High-end mobile home parks may become part of the St. George landscape

Manufactured homes are becoming the go-to option to affordable housing. Soon high-end mobile homes may be featured properties for sale in St. George. Elko RV Park Elko, Nev., Date undefined | Photo courtesy Mountain West Commercial Real Estate, St. George News

ST. GEORGE — High-end mobile home parks with additional space for recreational vehicles may be coming to St. George in the near future.

Salt Lake City-based Mountain West Commercial Real Estate is eyeing St. George and Washington County for a potential expansion of their business model to Southern Utah, which will include manufactured homes – a euphemism that once upon a time referred exclusively to a mobile home design.

Today’s manufactured homes bear little resemblance to the mobile homes that were bought prior to 1976 when all manufactured homes were considered “mobile.”

Now, the term mobile homes have been exchanged for manufactured homes, which also include prefabricated homes and recreational vehicles with more than 400 square feet of living space.

In the past year, Mountain West has continued to expand and broaden its services with its latest extension in developing manufactured housing parks for mobile homes as well as recreational vehicle investment opportunities for its clients.

The advantage, industry analysts say is that high-end mobile homes usually offer a choice of floor plans and high-end interior options.

Mobile homes aren’t what they used to be. Now they come with high-end amenities like a fireplace to warm the toes on a cold winter night. | Stock image, St. George News

They can range from basic models to elaborate designs featuring vaulted ceilings, drywall, fully equipped kitchens, bedrooms with walk-in closets and bathrooms with recessed bathtubs with some offering a whirlpool option.

With commercial real estate offices in Utah – including St. George – Idaho, Wyoming, Montana and Nevada, for more than a decade, Mountain West has specialized in retail properties, industrial space, office complexes, land sales, hospitality real estate and multifamily homes.

Now they have their sights on bringing attainable housing communities to Southern Utah through manufactured housing.

Matt Draeger, Mountain West manufactured housing specialist with more than a decade of construction industry experience and three years in manufactured homes and RV investment experience, said he realizes that people are now are beginning to see these are not the double or triple wide mobile homes of the past.

Still, a stigma of their quality exists, Draeger said.

The past and present of manufactured homes

According to K. Hovnanian Homes, a nationwide homebuilder, mobile homes appeared on the scene in the early 1900s, when, in order to find employment, people had to move frequently to find jobs wherever they could.

The structural designs of these mobile homes resembled what could be thought of today as a modern entry-level camper – sparse, lacking amenities, cramped and usually located in a dilapidated community.

The first mobile homes were built on steel I-beams that ran from end-to-end and could be moved for set up on concrete blocks, wooden blocks, metal stands or a concrete foundation.

The home came with an exposed trailer hitch and wheels in order to make it movable. These homes were mass-produced to satisfy the demand, but the industry had no uniform building quality or safety standards established.

“Placing the unwarranted stigma aside,” Draeger said, “with manufactured housing, they offer a similar investment to luxury multifamily apartments.”

Industry analysts say, manufactured homes offer financially stable residents – who are unlikely to be evicted for nonpayment of rents – a higher yield on investment. With low supply and high demand, minimal turnover and few operating costs manufactured housing could be a reasonable investment to any portfolio.

“I saw manufactured housing as a diamond-in-the-rough niche in investment real estate,” Draeger said. “It has many investment opportunities that aren’t being capitalized on by the industry at large. It’s an overlooked segment of commercial real estate providing outsized value and returns to smart investors.”

A lot of people realize the quality and growing opportunity that manufactured housing presents, added Draeger.

High-end mobile home parks are springing up every. The lower price point makes them attractive to first-time homeowners as well as residents over age 55. Montpelier, Ind., Date undefined | Photo courtesy Mountain West Commercial Real Estate, St. George News

When it comes to manufactured housing communities, because of the bias people have, there is a lot of resistance to having these types of communities just around the block. It’s the “not in my backyard,” mentality, Draeger said.

“However, when they are properly cared for and maintained, they are just like another neighborhood with low-income housing,” Draeger said, adding that the housing crunch in the West has many people looking for homes or apartments up against unattainable costs.

Attainable housing in St. George

Shirlayne Quayle, St. George director of economic vitality and housing is open to possibilities.

