Site-Built Home Prices Soar: Affordability Gap Widens
U.S home prices soared 12.1 percent in April from a year earlier (the biggest gain in 7 years) as more buyers are chasing fewer homes. This supply and demand situation with site built-built homes has created an even wider gap between the affordability of manufactured homes and comparably sited manufactured homes (which are never subject to supply issues). Manufactured homes built in a factory are available upon demand. Prices on manufactured homes only increase as a result of building material inflationary factors and is not affected by the supply and demand factors that are currently spiking sales prices of site built homes.
Real estate provider, Core-Logic, says site-built prices also rose 3.2 percent in April from March, much higher than the previous month’s gain. Furthermore, prices rose in April from the previous year in 48 states. The only states to show declines were Mississippi and Alabama.
The states where prices jumped the most from a year earlier were: #1 Nevada at 24.6 percent, #2 California at 19.4 percent, #3 Arizona at 17.3 percent, #4 Hawaii at 17 percent, and #5 Oregon at 15.5 percent.
More potential buyers are seeking to buy homes. At the same time, the number of houses in inventory is 14 percent lower than it was a year ago. That’s pushing up prices. Manufactured homes are also increasing but pricing has remained stable. Manufactured home builders do not increase prices or profit margins because supply and demand issues are not relevant to manufactured homes; Homes are always quickly available to match any demand considerations.
Home sales and prices began to recover last year — six years after the housing bust. They have been buoyed by steady job gains and low mortgage rates.The limited supply of homes has also builders more willing to ramp up construction. That’s creating more construction jobs — a big factor in the economic recovery.
“Conventional home prices also rose in in April from the previous year in 94 out of the 100 largest U.S. cities,” Core Logic said. That’s up from 88 in the previous month.
Los Angeles and Phoenix reported the biggest price gains among the cities. Prices in both cities lept 19.2 percent compared with a year earlier. They were followed by Atlanta and Riverside-San Bernardino in Southern California which both posted 16.5 per cent gains in price increases. Dallas rounded out the top five, with a 10.2 percent increase.
As the economy continues to improve, site built prices will also continue to escalate. Higher mortgage interest rates and inflation factors will eventually further accelerate higher prices of all homes, including manufactured homes, but only in proportion to site built.
The irony of all this is that the manufactured home, which is already the most affordable of any other form of housing, will become even more affordable. As site built prices continue to increase, manufactured home prices which are not subject to supply and demand dynamics inherent with site built housing will remain the same, therefore increasing the affordability difference between site built and manufactured homes.
The quality of today’s affordable manufactured home is equal or superior to any other form of residential housing in the interior and exterior design, safety, energy efficiency, and construction materials. Manufactured homes are built to the specifications of the purchaser — offering an array of floor plan choices and square footage sizes.
From the moment your manufactured home has been customized and ordered, delivery, and installation is usually accomplished in a time frame of 6-8 weeks with immediate occupancy to follow.
The rising prices of site built homes should not be a deterrent to your realizing your dream of homeownership. It would appear that now would be a perfect time to take advantage of the affordability and value of a manufactured home.
