Affect housing market will have on MHP's


#1

I’d like to get some of your thoughts on how you think the residential housing market slump will affect MHP’s throughout the country?

I’ve been in real estate now for about 6 years, and all I know/have seen is an appreciating market.

I realize that MHP’s values are mostly based off of revenue, but have a hard time believing how the residential market slump we are seeing won’t have a negative impact on MHP’s values.

I’ve been told that the commercial real estate’s cycle is typically about 2 years behind that of the residential market.

I also realize that MHP’s are a long term investment, and long term you can’t go wrong, but just wanted to get some expert advise/opinions on how you think MHP’s values will be affected over the next 2-3 years.

Thanks for your time.

Jared


#2

Hi Jared,

This is a great question. I selling apartment buildings in California. The market fundamentals are still strong (high occupancy and decent rent growth). However, I see more and more investors hesitant to buy. I think there is a psycological impact on buyers. Many are simply scared.

In addition, there have been some high profile examples of major commercial investors melting down. This is because they borrowed too much money and can’t refinance their existing debt.

There was a great article in Saturday’s Wall Street Journal about this exact topic. If you send me your email, I will send it to you.

Good luck, Peter


#3

I’m losing people to the housing market. Houses have become so cheap here in NE Ohio that three people in my community are moving due to the fact that they bought stick-built homes. They haven’t been able to sell their homes yet and are not ready to sell to me so at least I’m still getting lot rent.

I’m starting to think all them learned folk in this business who predicted the mortgage meltdown would benefit MHPs didn’t consider other possibilities.

Rolf

Post Edited (01-28-08 12:58)


#4

Remember we have the homes and we are the bank for those who cant get financing. I have not experienced the melt down in NC. Time will tell


#5

From what I’ve seen (MASSIVE Layoff’s) the MH world and low income housing in general is the first and hardest hit when people start loosing their jobs… The loss of mid level jobs filters down hard to the lower income area’s as there is just not as much retail money being spent which means that the lower income folks hours are cut thus reducing the retail money even further compounding the problems.

I don’t know where the lower income folks have gone but the prior mid income folks start grinding down and loosing homes to foreclosure, forced sale, etc. and start downsizing looking for a cheaper place to live. This is the group of people that I’ve been serving for awhile now. Rents in the mid level units have dropped and many are now below the mortgages that are owed by investors and I’m starting to see foreclosure rates rising on SFH rentals. (heard about 203 SFH units foreclosed on with one investor today)

The MH market has pretty much recovered via flexibility were as the SFH market can’t flex as much and currently is in complete turmoil in some areas. There was a post by someone (Ray Alcorn or Michael M. I think) on the other site that said that 2008 would be the WRECKoning year and the streets along the way to financial freedom would be littered with body’s.

I did a summery a while back and I’d have to rent my mobiles for something like $83/month (plus lot rent if don’t own the land) to cover mortgages and get a JOB to eat in order to weather the storm… I believe that flexibility as pointed out in the post today by Greg will be the main strength of MH’s & MHP’s in most area’s as the market shifts abruptly in local niche’s.

That Said, the “market slump” will affect income based value on MH properties (what a better time to buy cashflow), best guess without doing the math we’ve lost about 200-250k in equity across all of our properties using a CAP rate value. Can’t eat equity and the cash flow has become way more critical than the equity stance at the current moment IMHO. Do good deals, weather the storm, and live happy ever after…

Best wishes,

Ryan Needler