Manufactured Housing 2016: What You Need to Know
The manufactured housing industry has gained ground in the last few years, even if it is not comparable to the multifamily tower or mixed-use building. Borrowing from the list of amenities that are popular for apartment communities and large-scale properties, manufactured housing has evolved considerably. Valet trash pickup, high quality materials, fireplaces, and greenspace amenities are not unusual to find these days.
Beyond this evolution, the appeal of manufactured housing communities can be attributed to a recent finance development that occurred last year. As Fannie Mae and Freddie Mac approached spending caps, they sought products to exclude. Affordable and workforce housing are a constant priority so manufactured housing was excluded, which made it attractive to lenders since it was non-recourse, carrying competitive pricing and loan-to-value levels.
These changes are still in play for 2016, during which lending for manufactured housing is expected to ride high. Owners of manufactured housing communities who used commercial mortgage-backed securities can now use Fannie Mae and Freddie Mac.
Communities with solid operations, an on-site office, paved streets, and/or off-street parking are receiving great terms by Freddie Mac. A move away from the 50% requirement for double wide pad sites also has made this financing option more widely available. If Fannie Mae follows suit as is expected, financing for manufactured housing will continue to expand over the coming year and beyond.
On the other hand, the market for financing affordable housing is lacking. Many consumers need financial assistance, and this poses a problem for manufactured housing community owners, who find it more difficult to bring in new inventory or sell existing homes. Larger communities may have financing arms, but smaller operations often don’t have enough capital to fill their sites. This poses a hindrance until it is addressed by a lender or financing source.
Manufactured housing that is attractive to lenders has specific features such as an experienced sponsor with multiple parks. Communities should have an off-site office, paved streets, off-street parking, and no chain link fences. Competitive amenity packages should be offered, and no more than 25% of the homes should be owned by the park.
Hot spots for manufactured housing include the West Coast, Michigan, Florida, and the South. As the affordable housing crisis continues, urban areas also could see a rise.
In 2016 manufactured housing will be a heavily sought product type for lenders due to the fact that 100% of financing for it is excluded from the spending cap for government-sponsored enterprises like Fannie Mae and Freddie Mac. This is matched by the demand for those who can’t afford a single family home or prefer zero-maintenance lifestyles.