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by Dave Shanklin It's springtime in California, and bidding wars over mobile homes in parks are heating up. When I say 'mobile home,' I'm talking about pre-HUD Code homes. In the most expensive county in CA, Marin Valley Mobile Country Club is a city-owned 55+ MHP with views of the San Pablo Bay and offers very affordable space rent of $550 - $580. Recently, a 1975 double-wide was the subject of a "bidding war" in this park. This pre-Hud Code home comes with water views, is on a hill, and has an asking price of $173,000. The seller received three offers in late March: two for all-cash, and one contingent upon financing. The buyers in need of financing did get loan approval and were offered a 15-year loan at 9.5%. No word yet (as of deadline for this issue) as to which offer the seller will accept. Many mobile home shoppers might think that $173,000 for a 1975 MH on a rented lot in a park is overpriced. But prices in this park have seen much higher levels in recent years. And according to my appraiser, values in this park have bottomed as of last fall and are steadily climbing back up. This park is not alone in this trend. In wine country, the same appraiser has documented at least two parks whose values are up 30% since Dec. 2009. Sequoia Gardens and Rancho San Miguel in Santa Rosa have been hot, hot, hot this year. In these senior parks, as well as most of the parks in CA, over 90% of the MH's were built in the early 70's ("pre-Hud's"). Prices seemed to have bottomed last fall with a floor of $40,000. Buyers couldn't resist these bargains and plucked most of them up with all cash offers. And now the prices in the same parks for homes of the same vintage have a new "floor" of $50,000 and some are on the MLS at $69,000. I closed a loan in March in Rancho San Miguel on a 1974 double-wide for $50,000. The same home would have appraised at $40,000 last fall. My lender, which is a national lender that finances MH's in parks exclusively, was very skeptical about the appraiser's claim that values have spiked 30% in only three months. Their skepticism caused a one-week delay in getting the appraisal cleared, but the underwriter finally agreed with my appraiser and cleared the appraisal at $50,000. And in the state's capitol, Sacramento, a bidding war was fought over an MH in a family park. This time the subject home was a 1977 double-wide. The seller received two full-price offers: one for all-cash, and the other contingent upon financing. And both offers were contingent upon park approval. In other words, the park pulls credit and conducts a background check before approving anyone for residency. The all-cash buyers were declined by the park due to a foreclosure, and the other buyers were approved to move in. They are now in escrow and have loan approval. My national lender offered them a 15-year loan at 9.25% with 15% down. Price: $24,000. I love these "bidding wars". This hasn't happened since the last peak of this market in 2005. You can thank the IRS tax credit and super low prices for this uptick in buying activity.## |
