There is no other sector of real estate that is as studied as single-family homes. Look at all the websites out there that serve this market, and what a huge percentage of the U.S. population that is employed in single-family construction, financing, maintenance and 1001 other variants. Well, you can use this research as a mobile home park owner, to ascertain good markets to own parks in and predict the future performance of the property. So what can we learn from single-family home stats?
Mobile homes can’t compete with cheap single-family offerings
The mortgage on a $30,000 house is under $200 per month. The average mobile home park rent in the U.S. is over $200 per month. The conclusion? Mobile home parks are only attractive as an investment in markets where single-family homes are expensive. To succeed at affordable housing, you have to be in markets that are starving for affordability; you need high single-family home prices. We’ve found that homes need to be at least around $80,000 and up to give mobile home parks the edge they need. Go to www.zillow.com and see what the homes cost in the area of your park.
Housing starts reflect strong market dynamics
A good indicator of economic vitality in a market is the amount of homes being built, also known as “housing starts”. It makes logical sense that strong employment leads to strong population growth which leads to strong housing starts. In opposition, a market with weak employment leads to people moving away to seek jobs, and zero housing starts. You can examine housing starts by city, state and even region, and this is a terrific forecasting tool for economic strength. There are several websites that you can find on Google to give you the stats you desire.
Areas that allow for higher home speculation often lead to huge real estate cycles
If you go to the website BestPlaces.net and start mapping out median household income vs. median home price, you will see an unusual pattern emerge. On both costs of the U.S., the housing market is much more highly leveraged than in the middle of the nation. For example, in Beverly Hills, California, the median household income is $134,067 per year and the median home price is $1,953,200 – that’s a multiple of 12 times the median income. In Jupiter Island, Florida, the median income is $95,000 and the median home price is $2,923,000, for a whopping multiple of 30 times the median income. In most of the Midwest and Great Plains, that ratio is closer to a range of 2 times to 4 times the median income. What does this mean? It means that the coastal markets are more highly leveraged and, as a result, more prone to severe economic cycles. California’s boom and bust cycle in housing is legendary, while there is no such tradition in Des Moines, for example. Since mobile home parks do their best in areas of consistently high home prices, this type of correction is disturbing, and we prefer to stay in the safe, secure regions of the Midwest and Great Plains.
Determining if you are in the good or bad part of town
There is no politically correct way to determine if your mobile home park is in the right or wrong side of town. The Chamber of Commerce won’t tell you, nor will any realtor. But there’s an easy way to cheat. Go to www.Bestplaces.net and put in the zip code of the park. Look at the median home price. Then go to the “Overview” tab and click on “metro area”. Compare the media price in your zip code to the median for the metro area, and you will scientifically know where you fit into the overall picture on desirability.
Single-family home statistics can be a huge help in deciding on a mobile home park to buy. There is plenty of data and plenty of things you can glean from it. Let single-family data be your guide to buying a successful mobile home park. It’s quick, easy and free.