SIC 6515 Operators of Residential Mobile Home Sites

SIC 6515

This category covers establishments primarily engaged in the operation of residential mobile home sites. Establishments primarily engaged in the operation of sites for overnight or transient use for travel trailers are classified in SIC 7033: Recreational Vehicle Parks and Campsites.

NAICS CODE(S)

531190

Lessors of Other Real Estate Property

INDUSTRY SNAPSHOT

Mobile homes, commonly called manufactured housing, accounted for about 8 percent of U.S. housing in the mid-2000s. Approximately 22 million Americans lived in 10.5 million manufactured home. Thirty percent, or 3.15 million, homes are located within mobile home communities and the remaining 70 percent are located on private property. In 2004 the industry shipped 130,748 manufactured homes, reflecting relatively flat growth compared to 2003. The manufactured housing community management market is highly fragmented industry with the top five management companies controlling just 6 percent of the market in the mid-2000s.

Increasingly, mobile homes are approaching the average size and amenities of conventional housing units, as the share of mobile homes consisting of multiple sections has grown. Mobile homes are coming into direct competition with conventional units, especially as double-wide units have gained market share. In the mid-2000s multisectional housing accounted for 80 percent of all manufactured housing shipments.

The industry remained generally unsophisticated in the 1980s in comparison to other sectors of the housing ownership and operation industry. However, during the 1990s, it underwent a transformation based on its significant affordability advantage over single-family, site-built housing. As a result, in 2004 one out of every ten new home builds was a manufactured house.

ORGANIZATION AND STRUCTURE

Land owners who get permission from local zoning authorities can develop a mobile home park with a relatively small investment. The only significant costs involve bringing utilities, including water, gas, sewerage, and electricity, into each site and developing automobile access within the park. For parks that are unpaved, improvement costs are negligible compared to the costs associated with traditional site-built housing communities. Because there are so few barriers to entry, the mobile home operation industry has traditionally been dominated by small companies. According to the U.S. Census Bureau, almost 8,000 firms operated as lessors of manufactured mobile home sites, generating revenues $4.4 billion.

How the Industry Operates

Mobile home buyers can choose "singlewide" homes which in the mid-2000s averaged 1,120 square feet in size, or "doublewide" multisectional homes, which averaged 1,715 square feet. Some new multisectional homes also allow "triplewide" structures. Although residents usually rent their lots, most buy their dwellings. The standard purchase agreement allows the dealer a markup of 20 to 25 percent over the wholesale price of the home. The dealer sometimes arranges financing of the home through the manufacturer, though banks finance most mobile homes. Additionally, the dealer usually assumes responsibility for delivering the home to a community and installing it on a lot.

Many local authorities have used zoning laws to ban mobile home parks, restrict their size, or relegate them to the least desirable parts of a community. With supply constrained, occupancy rates have historically remained above 90 percent, which compares favorably with apartment buildings.

Turnover of mobile home residents is very low with only 5 percent for the actual homes and 10 percent among homeowner-renters who generally sell their homes in place before relocating. Turnover is so low because today's larger single-section and multisectional homes are quite difficult and expensive to move. Rent in manufactured housing communities is typically one-third that of nearby townhouse apartments.

In addition to mortgage payments to the manufacturer of their home, most mobile home park residents pay rent to their community owner/operator. Monthly rent typically ranges from $150 per month, although high-end developments with amenities usually charge more than $500 per month. Most fall in the range of $200 to $400.

One reason park owners and operators do not allow residents to buy lots is that they may be able to sell the land for higher prices in the future. In fact, many land owners operate mobile home parks with the specific intent of eventually converting, or selling, the property for a more lucrative purpose as it becomes more valuable.

Regional and Demographic Variations

Profiles of typical mobile home parks differ principally by region and by the age and economic status of its residents. For instance, some communities cater to retirees, offering smaller lots for smaller homes. Other communities cater to families and provide big yards, more...

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