Home Loans Matter
Access to fair, fixed-rate mortgage loans for manufactured homes makes a huge difference both in the lives of home buyers and sellers.
We knew that our Welcome Home Loans made a huge difference in the lives of people trying to buy a home. Now we know that they also make a huge difference to people trying to sell their homes.
Because the New Hampshire Community Loan Fund provides fair, fixed-rate mortgages for manufactured homes in resident-owned communities (ROCs), home sellers in those communities have found buyers with more money to invest in their homes.
Home prices in ROCs reflect this, selling for about 3.5 percent more per square foot than homes in investor-owned communities in our recent case study. Even through the recession, sellers of homes in ROCs kept more of the value of their homes than sellers in investor-owned communities.
Home Loans Matter: Buyers and Sellers of Manufactured Homes Benefit from Financing A Case Study summarizes our analysis of transactions in Rochester, N.H., over the previous 11 years.
The data show:
- Most mortgage lenders stopped providing mortgages for manufactured homes in parks during and after the housing crisis. The Community Loan Fund stayed in the field throughout the crisis, though it lent only to owners and buyers of homes in ROCs.
- The difficulty of obtaining a mortgage in investor-owned communities appears to have reduced the volume of transactions in those parks and depressed the sale price of those homes that did sell. The number of homes financed by mortgages in these communities fell by 77 percent during the period.
- These impacts were less pronounced in ROCs, probably because there was more "liquidity" in these markets. Liquidity is the ease with which one can exchange an asset for its true value. Mortgage financing, by providing cash to buyers, helps keep markets "liquid" and facilitates the exchange of homes at market values.
- The number of transactions financed with mortgages in ROCs increased by 50 percent during the period.
- Homes in ROCs, although older than homes in investor-owned communities, have, since 2006, sold for 3.5 percent more money per square foot than have homes in investor-owned communities.
- The continuous availability of fixed-rate mortgages for homes in ROCs may have kept that market functioning with relatively stable prices and relatively strong sales volume. We cautiously ascribe a causal relationship between the availability of mortgages and the robust performance of the market for homes in ROCs.
By the New Hampshire Community Loan Fund's Policy team.