DEPRECIATE OR APPRECIATE IN VALUE
DO MANUFACTURED HOMES DEPRECIATE OR APPRECIATE IN VALUE AFTER THEIR INITIAL PURCHASE?
Myth: Manufactured homes do not appreciate in value like other forms of housing. Instead, manufactured homes depreciate in market value, similar to the way automobiles lose value each day.
Reality: While there is no one easy answer, recent data seems to suggest that manufactured homes can appreciate just like other forms of housing.
Datacomp Appraisal Systems recently completed a study that looked at 185 manufactured homes in Michigan, comparing the average sale price when new to the average resale price several years later. The study found the average value of the home had increased by $190, from $26,422 new to $26,612 used. This average figure is misleading, in that 97 of the homes increased in value by an average of $2,985, while the remaining 88 decreased in value by an average of $2,822.
The only accurate conclusion is that some homes appreciate and some don’t. Based on an analysis of 88,000 actual sales, Datacomp found that there are specific reasons why some homes appreciate while other depreciate. These reasons include:
- The housing market in which the home is located, will have a significant impact on the future value of the home.
- The community in which the home is located, has a similarly significant impact on the home’s future value.
- The initial price paid for the home.
- The age 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.
- 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.
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.
Modular home facts
Modular homes appraise the same as their on-site built counterparts do; they do not depreciate in value. Most modular home companies have in-house engineering departments that utilize CAD (Computer Aided Design).