The Increasing Divergence Of Home And Apartment Pricing And The Impact On Mobile Home Park Performance

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2021-06-26 18:00:05

If you study the data on www.Bestplaces.net, you will see one unusual anomaly that has a direct bearing on understanding the attractiveness of a market for mobile home park ownership: the astounding difference in single-family home and apartment pricing. Perhaps the best example of this is to be found on the stats for Cairo, Illinois. This city of around 2,100 inhabitants has a median home price of $31,500 yet a three-bedroom apartment rent average of $1,000 per month. How is that even possible? Here are some thoughts:

We are seeing this trend in many markets in the U.S. Maybe not to the extreme of Cairo, Illinois, but certainly in many older American cities in which the single-family housing stock is no longer what modern consumers desire and have huge deferred maintenance burdens. In the city of St. Louis, for example, over 50% of all single-family homes date from before the Civil War. In these type of markets, you can’t really use the single-family home stats as a true reflection of the strength of the housing market.

Smart mobile home park buyers realize that you must have expensive housing to create the need for affordable housing. As a result, they want to see single-family homes at an average price point of around $100,000 or more. When a market has incredibly low home prices, they tend to stay far away from it. In the case of Cairo, any park buyer would flag this as a market that has seemingly little value. But even in larger cities with robust economies, you can sometimes get misled by low single-family home prices that do not accurately reflect what’s really going on.