Depreciation

[Jimmie Alamo]

I would like to know by what percentage a modular home depreciates in a year? Soon I plan to buy a used Patriot home and need to know how much this 2003 home has depreciated?
Thank you
Jimmie

[rmurray]

There IS NO ASUCH RULE OF THUMB...With land the value os the home is all location..location and condition...By the way...this is not a modular home..it is a manufacrured home...built to the HUD code....

[David Oxhandler]

MHI has put up a great page on this subject at www.manufacturedhousing.org/understandi ... _value.htm They say:"Do manufactured homes appreciate in value?In general, manufactured homes will appreciate. But, as with all housing, it is subject to the same market factors which affect appreciation. The factors that impact future value include: the housing market in which the home is located; the community in which the home is located; the initial price paid for the home; the age and maintenance of the home; the inflation rate; the availability and cost of community sites, which reflects the supply and demand influences on the home’s value; and the extent of an organized resale network, where an organized network will usually result in homes selling for a higher price than in markets without such an organized network."In other words exactly what Mr Murray said... Location Location Condition
When the location and condition of the home are both good you can count on APPRECIATION. I am in the process of reselling a doublewide that I sold brand new to a young couple in the late 80's. At that time the NEW home sold for just under $30,000. Today the price tag on that 16 year old doublewide is $57,000. Select your location with an eye towards the future and take good care of your home and you will see the value go up over the years.

[Jimmie Alamo]

You guys are great. Thanks

[jgn]

In 1994 I purchased a 1976 non-hud DW by a lake, not on the lake. I just closed on it the middle of last month and sold it for what I paid so although I didn't make any money on the home I didn't lose any. In 11 years I put in new windows, a new stove and painted it once outside. We had debated about replacing it with a new PH but it just didn't make sense to throw away a house that had value. I would estimate the land was worth the majority of the price because the house, if moved, was worth little and this would have been the same situation as a site built home. Land is the appreciating factor not the home. If I purchased a site built home to begin with I would have paid double what I did and after 11 years doubt if I would have done any better. A home doesn't appreciate, the value is in the land and location. We had many years of fun at that house and if I decide to get another lake home I wouldn't hesitate to get a MH.

[booher]

Hi,

I'm an appraiser and do manufactured homes a lot. Patriot is a good brand that holds its value better than many. Manufactured homes depreciate like site built but on a shorter time period. Fifty five years for site built and forty five years for manufactured. (two box homes) All homes depreciate, only the land appreciates. The dollars go up because money buys less every year. Depreciation is not streight line, it happens on a flattened S curve. To find out, get a copy of the Marshall Swift cost manual and it will give the percentage of depreciation for each year. Your library will probably have it or you can check with your assessor office.
I hope this helps,

Verly

[John Mitchell]

My family and I have been selling real estate for over sixty years. I hate to flame on these boards, but you are completely WRONG. Modular homes tend to appreciate in value, albeit very slowly, but this is seldom true of a true manufactured home (mobile home). True that the land will likely appreciate, depending on the market, but the home itself will lose value. Site built homes alway appreciate in value, and the land is only approximately a third of that appreciation. Take two identical plots of land and place a site built home on one, a mobile home on the other, and you will find that in twenty years the site built home will sell for several times the price of the mobile home even considering the land appreciation.

This is a fact, and there simply is no situation in which you will gain as much or more value with a mobile home than a site built home; irregardless of the condition of the modular home. To see that what these gentleman are saying isn't true, compare the cost of a bare lot to that of a lot with an older home on it in the same neighborhood. You will find that the lot itself is not worth nearly as much; even when all other factors are equal. Also, try comparing the value of homes in neighborhoods that allow either type of home. There are many of these in Oregon and Washington State. You will find that even very old site built homes, on identical plots, are worth far more than homes with even very new mobile homes. Mobile homes are more like cars than houses in that they are not designed to last more than a specific length of time. This is a classic case of something sounding to good to be true, e.g. something costs much less but is just as good, and obviously it is too good to be true. If that were true my friend, then we would all be buying mobile homes. Also, this isn't even getting into the other advantages of site built homes such as refinancing options, equity loans, and other options that simply are nearly unheard of with mobile homes.