Although Quayle is not sure what Mountain West wants to bring to Southern Utah or if it is a viable business endeavor it still is an intriguing concept, she said.

“We are interested as a community in any and all opportunities to bring more attainable housing into our market,” Quayle said. “But, this depends on the community, the neighborhood and zoning. The issue is a fact of life and municipalities across Washington County are looking at working with developers to bring more attainable priced housing into the area.”

Because home prices and rental apartment costs are so inflated, many families find themselves between a “rock and hard place financially,” Quayle added.

“I think that’s why bringing more supply into our market is one of the key ways to create housing at an attainable price point that can be passed on to our consumers,” she said. “I cannot comment on something that hasn’t happened yet … but in general this is good news. If Mountain West does come to St. George with manufactured housing we will work with them as we do with all developers to create more attainable housing.”

Manufactured homes are not just mobile homes, but the industry also includes certain categories of recreational vehicles. Elko, Nev, Date undefined | Photo courtesy Mountain West Commercial Real Estate, St. George News

Approximately 22 million people live in manufactured or mobile homes in the United States, according to manufactured housing industry statistics. Homeowner stats indicate 56.4% of mobile homeowners have lived in their current home for more than 10 years.

Recently, manufactured homes are getting a lot of cachet by high-end module homes – yet another term to describe another type of manufactured home – but module homes cost $200,000 or more depending on upgrades rather than $100,000 plus upgrades for a mobile home.

Typically mobile home price ranges between $20,000 for a fixer-upper to $150,000 or more for a fully upgraded single, double or triple wide home. Rentals average $900 less than a traditional apartment of the same size.

Manufactured housing investment potential

Chad Moore, managing director for Mountain West Commercial is bullish on the growth of manufactured homes.

Manufactured home construction is a multi-million industry. In 2020 factories shipped more than 94,000 homes to buyers across the United States. |  Photo by Riverview Homes Inc via Wikimedia Commons, St. George News

“Manufactured homes are not being built the same way they used to be,” Moore said. “There is really no difference between our homes now and how a traditional home is built aside from a few key things that we do such as help the owner save power and have a positive impact on the homeowner’s buying power.”

Currently, Mountain West Commercial Real Estate has a footprint in other parts of Utah, Idaho, and Arizona with plans to start expanding into St. George and Cedar City by the end of the year.

Draeger has been tasked with overseeing the potential of Southern Utah.

“St. George will be an excellent market for these types of communities,” Draeger said. “The weather is perfect. There are people who want to live here and the town offers a great quality of life. It’s really admirable to see what the town has become. These types of homes are a good way to keep people who live in a community able to stay in that community. They will also attract people who want to live in St. George and take a leap of faith to move to town.”

Mountain West Commercial Real Estate was founded approximately 11 years ago with a different mindset and a different portfolio mix.

“As everyone knows housing is incredibly tight right now,” Moore said. “It’s very challenging to find an attainable house throughout the state of Utah. Manufactured housing represents a unique opportunity to step into a home at a lower price point.

Mobile home parks are not what they used to be. Now they offer tree line landscape and amenities such as pools, spas and clubhouses with weight rooms often found in high-end communities, date and location not specified | Photo by Brett VA via Wikimedia Commons, St. George News

“Ideally a low price is attractive to younger first-time buyers and more established over 55 residents. These homes open ownership up to a huge market of people who are willing to live anywhere they can to make economic ends meet,” Moore added.

Every media outlet across the West has reported that housing prices are overheated. The result of overpriced homes is pricing many people out of the market even for rental apartments. A high-end mobile home is a viable alternative to being mortgage or rent poor, Moore said.

“Being priced out of the market is happening to hundreds and hundreds, maybe even thousands of people every single week in Utah,” he added.

Housing and income statistics

According to some of the most recent statistics, between 1980 and 2017 the permanent St. George population grew from slightly more than 26,000 to nearly 166,000 — an increase of more than 500%.

The growth curve is only going to get steeper, Quayle added. During the next 35 years, Washington County is expected to grow by nearly 230%.

Less than a handful of years ago, the average median income of county renters was a debilitating factor to homeownership. A household with an annual income of $54,022 could spend $1,351 a month on housing expenses or 30%.

