With home prices surging, many buyers, particularly millennial first-timers, are seeking out more affordable housing. And that means taking another look at alternatives like mobile homes.
Yes, mobile homes often get a bad rap. But their values have been rising faster than single-family homes, according to a recent report from online financial services marketplace LendingTree. These homes have become even more appealing recently as they support the on-the-go, work-from-home lifestyle during the COVID-19 pandemic.
“Because single-family home prices are so high, some middle-class buyers—especially younger ones—could increasingly turn to mobile homes,” says LendingTree senior economic analyst Jacob Channel. “Even though the value of single-family homes is rising very quickly, the lower price point of mobile homes allows for an even faster ascent.”
LendingTree compared the median prices of mobile homes and single-family homes in all states except for Hawaii using the most recent U.S. Census Bureau data available between 2014 and 2019. Analysts found that while mobile homes are far less expensive than single-family homes, their median values escalated faster in 27 states than that of single-family homes over the same five-year period.
The median value of a mobile home was $53,300 and they have appreciated 39% from 2014 to 2019, according to the report. That’s 6 percentage points higher than the median appreciation of single-family homes. And mobile homes are a fraction of the price, costing about $190,000 less than single-family homes.
“Millennials are definitely getting priced out of the current real estate market,” says Jason Dorsey, a generational expert at the Center for Generational Kinetics, which does market research on millennials and Generation Y.
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These folks may be experiencing bidding war fatigue as they compete for and often lose out on properties in today’s seller’s market.
“We’re seeing a lot of pressure on millennials to come up with even larger down payments as well as the higher monthly mortgage and holding costs,” adds Dorsey.
The most affordable mobile homes are in Nebraska, where the median home value is $21,800 appreciating by 8% over the past five years. That’s compared with a median of $172,700 for single-family homes in the state, where homes are appreciating by an eye-popping 29%.
Iowa had the second lowest-priced mobile homes, with median values of $23,300 with 15% appreciation.
“Millennials are taking a new interest in mobile homes because it fits their remote or hybrid work lifestyle as well as potentially giving them more options for green space and flexibility of geography,” says Dorsey. “We expect this trend to continue as long as home prices stay elevated and hybrid or remote work continues to be an option.”
Jeanette Settembre is a New York City-based journalist covering food, travel, lifestyle, and real estate.