Real estate is simply the best investment you can make, so you aren't going to lose with a site built home unless you live in an unhospitable area. Pay off your outstanding debts, save enough for at least ten percent down, and then buy a site built home that you can afford. With good credit, you will get a better loan and make lower payments because of it. Just make sure to get an appraisal and be sure the plumbing and roof are very sound. Also, always be certain there are no leins on the property. Whatever you do, don't take the advice of laypersons, and most of all don't rely on the internet and especially message boards for advice. There is far too much misinformation online these days, and far too many people claiming to have expertise or qualifications they do not actually have. Do your own research and consult a local expert in your area. That said, mobile homes definitely have their place, and are especially good for seniors, but they aren't meant to appreciate in value. Don't take my word for it though, do your own research. The more you know, the better buy you will make.

[rmurray]

As a real estate "peofessional" you havwe a duty to advise your clients with good information...You should take a few seconds to bring yourself up to speed...Consumers Union (home of Consumers Report magazine ) has published an extensive study that refutes everything you just said..You can find it here

http://www.consumersunion.org/pdf/mh/Appreciation.pdf

This study takes into consideration thousands of resale transactions..not just a few personal observations..Have fun...

[David Oxhandler]

John Im afraid that you are "completely WRONG" - But dont feel like your alone. "Many Americans have been victimized by an outdated conception of manufactured homes—one which has been perpetuated in the news media... IN FACT, manufactured homes held up well, even when compared to site-built homes. That this was be the case should not really surprise anyone: since 1999, manufactured homes have been built and installed to standards tougher than any but the most recent codes for site-built structures." (http://www.builtstronger.com/myths.html)
For a point of view from the Lakeland Florida area, where there are more manufactured homes per sq mile than any place else on earth, take a look at this weeks contribution to our INDUSTRY COMMENTARY section from LEN BONIFIELD. He tells us "As with all real estate, location and maintenance of the home play a huge role in determining the rate and extent of appreciation. In a community setting, location equates to amenities, location in the state, proximity to rivers, lakes coastlines, etc. In most average communities, homes that are 25 to 30 years old can be found selling for $15,000 to $30,000, when they sold new for under $10,000. It's not much, but it is some, appreciation. A recent newspaper article related a manufactured home for sale for more than $250,000 in Broward County. It is common to see 30-plus-year old homes sell for more than $100,000 in the Fort Myers area." He tells us "If you go to Natalie Estates in Stuart and hundreds of other good communities in Florida, you will find 1970's parks where housing has appreciated greatly. California is another classic example of selling prices several times more than they sold for originally." Read the entire article - Factory-Built Homes Appreciate


Here is a hot link to the Consumers Union article that Mr Murray sited http://www.consumersunion.org/pdf/mh/Appreciation.pdf Read it and learn that "average appreciation rates of manufactured homes packaged with owned land are statistically in line with the site built market, and there are few inherent reasons that a home built in a factory should perform differently than one built on site"


"For many years, people have assumed that the value of manufactured homes depreciates. This is not so. Studies conducted at two Universities revealed that the determining factor of appreciation in both types of homes was their location. Maintenance also plays a major role.

If a home of any kind is built or setup in a bad neighborhood or area it will probably depreciate no matter what. In a good area or neighborhood they will generally appreciate in value depending on the local housing market and economy. In the case of a manufactured home, if it is setup on a permanent foundation with a concrete pad, blocked properly and anchored properly, with good drainage so water does not sit under the home and if one buys from a reputable dealer who uses good setup people, the home will be no different than a site built home. It would appreciate in value at the same rate as a site built home in the same area.

The cost of manufactured homes is significantly lower than the cost of site-built homes. This gives them an instant appreciation between what the home actually cost the homebuyer and what its market value is. In some cases, a multi-section manufactured home has sold for more the second time than the first. Properly setup and well taken care of, you are talking about a fantastic investment potential." (http://www.rebelhome.net/myth.html)

Here are a few more opinions - lifted from the MHI web site:

