Understanding Mobile Home Depreciation: Top 5 Causes

Unlock the Mystery: Discover How Land Ownership and Construction Influence Mobile Home Value Decline.

why do mobile homes depreciate

First things first – not all mobile or manufactured homes depreciate at the same rate, or if at all. But, many do, and for a variety of reasons.

Let’s look at why mobile homes depreciate and what you can do about it.

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Do mobile homes hold their value?

For the most part, no, especially for manufactured homes placed in mobile home parks.

Mobile homes on private land actually appreciate because the land itself does.

A well-maintained manufactured home on a piece of land will grow in value, while one in a park will lose value. And one on a permanent foundation in a mobile home park with rising rent will lose value the most.

What is value depreciation?

Value depreciation is a big term that just means something loses its monetary value over time – vehicles, machinery, mobile homes.

Actual land is the only asset that increases in value over time.

5 Reasons Why Mobile Homes Depreciate

Mobile homes depreciate for a variety of reasons.

Location, Location, Location

It’s about where the mobile home is located. The value will decrease slower if it’s near or accessible to amenities.

Trailer parks tend to cause mobile homes to depreciate, while those on private land actually have a chance of some appreciation.

The neighborhood or community that you’re parked in can affect the value of your mobile home just from perceptions, regardless of whether they’re right or wrong.

Real Estate vs Private Property

Mobile homes move; thus, they are property with the same licensing and title deeds as vehicles. That’s what makes it your personal property.

Real estate, however, includes a brick or stick-built home because you can’t just pick it up and move it (the can change with a permanent foundation).

Condition of the Mobile Home

The depreciation rate depends very much on the condition of the mobile home.

A well-maintained manufactured home loses value at a far lower rate than those that are not well kept.

You may not get the total amount of your investment back, but you can resale a good-condition mobile home at a higher rate.

Value

You want to hold onto as much value as possible when you’re preventing a mobile home from depreciating.

Economic value doesn’t only mean maintaining the structure. You want to pay attention to the overall aesthetics of the entire property.

How do you determine the value of a mobile home?

One of the easiest ways to calculate the value of a mobile home is through the National Automobile Dealers Association (NADA). NADA does charge for the value reports.

If you don’t mind doing a little reading, you can purchase a copy of the NADA Manufactured Housing Appraisal Guide (or blue book) at your local bookstore or public library.

The Age of the Mobile Home 

Mobile homes depreciate at a rate that houses don’t. It’s because manufactured homes come with a bunch of different moving parts, and those parts wear and tear over time.

Even the best maintained mobile home still depreciates due to just the wear and tear.

Perishability 

A well-taken-care of manufactured home has a lifespan of 30 to 55 years. Once it’s hit the perishability phase, it’s near impossible to resale it for any real price.

Mobile Home Trends

The novelty of anything wears off over time, and it then becomes obsolete. The same goes for manufactured homes. What was “in” five years ago is most likely not still a thing.

Mobile home manufacturers constantly update, upgrade, and implement new building methods. And, it’s human nature to want the newest and coolest, making it a reason mobile homes naturally depreciate like a vehicle.

What else impacts my mobile home value?

You’ve got even more factors to consider when it comes to the rate of depreciation.

  • Anytime there’s buying and selling involved, inflation rates play a part.
  • The housing market is competitive, and that includes manufactured homes.
  • The initial price paid you paid is part of the deprecation.
  • Mobile homes are part of a supply and demand market.
  • Where you park the home matters when it comes to value.

How do I add value to my mobile home?

We’ve talked a lot about boring depreciation, so now let’s look at inventive ways to appreciate your mobile home without emptying the bank on a big addition.

Upgrade Appliances

You can head off a lot of the depreciation by upgrading appliances one at a time. And, you want to go with energy-efficient upgrades because they provide a pretty solid value difference.

Paint Job

Inside or outside, paint is the basis for any aesthetic or remodel job

And while it’s tempting to play around with bold and bright colors, you will need to stick to neutral shades if you are attempting to make a sale.

You may think red living room walls are living your best life, but someone else may get completely turned off from the potential purchase.

