As demand for affordable housing continues to soar, the spotlight on Manufactured Housing Communities (MHCs) is intensifying. With rising rents, high occupancy rates, and growing interest from institutional investors, MHCs are positioned to be one of the most appealing investment opportunities in the housing sector in 2025 and beyond. Let’s dive into why manufactured housing will remain a key player in the market and where the opportunities lie for savvy investors.
The Rising Appeal of MHCs
Manufactured housing has been attracting increasing attention due to its affordability, low operating costs, and self-sustaining nature. Over the last decade, occupancy rates in MHCs have seen consistent growth, with national occupancy rising from 86.5% in 2014 to higher levels today. Rent increases have also been notable, reflecting strong demand. According to experts, these factors suggest the sector’s continued growth.
“Since 2014, occupancy has increased by about 90 basis points each year,” explained Anthony Pino, a manufactured housing expert at Northmarq. “In addition, rents have gone up by 7.7% in the past year alone, which is a clear indication of the sector’s ongoing strength.”
This growth has caught the attention of institutional investors and Real Estate Investment Trusts (REITs), resulting in more consolidation and investment in the MHC space. One of the key factors driving interest is the land-lease model, which significantly reduces capital expenditures for operators. Unlike traditional housing, MHCs operate without direct government subsidies, creating a market-driven, stable approach to affordable housing.
Mike Nissley, co-founder of the Manufactured Housing & RV Group at Colliers, noted, “Manufactured housing often provides the most affordable primary housing option available, aligning perfectly with key investment trends such as affordability and the rising demand for senior housing.”
Why Investors Are Flocking to MHCs
One of the primary reasons for the strong investor interest in MHCs is the operational efficiency they offer. Unlike traditional homes, MHC operators don’t have to manage the habitable dwelling itself. Instead, they lease the land, which reduces expenses and provides an attractive profit margin. Danny Douglas, a senior managing director at Marcus & Millichap, estimates that MHCs operate with an expense load of just 40-55%, depending on the state’s property tax structure. Additionally, with falling interest rates, MHCs are becoming an even more attractive option for long-term investors seeking stable yields.
Furthermore, as interest rates decline, the appeal of MHCs will only grow, especially for investors who are looking for steady, long-term returns. With the increasing demand for affordable housing and a steady stream of new buyers looking for cost-effective solutions, MHCs provide a unique opportunity for investment that combines affordability with stability.
Hot Markets for MHC Investment
Much like traditional multifamily housing, certain regions of the U.S. are prime for MHC investment. The Sun Belt, which includes states like Florida, Texas, Arizona, and New Mexico, continues to be a hotspot. These areas attract significant numbers of retirees and residents seeking affordable housing options in regions with a lower cost of living and favorable climates. States in the Mountain West, including Utah, Colorado, and Montana, are also seeing increased investor interest.
Dustin Wilmer, a first vice president at Marcus & Millichap, notes that the Mid-Atlantic region is another key area, where many mobile home communities are owned by private “mom-and-pop” operators, offering consolidation opportunities for institutional buyers. These regions share common characteristics—robust demographics, job growth, affordable housing, and favorable economic climates.
Another important trend is the growing demand for manufactured housing development. As the need for affordable housing intensifies, the supply of manufactured homes has struggled to keep pace. However, barriers to entry persist, especially in states like California, where high land costs and regulatory hurdles make new MHC development exceedingly difficult.
“In California, developing new MHCs has become nearly impossible due to prohibitive costs and bureaucratic challenges,” said Wilmer. “Many areas still perceive these communities as lower-class trailer parks, and developers face resistance from local municipalities that are hesitant to embrace this type of housing due to outdated perceptions and concerns over tax revenue.”
Challenges and Opportunities for Development
Although the demand for affordable manufactured housing is growing, the ability to develop new MHCs is limited. The high cost of land and stringent regulations on zoning and permits in certain areas make new developments rare, especially in desirable urban and suburban markets. As a result, much of the investment in the sector will focus on upgrading existing properties rather than building new ones.
Robbie Pratt, CEO of Havenpark, a mobile home park operator and developer, notes that although new developments are rare, operators are investing heavily in improving their existing assets. Havenpark, for example, plans to invest more than $30 million across its portfolio in 2024, with further investments anticipated in 2025.
“We see limited development right now, but the focus is shifting to improving the amenities, infrastructure, and overall appeal of existing communities,” Pratt said. “The challenge is not in developing new communities but in enhancing the ones that are already established.”
What 2025 Holds for MHCs
As we move into 2025, many industry players are optimistic about the sector’s future, particularly with the potential for a new administration to bring changes to tax laws that could benefit the industry. After a turbulent period marked by unpredictable market conditions, experts predict that the manufactured housing market will stabilize as capital returns and interest rates ease.
“Based on past experience, I believe owning or investing in mobile home communities will be one of the best choices for 2025,” said Danny Douglas. “The market conditions will be ripe for investors looking for a solid, long-term play.”
As borrowing costs decrease, it’s expected that deal flow will increase, especially in the form of consolidations among REITs and other large investors. At the same time, MHCs’ unique advantages—such as limited competition in desirable areas and their role in providing affordable housing—will continue to drive demand.
“They’re rare, irreplaceable, and in incredibly high demand,” explained Robbie Pratt. “Less than 1% of homes in most major markets are manufactured homes, and getting zoning approval for new MHCs in desirable urban areas is extremely difficult. As such, these communities represent an untapped opportunity for investors, and the demand for affordable homeownership will continue to rise.”
Conclusion
The manufactured housing sector is poised for significant growth in 2025 and beyond. With its affordability, operational efficiency, and steady demand, MHCs present an attractive opportunity for investors looking for long-term stability in a changing market. While challenges remain, such as the difficulty of developing new MHCs in high-demand areas, the sector’s fundamentals—low operating costs, high demand for affordable housing, and increasing institutional interest—ensure that MHCs will continue to thrive in the years to come. For those looking to invest, the time is now to capitalize on the growing appeal of manufactured housing communities.
