Q4 Manufactured Housing REIT Highlights
Equity Lifestyle Properties
- Rental Rates and Home Values: ELS reported 5.8% year-over-year rent growth across its manufactured housing portfolio in Q4 2024. Average home prices in its communities remained approximately $80,000, highlighting manufactured housing’s affordability advantage compared to traditional site-built homes.
- Occupancy: Manufactured housing occupancy for ELS was highlighted in key markets, with the California portfolio being more than 98% occupied. There are opportunities to increase occupancy above 95% in Florida and Arizona, supported by stable long-term residents and strong demand for age-restricted and resort-style communities in Sunbelt markets.
- Income and Expense Information: Same-property NOI grew 7.6% year-over-year in Q4 2024, reflecting strong rental growth. Full-year property operating expenses increased by 2.6% compared to 2023.
Sun Communities
- Rental Rates and Home Values: Sun achieved a 5.5% increase in weighted average monthly rent across its manufactured housing portfolio, contributing to a 6.8% increase in same-property MH revenues.
- Occupancy: Occupancy for Sun’s manufactured housing portfolio ended the year at 97.6%, supported by strong demand, particularly within age-restricted communities.
- Investment and Transaction Activity: Sun completed approximately $570 million in asset sales, including the $5.65 billion sale of its Safe Harbor Marinas platform, allowing the company to redeploy capital toward core manufactured housing and RV investments and reducing net debt-to-EBITDA to between 2.5x and 3x at closing.
UMH Properties
- Rental Rates and Home Values: UMH achieved a 7.9% increase in same-property rental income for 2024 – additionally, UMH anticipates continuing to achieve 5% rent increases throughout the portfolio. As conventional home sales are currently a bit blocked, UMH expects more people to downsize and buy homes from them in cash, with higher-end homes priced between $250,000 and $300,000, and lot rents around $750 per month.
- Occupancy: UMH reported an increase in occupancy of 216 units, resulting in an increase of 70 basis points. Stabilized communities had occupancy closer to 94%. Infill efforts, including 190 expansion sites completed in 2024, contributed to occupancy growth, with a continued focus on converting vacant lots into revenue-producing rental sites.
- Income and Expense Information: UMH achieved 8% same-property NOI growth for the quarter, benefiting from higher rents and occupancy gains.
Thoughts from the CEO’s
Macroeconomic Highlights
Q4 2024 Manufactured Housing REIT Data Overview
| Equity Lifestyle Properties (ELS) | Sun Communities (SUI) | UMH Properties (UMH) | |||||
| Ending Occupancy (Same Store) | 2024 | 94.90% | 97.60% | 87.80% | |||
| 2023 | 94.90% | 97.30% | 88.50% | ||||
| YoY MH Rental Income Increase (Same Store) | 2024 | 5.8% | 6.7% | 7.9% | |||
| 2023 | 7.1% | 7.5% | 10.9% | ||||
| YoY MH Expense Increase (Same Store) | 2024 | 0.3% | 5.3% | 8.0% | |||
| 2023 | 8.7% | 4.8% | 0.2% | ||||
| YoY MH NOI Increase (Same Store) | 2024 | 7.6% | 7.1% | 7.8% | |||
| 2023 | 5.2% | 8.6% | 18.9% | ||||
| Rent Per Site (Same Store) | 2024 | $870 | $708 | $546 | |||
| 2023 | $824 | $670 | $524 | ||||
| Q4 MH Acquisitions | 0 | 0 | 0 | ||||
| Total MH Sites | 73,075 | 115,120 | 25,896 | ||||
Q4 2024 Manufactured Housing Operating Fundamentals
Manufactured Housing Rental Rates
Manufactured Housing Occupancy
Occupancy within manufactured housing communities remained at or near historical highs, driven by strong resident retention and limited affordable housing alternatives. Equity LifeStyle Properties (ELS) reported high occupancy in key markets, with the California portfolio being more than 98% occupied, and opportunities to increase occupancy above 95% in Florida and Arizona. Sun Communities (SUI) closed 2024 with manufactured housing occupancy at 97.6%. UMH Properties (UMH) reported an increase in occupancy of 216 units, resulting in an increase of 70 basis points, with infill efforts and 190 expansion sites completed in 2024.
