Manufactured homes in are selling quickly and for all-time high prices in Metro Vancouver and across B.C. this year but remain the most affordable detached houses on the market.
The action is not being lost on investors, who snapped up 69 home parks during 2020-21, including five in the Lower Mainland.
According to data from Royal LePage Westside Klein Group, most of the sales are taking place in the B.C. Interior and Vancouver Island, which accounted for 30 of the 41 manufactured home parks sold in B.C. last year.
The reason, aside from a wider selection than in the Lower Mainland, is higher capitalization rates, according to agents, despite the jaw-dropping prices being seen for manufactured homes this year in Metro Vancouver.
In March, for example, a 36-year-old manufactured home on a rented pad at the Millcreek Village park in central Coquitlam sold for $70,000 over asking after six days on the market. The double wide, two-bedroom home sold for $520,000, or about four times the price of typical manufactured home sold in the province.
Al Kemp executive director of the Manufactured (Mobile) Park Owners’ Alliance of BC. said the price is reflective of activity in the southwestern B.C. housing market, where people are looking for space and privacy at an affordable price.
“It [higher prices for manufactured homes) is becoming more common, I’ll put it that way,” said Kemp, whose organization represents 50 per cent of B.C.’s 900 manufactured home parks.
Prices for manufactured homes have steadily risen in the last two years, said Kemp, who speculated that the pandemic and the ability to work from home helped spark interest in purchasing these types of homes.
Kemp said manufactured homes can be an affordable option, providing the space of a single-family house without the $1.5 million price tag.
In fact, he said, the $520,000 price paid for this manufactured home is about the same as a condo but has the advantage in that there are “no shared walls.”‘
He acknowledged that owners pay pad rental fees, which can range from $700 to $1,100 a month in the Lower Mainland, but condo owners must pay strata fees and sometimes an additional levy for major repairs.
And unlike condos in tall towers where socializing is limited to a few households on a single floor, people in manufactured homes enjoy a sense of community, where they know their neighbours, Kemp said.
“Residents look out for each other. They supply social events and they take much greater interest in the property because they own the home,” Kemp said.
Over the years the stigma attached to living in a “mobile home” has eased as newer homes are built to national standards, which makes them more like a wood-frame house with drywall, weatherproofing and a 25-year roof, he said.
And with greater respect has come recognition by banks: You can now get a 25-year mortgage to purchase a manufactured home, and refinance if you need to build a shed or a new roof, Kemp noted.
“They’re not trailers anymore. They are not mobile homes anymore. They don’t come with wheels. They don’t come with hitches,” said Kemp.
Many manufactured home park sites in Metro Vancouver and Greater Victoria have been developed into multi-family housing over the years, but manufactured home parks remain popular and plentiful in more rural areas of B.C.
And they can prove a good investment, capable of generating 6 per cent to 7.5 per cent cap rates, according to Vadim Kobasew of Re/Max Penticton Realty in Penticton, B.C.
“Smaller markets offer opportunities to attain higher cap rates than larger centres,” Kobasew noted.
There is also the appreciation factor.
Last year Kobasew sold a 12-pad site with seven additional rental cabins on 3.3 acres in Oliver, B.C. Assessed at $890,000, it sold for $1.52 million, 71 per cent above the assessed value. The capitalization rate is 6.2 per cent.
This May he sold a 48-pad manufactured home park, on city services in Castlegar, B.C., for $100,000 over list price and $600,000 above its BC Assessment value, at $3.6 million.
Klein Group’s date provides insight into how park values have increased provincewide.
In pre-pandemic 2018, 40 manufactured home parks sold in B.C. at a total volume of $46.0 million, or $1.15 million per park. Last year, 41 parks sold for a total of $71.5 million, or $1.73 million per park.