Costly stick-built homes give boost to prefab sales
November 26, 2013
Rising home values and a shortage of housing in rural areas mean more homebuyers are turning to new manufactured homes — though the industry is seeing some of the same rapid appreciation experienced in the market stick-built homes in the past year.
Four or five years ago, Leo Poggione, president of Craftsman Homes on Glendale Avenue in Sparks, snapped up mobile homes for rental properties for as little as $60,000 to $65,000 each. Now, Poggione says, it's hard to find anything under $100,000, and there usually are competing offers.
New manufactured homes start around $55 per square foot and typically go up to about $120 to $130 a square foot depending on size and amenities. Sizes range from about 800 square feet to 2,700 square feet, but some buyers have purchased custom manufactured homes as large as 4,000 and 5,000 square feet using multiple pre-fabricated sections.
Today's manufactured homes aren't the same as many of the old and dilapidated double-wide units found in parks throughout the Truckee Meadows and in smaller communities. Upgraded amenities include granite counter tops, raised-panel cabinetry, tile flooring and hardboard siding similar to what's being offered by new residential homebuilders.
Michael Smith, general manager of Clayton Homes of Carson City, says sales of new manufactured homes are up 20 percent this year versus 2012. Clayton Homes has an office in Elko and is re-opening its Las Vegas branch, which folded during the housing downturn.
The mining industry was the main driver of sales during the bleak years of the recession, Smith says.
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"Mining really kept us alive, but we are starting to see it picking up in Stagecoach, Carson City and Reno. But over the last few years Winnemucca and Elko have been really strong."
Poggione says nearly 100 percent of his company's sales in northeastern Nevada the past few years are related to the mining industry. Craftsman Homes sold 30 manufactured homes to Allied Nevada Gold Corp. for the man camp the Reno mining firm built in Winnemucca, and Craftsman installed each of the 154 homes Allied Nevada purchased for the camp. Heavy sales in the region prompted Craftsman Homes to open an office in Winnemucca.
Manufactured homes not located in mobile-home parks are usually sold to homeowners who buy a parcel of land and have a concrete foundation built for the home. Manufactured homes are built out-of-state and trucked from a factory to the location.
The dearth of inventory of stick-built homes in the region led to a run-up in pricing — the median sales price for existing homes spiked 28.5 percent year-over-year in September, the Reno/Sparks Association of Realtors reports. With the lack of inventory and high costs for stick-built homes in northern Nevada, more and more buyers are giving consideration to manufactured homes.
Clayton Homes recently brought on additional sales and service coordinators to handle the increased in volume, and it works with a wide network of contractors who install the homes on location and build the foundations.
The Carson City office of Clayton Homes in April was named the retail sales center of the year for the West region by the Manufactured Housing Institute. Smith says his firm sees many sales from previous customers or through referrals from previous clients.
"Nevada has got so many small communities out there that if you put in a home and take care of them, you get a referral that leads to repeat business and future sales," he says.
Craftsman Homes and Clayton Homes are among the few manufactured home dealers left in the region, Smith notes, though companies from Boise and Twin Falls also do business in northern Nevada.
The resale market also has been strong. Sales of mobile and manufactured homes are up about 30 percent this year, says Todd Anderson, founder of White Knight Enterprises, a Reno broker of manufactured homes and real estate. However, prices in the resale market remain flat year-over-year.
White Knight specializes in manufactured-home sales on leased land in mobile home communities. While it's a seller's market for site-built homes, Anderson says it's still a buyer's market for manufactured homes.
"Manufactured homes are very, very affordable," Anderson says. "When the market was booming in real estate, it was the same trend in manufactured homes. When prices go up in site-built they go up in manufactured. But the people who can't afford site-built homes are purchasing manufactured homes."
Anderson says manufactured homes also are attractive for buyers who have gone through a foreclosure or a costly divorce.
"A lot of times people who move into manufactured homes are first-time buyers or they are downsizing through foreclosure, short sales or divorce," he says. "When foreclosures and short sales became a trend, a lot of people were losing their homes and manufactured was a way for a future. They could buy manufactured in cash, or if they were going through a bankruptcy, manufactured homes were a good alternative."