Manufactured Housing Income & Expenses
Same-property revenue growth across manufactured housing portfolios was driven by rent increases, occupancy gains, and a growing base of ancillary revenue such as late fees, utility bill-backs, and home sales profits. Equity LifeStyle Properties (ELS) generated 7.6% same-property NOI growth in Q4 and 6.5% for the full year, reflecting steady rent increases combined with careful expense management. Sun Communities (SUI) reported a 6.8% increase in same-property MH revenues for the year. UMH Properties (UMH) achieved a 8% increase in same-property rental income for the year.
REITs faced cost pressures, particularly from insurance premiums, which increased between 15% and 20% year-over-year across all three REITs. This increase reflects rising replacement costs, climate-related risk re-pricing, and concentrated exposure in storm-prone states.
Manufactured Housing Investment & Transaction Activity
Manufactured Housing Cap Rates & Bid-Ask Spread
Cap rates for stabilized manufactured housing communities in 2024 generally hovered around 5.5%, as reported by UMH Properties, which pursued acquisitions at this level with expectations for upside through infill development and rental growth. While Sun Communities and Equity LifeStyle Properties (ELS) did not explicitly disclose cap rates, both emphasized strong demand in Sunbelt markets like Florida, Arizona, and California, where occupancy and revenue growth trends supported valuations. The bid-ask spread remained wide throughout the year, as private sellers, particularly mom-and-pop owners, held onto peak 2021 pricing, while institutional buyers adjusted underwriting models to account for higher debt costs and more conservative rent growth assumptions.
With large portfolio transactions mostly at a standstill, market activity was dominated by single-asset, off-market transactions, where pricing flexibility was greater. UMH anticipated more acquisition opportunities emerging in 2025 as refinancing pressures pushed private owners to sell, with a reported pipeline of four communities under contract at a blended 5.5% cap rate.
Headwinds in the Manufactured Housing Market
Despite the sector’s strengths, several challenges persist. Rising operating expenses are a significant concern, with property taxes expected to increase by 5% to 8% in many Sunbelt states, and reassessments leading to sharper increases in Florida and Texas. Insurance premiums, which also rose in 2024, are likely to continue climbing due to climate risk adjustments. Additionally, labor costs, particularly for skilled trades needed to maintain aging infrastructure in legacy communities, pose ongoing challenges.
Regulatory risks are also increasing, particularly in California, where expanded rent control legislation limits annual rent increases in several jurisdictions, impacting revenue growth. Zoning and entitlement delays further complicate expansion projects, especially in high-growth areas. Moreover, high mortgage rates and reduced mobility are slowing housing turnover, affecting move-in demand, particularly in communities targeting first-time homebuyers.
Tailwinds in the Manufactured Housing Market
The manufactured housing sector continues to demonstrate resilience and growth amid economic uncertainties, driven by several key factors. One of the primary advantages is the affordability of manufactured housing, which offers a cost-effective path to homeownership. New homes in ELS and UMH communities are priced between $80,000 and $90,000, significantly lower than the median price for new site-built homes. This affordability ensures sustained demand, particularly among cost-burdened households.
Demographic trends also support the sector’s growth. Sunbelt migration remains strong, with states like Florida experiencing significant population growth, especially among retirees and downsizing households. This demographic shift supports demand for age-restricted manufactured housing communities. Additionally, investments in technology across all three REITs are enhancing operational efficiency. Dynamic pricing algorithms, centralized leasing platforms, and AI-enhanced marketing strategies are improving lead conversion rates and operational margins.
