Local Opinion: Manufactured homes not such a great deal

I was disappointed with the recent Star article “Manufactured homes coming to Sahuarita,” published on April 10. The article reads like a press release from an industry that has a long history of hiding the true economics of its products. The reporter should have questioned the numbers offered by the developer.

When you buy a manufactured home inside a park, you may not own the land under your home. Most mobile and manufactured home parks are owned by a landlord. That puts you at a strategic and economic disadvantage.

The article states, “The company is able to sell homes at this price because they aren’t charging buyers for the land — just the home. … The land lease, which will be about $500 a month, is in lieu of property taxes and HOA fees.”

This quote ignores two important facts about the economics of manufactured housing:

First, manufactured housing generally does not appreciate in value at the same rate as traditional “stick-built” housing stock. When you are investing your money in an asset as significant as a home, decreased appreciation will deprive you of future wealth. Your return on your manufactured home investment will be less than a “stick-built” home.

Second, and relevant to this article, when the homeowner does not own the land on which the house is located, they are at the mercy of the landowner. While a $500 monthly land rental fee (in addition to the mortgage payment) may seem affordable at the outset, these rents escalate over time. Once the original lease expires (or even during its term) the landowner has the upper hand in all future rent negotiations, knowing that it may be unaffordable or even impossible to move a manufactured house.

When the landowner evicts the owner of a manufactured home, the home must be moved, sold or it will be lost — resold by the landowner. If you cannot afford your lot rent, you are very unlikely to be able to afford the $5,000-$20,000 it will cost you to move a manufactured home, if you can move it at all. Your only option may be to sell your home, or be evicted. After eviction, the park owner may offer to exchange the money owed for title to the home. That $200,000 home is now worth nothing to the owner.

Manufactured and mobile homeowners all over the country are being forced out of their homes by park owners when the homeowner cannot keep up with increased rent and fees. The New York Times recently published an exposé on this practice, documenting 50% rent increases. There’s a reason why so many investors are salivating over these parks: they make wealth for the landowner, but not for the homeowner.

The $500/month rent payment adds nothing to the homeowner’s equity. It’s also not deductible on your taxes, as your real estate taxes might be. Meanwhile, the homeowner is still responsible for maintenance of the home, county taxes on the manufactured home, and is subject to all the park’s requirements for landscaping and upkeep. In some contracts, the homeowner can be evicted for failing to maintain their home according to the park’s restrictions, like having a car that isn’t licensed, or a messy yard.

Even before the park owner raises the rent, park-sited manufactured homes aren’t a great deal.

Suppose a buyer in American Resort Communities chooses a $200,000, two-bedroom home. The buyer will be required to pay the developer $6,000 a year for the land rent, which is described as covering real estate taxes and HOA fees.

Real estate taxes on a comparable stick-built $200,000 two-bedroom home in Sahuarita would be less than $3,000. That is half the annual rent for the lot in our first example. That extra $3,000 would pay for gym and swimming pool memberships.

After the mortgage is paid off, the stick-built homeowner will only owe real estate taxes.

Our theoretical buyer in American Resort Communities will be paying whatever the landowner demands for the lot rent for the rest of their life. You will never be free of the expense, even after your mortgage is paid off.

I wish the Star and the reporter had done a better job analyzing the developer’s suggestion that this is more “affordable” housing.