© 2017 Fannie Mae. Trademarks of Fannie Mae. 9.15.2017 1 of 6

Multifamily Market Commentary – September 2017

Manufactured Housing Community Property Sales Slowed in First Half 2017 

The ongoing increase in multifamily asking rents over the past several years has prompted many renters to seek lower cost 

housing alternatives, including renting factory-built homes located in a Manufactured Housing Community (MHC). 

Although most MHCs consist of owned manufactured homes, there are a number of these communities that also rent out 

existing units. The combination of renewed renter and homeowner interest in living in MHCs has caused vacancies to fall 

and revenues to rise. This fact has not been lost on some real estate investors who showed continued interest in MHCs in 

the first half of 2017, despite an overall slowdown in MHC property sales activity. 

While not a comprehensive source of data for MHC property sales, Real Capital Analytics (RCA) provides a window into the 

MHC sector. As shown in the chart below, transactions involving MHC properties totaled an estimated $3.8 billion from 

January through mid-August 2017, compared to $8.5 billion in all of 2016. 

Large Transactions on Both Coasts

The largest sale of an MHC property recorded by RCA through mid-August 2017 was the 645-unit Gardens of Parrish MHC, 

located in Sarasota, FL. It was purchased by Northwestern Mutual Life Insurance Company for $80 million. 

The second-largest sale was the 421-unit Brookside Mobile Country Club, located in East Los Angeles County. It was 

purchased by the Shopoff Properties Trust for $53 million and was financed by Ladder Capital Commercial Mortgage at an 

estimated $38 million. The property, which was built in 1966, had an estimated occupancy of 64 percent at the time of 

purchase and was identified as an acquisition and rehabilitation transaction. While these two properties were the most 

expensive MHC sales reported by RCA so far in 2017, almost 80 percent of MHC properties sold for $7.5 million or less 

during the first half of 2017.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

20072008200920102011201220132014201520162017

YTD

Volume ($billions)

Source: Real Capital Analytics

Note: Transaction volume includes both sales of existing and the appraised value of refinanced MHC properties. 

Reported MHC Transaction Volume 

2007 – August 2017
© 2017 Fannie Mae. Trademarks of Fannie Mae. 9.15.2017 2 of 6

MHC Investing Goes Beyond 

REITs

While publicly-listed Real Estate 

Investment Trusts (REITs) 

remained active in the MHC sector 

during 2017, private entities had the 

highest share of investment in 

MHCs through mid-August 2017, as 

seen in the adjacent chart. Private 

investors, which include privatelyowned companies and real estate 

developers, represented 69 percent 

of MHC purchase volume through 

mid-August 2017, followed by 

public REITs at 16 percent. 

Institutional investors, which can 

include insurance companies, 

equity funds, and sovereign wealth 

funds, came in third with estimated 

14 percent of purchase volume.

Global Investors Also Interested

While Sun Communities remained the top investor over the past 24 months, investing almost $1.8 billion in 117 MHC 

properties, non-U.S. buyers also remained interested in the sector. For example, the Government of Singapore Investment 

Corporation (GIC), which is the sovereign wealth fund of Singapore, invested almost $1.5 billion to gain a majority interest 

on 178 MHC properties. The opportunity was created when Yes! Communities, one of the largest owners and operators of 

MHC properties, sold a nearly 71 percent equity interest in its combined businesses to institutional investors, including 

affiliates of GIC.

Buyer Investor Group Type of Investor Location

Acquisition 

($ M)

1 Sun Communities Inc. Listed/REIT Public REIT Southfield, MI $1,800

2

Government of Singapore 

Investment Fund (GIC) Institutional Sovereign Wealth Fund Singapore, SGP 1,500

3 Carlyle Group Institutional Equity Fund Washington, DC 240

4 RHP Properties Private Developer/Owner Oakland, MI 190

5 Equity Lifestyle Props Listed/REIT Public REIT Chicago, IL 150

6 Meritus Communities Private Developer/Owner Oakland, MI 140

7 Investment Property Group Private Developer/Owner Irvine, CA 120

8 Hometown AM Private Developer/Owner Chicago, IL 100

9 Tricon Capital Group Institutional Equity Fund Toronto, ON 90

10 Cobblestone Real Estate Private Developer/Owner Oak Brook, IL 90

Buyer Composition 

2013 – August 2017

Source: Real Capital Analytics

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016 2017

Other Private REIT/Listed Institutional Cross-Border

Top 10 MHC Buyers 

(Past 24 Months)

Source: Real Capital Analytics
© 2017 Fannie Mae. Trademarks of Fannie Mae. 9.15.2017 3 of 6

MHC Cap Rates Compress

With ongoing interest from a wide variety of investors, capitalization rates for institutional quality MHCs have declined 

significantly from the 7.5 percent national average cap rate recorded in 2009. As shown in the chart below, as of second 

quarter 2017, cap rates appear to have compressed further to a national average of 6.2 percent, compared to 6.3 percent as 

of the end of 2016. Nevertheless, the average MHC cap rate remains well above the national multifamily average cap rate of 

5.7 percent as of mid-2017.

Increasing Occupancies

It is easy to see why investors remain interested in MHCs, as property performance across the country continues to do well 

thanks to rising occupancy levels, for both owned and rented units.

As shown in the table below, occupancy for most U.S. regions for non-age restricted communities rose year-over-year as of 

mid-2017. The Southwest region had the largest increase at 2.2 percent, bringing its occupancy rate to 92 percent. The 

Pacific region, which includes California, had the tightest occupancy rate at 98 percent. 