“If you are spending more than 30%, you are considered cost-burdened,” Quayle said.

In St. George, there are more than 4,000 households considered to be cost-burdened. For households making less than the 30% barrier, it makes it hard to make ends meet, city officials said.

With an income of $27,010, a household can comfortably spend $675 on monthly housing expenses for renters, and for the people that make $16,206, their expense cap is $405 per month. Washington County’s average wage in 2017 was $2,912 per month or $35,000 annually.

For potential homeowners, the mortgage picture is not much better.

Maximum mortgage loan amounts have dropped from more than 5% in 2017 to a low of slightly more than 3% as of Oct. 22, 2021, for a 30-year fixed loan resulting in home prices across the West escalating.

According to Zillow, the median sales price for a home in St. George is $479,045 with Homes.com setting the median price at $483,800 or a $4,755 difference. For the purpose of this article, the numbers are based on Zillow’s median price.

The values are seasonally adjusted and only include the middle price tier of homes. Saint George’s home values have gone up 35.4% during the past year.

The hurdle facing homeownership is more than likely the buyer’s debt to income ratio.

Even with good credit if a buyer is carrying too much debt they may be disqualified. Conversely, even with a low credit score but no debt, a lender may take a chance on a loan.

The ins and outs of buying a home

While different lenders will offer various incentives including a range of fix rate interest loan percentages based on credit scores, lenders also consider the annual percentage rate, or APR of the home for sale.

The APR is reflected as a percentage a homeowner will pay to borrow the money to close the deal.

This rate does not reflect on other fees or any charges associated with the loan – such as points, inspection, closing costs, and Homeowner Association (HOA) fees, but calculates the actual monthly mortgage payment. The interest rate depends on factors such as loan type and credit score.

St. George housing costs

Asking prices for single-family homes in St. George runs a wide spectrum.

On the low end of a typical home price, it often starts at $200,000, but ask any longtime St. George resident and they will tell you if a $200,000 home exists the buyer will not get much in the way of a turnkey home.

Better Mortgage Co. was used for comparison purposes.

At this price point – in the 84790 zip code – with a credit score of 620 – 639 on a 3.375%, 30 year fixed rate loan, 10% down, the upfront costs could run as high as approximately $2,957 with a monthly mortgage of $796.

When the purchaser’s credit score reaches 740 the number change slightly.

At this price point, the loan rate is 2.75%, upfront costs could run as high as approximately $3,204 with a monthly mortgage of $735.

With the median price of a home in St. George at more than $450,000 the number change dramatically.

At this price point – in the 84790 zip code – with a credit score of 620 – 639 on a 3.125%, 30 year fixed rate, providing 10% down, the upfront costs could run as high as approximately $9,415 – with a monthly mortgage of $1,732.

When the purchaser’s credit score reaches 740 the number changes dramatically.

At this price point the loan rate decrease to 2.625%, upfront costs could run as high as approximately $3,204 with a monthly mortgage of $735.

For the lucky few who can afford their $1 million home, a high credit rating and a down payment of 20% is essential for closing a sale.

With a credit score of 700 – 719, the loan rate is 2.625%, upfront costs could run as high as approximately $14,047 with a monthly mortgage of $3,214. With a perfect credit score of 740 or more, only the upfront costs could decrease slightly to $13,047. All of the other factors for a $1 million remain the same including the mortgage.

Note: These are approximate numbers based on a one-day snapshot in time on Oct. 22, 2021, and on one lender’s specific offers. Percentages and costs vary.

“When we look at what that means in terms of our income, that just doesn’t work,” Quayle said in a previous interview. “There are not a lot of homes for $200,000 out there, and whether you are renting or buying it’s a monthly chunk of anyone’s income.”

Background research was provided by Forbes writer Whitson Huffman, Forbes Councils Member, who contributed source material to this article from his 2020 story, “Why Manufactured Housing is a Strong Foundation for Investment.”

The Manufactured Housing Institute and Movity and Bank Rate also contributed source material to this article.

For more information click on the links provided.

Copyright St. George News, SaintGeorgeUtah.com LLC, 2021, all rights reserved.

Free News Delivery by Email

Would you like to have the day's news stories delivered right to your inbox every evening? Enter your email below to start!