Curb Appeal

Mobile homes need a curb appeal, just like real estate. A well-kept yard and flower beds add value to your mobile home.

Adding small stone walkways and a few bird feeders are quick and simple ways to add to the curb appeal.

Upgrading Little Things Matters

If you do the little things as you go, you’re doing a lot for the overall big picture.

Adding bougie shower heads, hanging sparkly chandeliers, and upgrading faucets are just a few ways you can add value along the way., 

FAQs

What is the average depreciation of a mobile home?

You’re looking at an average depreciation rate of around 5% every year. The percentage does increase as the mobile home ages. 

How many years does a mobile home last?

A traditional mobile home can last between 30 and 55 years as long as it’s well-maintained.

Why do manufactured homes not hold value?

From the moment they leave the factory, a mobile home does begin to lose some value (just like a car). The most significant reason is that it is mobile, and moving does its fair share of wear and tear.

How long does a mobile home roof last?

The average lifespan of a mobile home roof is 13 years. And its durability depends heavily on the climate and weather conditions.

Why mobile homes are a bad investment?

Mobile homes can be a poor investment due to the tendency for their value to decrease over time, especially when located in mobile home parks. This depreciation occurs as the homes age and become more difficult to relocate, making it challenging to sell them for a price equal to or higher than the initial purchase.

Do you regret buying a mobile home?

For certain individuals and families, purchasing a mobile home may lead to regret. While it can be a suitable choice for some, it may not be the optimal decision for others. Mobile homes can serve as cost-effective initial residences for individuals, couples, or small families.

Do mobile homes still depreciate in value?

Mobile homes still depreciate in value, typically at a rate of around 3-3.5% per year. Calculating the depreciation of your manufactured house can assist in determining its current worth with reasonable accuracy.

What is the average useful life of a mobile home?

The average useful life of a mobile home can range from 30 to 50 years, similar to that of a traditional home, as long as it is regularly maintained and repaired as necessary. This extended lifespan is primarily due to stringent manufacturing regulations that mobile homes now adhere to.

Do manufactured homes always depreciate?

Manufactured homes do not always depreciate in value; instead, they follow market conditions similar to site-built homes.

What type of asset is a mobile home?

A mobile home is considered personal property, not real estate, when it is purchased. Furthermore, if the land on which the home is located is rented rather than owned, the mobile home can only be classified as personal property and cannot be converted into real estate.

Are trailers a depreciating asset?

Trailers are indeed a depreciating asset, similar to other RVs. Initially, the depreciation rate of travel trailers is comparable to that of motorhomes for the first five years. However, while motorhomes continue to depreciate, the depreciation rate of travel trailers levels off after this period.

Do mobile homes have good resale value?

Mobile homes do not have a guaranteed resale value, but this is also true for stick-built homes. However, as long as manufactured homes are well-maintained, they generally appreciate in value over time.

What increases the value of a mobile home?

The value of a mobile home can be increased by making energy-efficient improvements such as installing new doors and windows, as well as by conducting regular maintenance. It is important to involve a professional throughout the process to ensure optimal results, whether you plan to sell the home or live in it for an extended period of time.

Why do modular homes depreciate in value?

Modular homes may experience depreciation in value due to the need for urgent repairs, which can deter potential buyers from making offers and result in a lower sale price. However, it is important to note that a well-maintained modular home is likely to have a higher resale value compared to an older stick-built home that has been neglected and is in poor condition.

Do tiny homes appreciate in value?

Tiny homes do not necessarily appreciate in value like traditional homes do, and in fact, they can depreciate in value, especially if they are highly customized. Additionally, due to their niche market, selling a tiny home may be more challenging in the future.

Can houses depreciate?

Houses can depreciate in value, which means that their prices can decrease over time. While buying a home offers various advantages such as stability, customization, financial security, and the potential for value appreciation, it is important to acknowledge the possibility of depreciation. Depreciation occurs when the market value of a house declines.

What are the disadvantages of living in a mobile home?

Living in a mobile home has several disadvantages, including the limited availability and high cost of appropriate land, the enduring negative perception associated with mobile homes, the strict requirements imposed by lenders, and the potential for a decrease in long-term value.

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