Even the Midwest region, which at 83 percent had the lowest occupancy rate of all the regions, showed improvement with 

a 1.9 percent increase as of June 2017. According to information from JLT Market Reports by Datacomp, occupancy in the 

Midwest region remains subdued because of a variety of factors, including the proximity of many of the region’s MHC 

properties to former manufacturing towns with still-recovering economies, as well as the lack of chattel financing availability 

in some areas.

Manufactured Housing Community Average Cap Rate vs. Multifamily Average Cap Rate

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

MHC Average

US Average

Source: Real Capital Analytics

Statistics for Select All-Ages MHC – Trailing 12-Month Period

Source: Datacomp/JLT, as of June 30, 2017; rents are for sites

* Based on rent-paying resident occupied home sites.

** Adjusted for services in rent
© 2017 Fannie Mae. Trademarks of Fannie Mae. 9.15.2017 4 of 6

Low Vacancies for Age-Restricted MHC Properties

Some MHCs are designated specifically for residents aged 55 and older. Occupancy for amenity-rich institutional investment 

type MHCs is even higher for 55+ communities than it is for non-age-restricted communities. As shown in the table below, 

occupancy in the Midwest region for age-restricted communities is 89 percent as of mid-year 2017, which is 6 percent higher 

than in the region’s non-age-restricted communities. Occupancies in the South, Northeast, and Pacific regions all increased 

year-over-year as of mid-2017, with all three regions having a minimum occupancy rate of 95 percent or higher. 

Few New MHC Properties Being Built

MHC properties are aging, with 68 percent of the stock having been built prior to 1980. In fact, currently only eight new 

MHC properties are estimated to be under construction or expansion, as illustrated in the map and table below. 

One new interesting MHC development under construction is Emerald Village, located in Eugene, Oregon. This MHC is 

slated to consist of 22 units ranging in size from 150-250 square feet, according to data from real estate research firm CoStar 

Group, Inc., and is meant to serve as transitional housing for homeless individuals. 

MHC Name Details

11350 State Road 121

Inglis, FL 34449

81 Unit Class B MHC

Delivering 8/2017

901 5

th

Street

Upton, WY 82730

Units Unknown, Class B MHC

Delivering 11/2017

2530 132nd J Ave NW

Arnegard, ND 58835

48 Unit Class C MHC

Delivering 8/2017

235 Eld Ln

Donnelly, ID 83615

Units Unknown, Class C MHC

Delivering 4/2018

925 E Garnet Ave

Granby CO 80446

Units Unknown, Class B MHC

Delivering 2018

Emerald Village 

25 N Polk St 

Eugene, OR 97402

22 Unit Class B MHC 

Delivering 4/2018

Note: 22 of the homes will be 

affordable and range in size from 

about 150-250 square feet.

Countryside Village of Atlanta 

Phase II

10 Sweetwater Way

Lawrenceville, GA 30044

92 Unit Class C MHC

Delivering 9/2017

315 Atigun Dr

Valdez, AK 99686

Units Unknown Class C MHC

Delivering 8/2017

Statistics for Select Age 55+ MHC – Trailing 12-Month Period

Source: Datacomp/JLT, as of June 30, 2017; rents are for sites * Based on rent-paying resident occupied home sites.

** Adjusted for services in rent

MHC Under Construction—June 30, 2017

Source: CoStar Group, Inc.

Map excludes one MHC under construction in Valdez Alaska
© 2017 Fannie Mae. Trademarks of Fannie Mae. 9.15.2017 5 of 6

MHC Rents Tend to Be Affordable

Despite the lack of new supply, rentals in MHC properties tend to be quite affordable, as shown in the two tables above. 

According to recent data from Datacomp, Fort Wayne, IN showed the lowest listed average rent for a pre-owned 

manufactured home, at just $292 per month. Rent for a new factory-built manufactured home in the metro was higher at 

$656 per month but still below CoStar’s estimated metro average multifamily asking rent of $696. Nationwide, MHC rents 

remain at about half of multifamily rents, making them a more affordable option for a number of renters. 

Median Manufactured Housing Rents vs Multifamily Rents 

The Future for MHCs Appears Stable

While sales transactions involving MHC properties slowed during the first half of 2017, they are expected to rebound. 

According to Datacomp/JLT, there are only about 38,000 existing MHC properties, of which only a few communities are 

expanding, and nearly no new communities are being built. In addition, almost 70 percent of MHCs were built prior to

almost 40 years ago. Meanwhile, there is no shortage of demand for affordable rental units from a wide variety of renters, 

whether they are retirees living on fixed incomes or other lower income households. As a result, the combination of rental 

demand, low interest rates, and dearth of new supply, MHC properties are expected to continue drawing interest from real 

estate investors over the next few years.

$100

$300

$500

$700

$900

$1,100

$1,300

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Multifamily Rents Manufactured Home Rents

Source: Reis, Inc. for asking rents. Fannie Mae tabulations of the 2015 American Community Survey Data for MHC rents.

Note: Based on gross rents and includes utilities; rents based on all manufactured housing rentals including those outside of

manufactured housing communities. 
© 2017 Fannie Mae. Trademarks of Fannie Mae. 9.15.2017 6 of 6

Tanya Zahalak

Senior Multifamily Economist

Multifamily Economics and Market Research

September 2017

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Multifamily Economics and Market Research 

(MRG) group included in these materials should not be construed as indicating Fannie Mae's business prospects or 

expected results, are based on a number of assumptions, and are subject to change without notice. How this information 

affects Fannie Mae will depend on many factors. Although the MRG bases its opinions, analyses, estimates, forecasts, and 

other views on information it considers reliable, it does not guarantee that the information provided in these materials is 

accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these 

views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published 

by the MRG represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie 

Mae or its management.