughly 5 percent.
On a national level, occupancy rose 30 basis points in the first quarter, reaching 93.7 percent. That’s 10 basis points less than the cycle high recorded late 2019 and early 2020. Occupancy has been climbing more than 100 basis points per year from 2013 to 2019 but recorded a 40 basis point dip last year. States in the South recorded the highest occupancy rates, growing 30 basis points year-over-year to 94.9 percent.
Rents reached $571 per month, reflecting a modest 0.5 percent increase in the first three months of the year and a 4 percent increase year-over-year. Southwest states recorded the strongest rent growth, with a 4.8 percent increase year-over-year to $506 per month.
Some 24,500 manufactured housing units were shipped in the first quarter, a slight 3 percent decrease compared to the same period in 2020—and almost the same as the number of units shipped in the last quarter of the previous year.
New supply growth has remained relatively steady since 2017, with roughly 94,600 units shipped per year—never dipping under 90,000 and never topping 95,000. In 2021, the figures are expected to remain within that same interval. Texas was the state with the most shipments, recoding some 4,100 units added to the inventory in the first quarter. This is an 11 percent decrease from the same period last year.
Read the report by NorthMarq.