The Challenges of Rising Home Values

How Manufactured Home Appraisals Provide Insights in a Red-Hot Market

By Mark Johnson

Johnson Mark VP Datacomp home value appraisal inspection
Mark Johnson, Datacomp Appraisal

Even casual observers of the U.S. housing market during the last two years have expressed wonder over the rush of movement in all aspects — from consumer preference changes to the increasing pace of sales activity — and lost on no one is the rapidly increasing cost of homes in most markets.

Housing stock has been low for years, particularly in the mid- and lower segments of the market. Prices were rising steadily before the Pandemic, and with a rush of associated locational and lifestyle changes in combination with near-zero interest rates, material shortages, price increases, inventory constraints and creeping inflation, the top line result is red hot home selling prices increasing by 18 percent across the market as a whole in 2021 according to the S&P CoreLogic Case-Shiller Index.

So, in a sizzling housing market, how is a seller certain to know they’re being fairly compensated for their asset? Likewise, how does a lender move forward confidently knowing their investment in a transaction is sound? How can the seller, buyer, and lender increase the likelihood of a successful transaction rather than facing the potential of a canceled deal? 

As a nationwide appraiser of manufactured homes, Datacomp relies on three primary tools to help us more accurately determine a fair manufactured home valuation in a hot market:

1. Using the most recent comparables possible, even giving consideration to pending sales that are under contract. This means taking the extra time to make some additional phone calls to the community office, in-park brokers, and local real estate agents who may know of a recent or pending sale.

2. Factoring in a sale date adjustment to reflect the fact that the market has been appreciating and a comparable sale from even three months ago would most likely sell for more today.

3. Placing the most weight on the most recent comparable sale. If the market is appreciating at a high rate then home values can be changing on a weekly basis. Understanding that fact and placing more weight on the most recent sale helps the appraiser properly reflect the current value of the home.

Understanding Manufactured Home Valuation Methodologies

When it comes to the appraisal of manufactured homes for sale in communities or where land is not part of the transaction (chattel), there are two predominant valuation methodologies in widespread use today. One is the cost-based approach, which essentially takes what manufacturers typically charge retailers for their homes, applies a retail mark-up, and then an increase or decrease to that value over time based on broad appreciation and depreciation trends nationwide. This is also commonly known as a “book value”, after the printed guide books for manufactured housing values originated by organizations such as the National Automobile Dealers Association or Kelley Blue Book®.

The second is the market-based approach for manufactured housing, which is based on the actual sales of comparable homes in the market area surrounding the subject property. This is the same approach used in the valuation of conventional, site-built real estate, including manufactured homes where the land is part of the transaction. 

In our 35 years of performing manufactured home appraisals, we have had the opportunity to utilize both valuation methodologies through multiple market cycles, depending on the individual needs of the client and subject property. 

While both methodologies have specific advantages and compromises, it has been our experience that an appraisal that market-based approach provides the most consistent, reliable values in volatile markets. 

In a rapidly depreciating market experienced by our industry several decades ago, the market-based valuation approach was relied on by lenders to avoid overfinancing homes and limiting their rate and severity of loss. The market-based approach provides the same safeguards today in a rapidly appreciating market where buyers’ enthusiasm and emotion may be outpacing value trends in their market.

Sea Air, Rehoboth Beach, Del.

The Advantages of a Market-Based Approach in Volatile Markets

1. The market-based approach considers the specific qualities of each market in determining value.

All housing markets are not created equal. This is true not only of the region and state, but also for the local housing market. It’s like asking, “How much is a three-bedroom home in a nice neighborhood in Ohio worth?” That’s a very difficult question to answer because there are so many variables. Location is everything, and we know that there can be vast differences in housing values from one housing market to another even within the same state, even with identical homes.

2. The market approach does not reply upon assumptions about manufacturer, model, or series.

Listing activity or title data alone is often insufficient because it does not always contain complete information. Title data, for example, often shows only the manufacturer of the home, making it impossible to determine the model or the series. Guessing at the model and or the series can result in the value being seriously over or understated.

3. The market approach is not subject to broad appreciation/depreciation trends.

The millions of manufactured homes in this country consist of thousands of combinations of year, make, model, features and amenities. Each resides in a distinct market or submarket throughout the country. Additionally, many are located in one of the more than 43,000 land-lease communities nationwide, also with their own combination of attributes and amenities that contribute to the value of that location. Is it reasonable to assume that a broad approximation of depreciation and value trends could responsively and accurately reflect the individual market factors of hundreds of MSAs and CBSAs throughout the country?

4. Market-based values tend to have a more consistent relationship to actual selling prices.

When we compare manufactured home values to actual selling prices that are used in a market-based appraisal, it is apparent that there is a very consistent relationship between the two. This is the relationship we would expect since both value and selling price reflect market value most of the time, even under short-term variability. Historically when Datacomp has compared other valuation methods and market-based comparable appraised values to the actual sales price of the home, we noticed a much tighter correlation between the comparable appraised value and the sales price. Other valuation methodologies tended to produce results that differed from the sale price more erratically and to a larger degree. 

5. Market-based values accurately reflect the marketplace.

In the late 1990s, Datacomp considered cost-based manufactured home values to be too high. We felt that the high values afforded lenders little protection against loans on homes that were overpriced. Also, the high and inconsistent values created the potential for over-advancing on refi’s. Today the opposite market dynamics are at work, but the market-based valuation methodology continues to be the best tool for understanding the true value of a home.

How to Ensure You Are Able to Get Reliable Valuations in an Evolving Market

Regardless of the strength of the market-based approach, the ability to obtain reliable values within an acceptable timeframe and at a reasonable cost is based on the availability of comps. Everyone wants a smooth transaction with a minimum of delays and unexpected surprises.

At Datacomp, we are fortunate to have a robust database, valued data relationships, and access to the more than $3 billion in manufactured home transactions that pass through the advertising platform of our corporate sibling, MHVillage. Fresh comps, though, are always appreciated.

Whether the market is moving up or down, the simplest thing you can do to ensure the ability of your appraiser to deliver a fair and efficient valuation is to make sure we have recent comps.

As the market has continued to evolve, market dynamics have placed increased pressure on the comp base to accurately reflect these rapidly changing values. Now, more than ever, it’s important to ensure that all of your sales, including cash sales and in-house financed transactions are reported.

If you are a community or retailer, you can easily submit your most recent sales comps using the MHI Community Attributes System website at MHICAS.org. You’ll find links in the navigation sidebar to report new and pre-owned home sales. They can be reported as individual transactions or by downloading a bulk transaction template. 

From time to time, you may also receive a phone call from one of our representatives seeking recent comps for your community or market area. We recognize how busy everyone is, and we appreciate you taking the time to assist us. 

That next comp you provide just might help make the difference on one of your future deals.


Mark Johnson is vice president at Datacomp Appraisal Services, a leading national inspection and appraisal company that provides value information to manufactured housing professionals. Datacomp has a national network of about 800 field inspectors and does appraisal and inspection work for thousands of lenders, credit unions, insurance companies, private individuals and others interested parties across the country.

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