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Many Renters Are Turning to Manufactured Housing

July 13, 1993|Ron Galperin

Welcome to Canyon View Estates in Santa Clarita. This gated community features a pool and spa, two tennis courts, a basketball court and a 6,500-square-foot clubhouse. New single-family homes here start at $69,950, and a 1,836-square-foot home with appliances, drapes and floor coverings will set you back just $109,950.

By the way, Canyon View Estates is a mobile-home community.

Mobile-home parks aren't what they used to be. Many are now called manufactured housing communities, and the homes aren't very mobile once they've been attached to a foundation. Manufactured homes are getting bigger and more luxurious. And some mobile- and manufactured- home owners are buying the land under their homes instead of paying rent to a landlord.

Manufactured housing has become the choice for 1.1 million Californians living in 572,000 residences, according to the California Manufactured Housing Institute. Manufactured houses, also sometimes called prefabricated homes, account for about 9% of all new single-family home sales in the state. With an average price of about $50,000, it's easy to understand why many residents in the San Fernando Valley and Ventura County priced out of the traditional housing market are buying a manufactured home instead of renting.

Bill Jensen moved to Canyon View Estates in June from an apartment in Valencia. He and his girlfriend picked their two-bedroom Mediterranean-style model from six basic floor plans offered by the community's developer, American Diversified Properties. The home cost $80,000, and Jensen pays $515 a month in rent for the lot where his manufactured home is situated.

Because he signed a 35-year lease with the developer, Jensen was able to put 20% down on the home purchase and finance the rest with a mortgage. Conventional lenders are now offering mortgages on mobile homes if the purchaser also has a long-term lease. The interest rate on a mortgage is well below the rate on a personal loan, which has been the primary way to finance a mobile home. Also, mobile-home owners with a mortgage can write off the interest expense for federal income tax purposes.

"Cost was the main factor, but the all-around picture was appealing to us," Jensen said. "The homes are similar in quality to homes built on-site by a builder," added the former contractor.

"We're not the answer for every buyer, but there are a lot of people who can't afford to buy a home with the land," said Mark Seidenglanz, general partner in American Diversified Properties.

The floor plans are offered in three different exterior styles and an assortment of colors. The homes are usually delivered in two pieces from a local manufacturer, then anchored to a foundation within 60 to 70 days. Residents get their own fenced yard, a garage and concrete driveway, landscaping and an irrigation system.

Seidenglanz said he has sold 175 out of the 455 residences that are slated for Canyon View Estates.

Are mobile and manufactured homes a good investment? The answer to this often-asked question depends on a number of factors.

"Generally, manufactured homes appreciate about the same as real property," said Travis Pitts, deputy director at the manufactured housing section of the state's Housing and Community Development Department in Sacramento. Homeowners, however, can find their investment at risk if they're in a mobile-home park that closes. A mobile home may be worth $35,000 in a park, but as little as $2,000 if the park closes, Pitts said. "You can lose your whole investment."

The number of manufactured-housing communities has remained relatively stable in California over the past few years, Pitts said. But occasionally, communities close to make way for other developments. The shorter a tenant's lease, the greater the risk, Pitts said.

While manufactured housing is a cost-effective form of ownership for many Californians, "many municipalities discriminate against manufactured housing. It's very difficult to get manufactured housing communities through the local approval process," Pitts said. Many home buyers also still believe that prefabricated homes are inferior in quality.

But Jess Maxcy, president of the California Manufactured Housing Institute in Rancho Cucamonga, said: "It is not easy to just decide to close up a park."

About 99% of manufactured homes in California are never moved. "None of these homes is very mobile," he said.

There are eight manufacturers operating out of 12 factories in California, Maxcy said. There used to be nearly 50, but they've either closed as a result of the recession or moved to other states with less stringent environmental regulations and cheaper labor. There were 6,450 manufactured homes built in California last year, about 300 of which were situated in Los Angeles County.

The trend in manufactured housing and mobile-home parks is toward ownership of both the home and the underlying property or pad, said Inge Swaggart, vice president for resident-owned parks for the Golden State Mobile Home Owners League in Garden Grove.

"Many buyers would rather spend more money up front and own their own pad and part of the common areas," she said. Some communities are converting to a condominium form of ownership, she said, while some new parks are being marketed initially as condos.

"They're placed in very prestigious areas now," Swaggart said. "It turns out to be like any other single-family neighborhood."

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