Manufactured Housing Research ProjectUniversity of Michigan, 1993Dr. Kate Warner and Dr. Robert JohnsonThis study is divided into six sections dealing with various questions surrounding manufactured housing: Quality, Costs and Finance, Values, Impacts on Adjacent Property Values, Manufactured Housing and the Senior Population, and Alternative Ownership and Innovative uses. Findings included: - Manufactured housing quality has become essentially equivalent to that of conventional housing - Manufactured housing compares favorably with site-built housing as an affordable housing option - Manufactured housing, like site-built housing, can be viewed as an investment with probabilities of appreciation and equity accumulation - Manufactured housing has no impact on the appreciation rates of surrounding properties, putting to lie the myths of negative property value impacts.The Future of Manufactured HousingHarvard University Joint Center for Housing Studies, 1997Kimberley Vermeer and Josephine Louis The Harvard Joint Center report is essentially a survey of previous academic studies of manufactured housing. It draws from earlier Joint Center studies, particularly Residential Property Value and Mobile/Manufactured Homes: A Case Study of Belmont, New Hampshire," which is Thomas Nutt-Powell’s 1986 examination of property value impacts of manufactured housing, as well as the Manufactured Housing Research Project abstracted above. The Future of Manufactured Housing points out some areas that the industry needs to address (many of them dealt with in the Manufactured Housing Improvement Act, such as installation) and the conclusions that it draws are generally very favorable for the industry. The Impact of Manufactured Housing on Adjacent Site-BuiltResidential Properties in North CarolinaEast Carolina University, 1997Dr. Richard Stephenson and Dr. Guoqiang Shen.The first examination of property value impacts of manufactured housing that draws on real-world spatial relationships via GIS data, The Impact of Manufactured Housing on Adjacent Site-Built Residential Properties in North Carolina dispels the twin myths that manufactured housing automatically depreciates and drags down surrounding property values. The most telling findings were: - Manufactured homes with a fixed foundation or listed as real property appreciated at comparable rates to site-built residential properties - There is no clear negative correlation between the overall appreciation rate of site-built residential properties and the presence of manufactured housing in close proximity Manufactured Home Life, Existing Housing Stock Through 1997Iowa State University, May 1998Dr. Carol B. Meeks An update to an earlier study conducted when Dr. Meeks was with the University of Georgia, this study takes a more comprehensive look at the manufactured housing stock to determine the life expectancy of manufactured homes. Manufactured Home Life, Existing Housing Stock Through 1997 finds that the life expectancy of manufactured homes is comparable to the life expectancy of new site-built homes.Code Comparison Study - MHCSS vs. CABO One- and Two-Family Dwelling and Model Energy CodesUniversity of Illinois at Urbana-Champaign School of Architecture, January 1998Jeffrey Gordon and William B. Rose Compares the applicable requirements of standards for construction of a home built to the federal Manufactured Home Construction and Safety Standards (HUD Code) with the CABO One- and Two-Family Dwelling Code and Model Energy Code. The comparison concludes that while in some areas the HUD Code requirements are more restrictive, and in other areas the CABO code are, on balance the two codes are comparable, resulting in houses that perform similarly.Identification and Measurement of Zoning Barriers Related to Manufactured Housing: A Location and Accessibility Analysis East Carolina University, 1999Dr. Richard Stephenson and Dr. Guoqiang Shen The 1999 ECU Study examines what impact zoning has on manufactured housing placement and it’s proximity to "positive" versus "negative" public facilities. For the purposes of the study, "positive" facilities included environmental, health and emergency rescue services; cultural, recreational and education services; and auto, food, shopping and other business services. "Negative" facilities include landfill and solid waste sites and other similar uses. Findings include: - Manufactured housing is located farther from "positive" community facilities, which is especially significant in the area of life safety services - Manufactured housing is located closer to "negative" public facilities such as landfills and solid waste facilities - Zoning districts where manufactured housing is a permitted use have a higher percentage likelihood of being located in flood zones The general conclusion is that many of the negative perceptions of manufactured housing are in fact self-fulfilling prophecies perpetuated in part by the limited placement opportunities created through local government zoning actions.The Impact of Manufactured Housing on Adjacent Site BuiltResidential Properties in Two Alabama CountiesAuburn University - Montgomery, 2000Charles E Hegji and Linda MitchellThis study used property valuations from Montgomery and Lee Counties in Alabama to assess the impact of proximity to manufactured housing on site-built property value. Using a methodology similar to that use by East Carolina University in their earlier study, including a spatial analysis using GIS, the Auburn University - Montgomery study concluded that: - The appreciation rates of individual manufactured homes in both counties were comparable to those of site-built properties - Proximity to manufactured housing did not appear to be a significant determinant of property values of site-built residential housing (www.manufacturedhousing.org/)


"The appreciation in value of manufactured homes comes back to the old real estate axiom -- location, location, location. When properly sited and maintained, manufactured homes will appreciate at the same rate as other homes in surrounding neighborhoods" (http://www.mhao.org/myths.asp)

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[trmimo]

Talk about misinformation!
You don't have a clue. Every home I have ever had is meant to be a money making venture, and I have made a lot more money on the modulars I have owned than the site builts. Mainly because their value has climbed significantly. Even manufactured homes in communities appreciate under good cicrumstances. Namely maintenance and location. In 1971, my parents paid $7500 for a new, low end 900 square foot double. In 1999, I brokered the sale to the 4th owner for $20,000.
I think everyone here recognizes your bias and lack of information for what it is.
I hope that your potential customers do too.