Panhandle (Amarillo, Lubbock, Abilene) Manufactured Home Community Market Report

By Casey Thom - Sunstone Real Estate Advisors

In a survey of 21 communities equaling 2,132 pad sites, the Amarillo-Lubbock-Abilene markets have a blended 93% occupancy and an average lot rent of $196 net of utilities.

All three MSAs have a modest population growth rate under 1% annually: Abilene (.28%), Amarillo (.76%), and Lubbock (.96%). Abilene has experienced a 4% effective rent growth in multifamily, Amarillo and Lubbock have experienced a very slight decline in occupancy rates due to supply expansion. The median home value in Abilene has grown 5% in 2018 to $127,800 with 3.2 months of inventory. Amarillo has experienced a 7.2% growth in median home value to $134,700 with 4 months of inventory, and Lubbock home values have grown 4.2% to a median value of $135,800 with only 2.9 months of inventory. 6 months of inventory is considered status quo and anything less than that indicates a “sellers market.”

In a nationwide study of over 7,000 communities in the 220 largest MSAs we found that with an average lot rent of $196, Abilene-Amarillo-Lubbock rank 213 of 220 (national average-$421), and at a 26% Avg. Lot Rent/2-BR Apt Rent the area ranks 215th (national median- 46%). With a strong cross market occupancy of 93%, this indicates that lot rents are significantly underpriced in these markets.

Communities with a high percentage of residents making home payments should consider the affordability of the all-in home payment, lot rent, taxes, and insurance. We compared communities nationwide, using the assumption of a resident purchasing a home with a $45,000 note balance, on a 15-year amortization, at 8% interest, with insurance rates specific to the county. The amount above and beyond lot rent came out to roughly $565. The national median percentage of all-in payments to median 2-bedroom apartment rent was 105%. Abilene-Amarillo-Lubbock comes in 5% below the national median at 100%. Of the 21 communities surveyed 5 exceed the national median. Only 2 of the 5 exceed the 3-bedroom apartment rent for the community’s unique address, mostly due to a lack of statistically significant 3-bedroom options near the communities.

In conclusion, we feel strongly that lot rents in the Abilene-Amarillo-Lubbock triangle are significantly below what we would expect. In communities that are mostly resident-owned homes, we would expect lot rents in the range of $300-$345 per month and communities that require home sales or rentals to be able to sustain $250-$275 per site allocated to lot rent on average.