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As I was assembling the Tallahassee Real Estate Newsletter this morning, I found an interesting comparison between lot values in Tallahassee and mobile home values. Over the past 20 years, these two market components have run a very similar course, but all of that changed during the real estate boom several years ago.
When the housing market went crazy, mobile home values went higher as well, though not proportionately the same as homes and land values. The same seems to be true as the market recovers. Mobile home values continue to fall, just like the rest of the real estate market in Leon County, though not as dramatically as everything else.
We are seeing a normalization of the relationship between lot values and mobile home values as demonstrated in the graph below. Mobile home values include the land beneath them, but oddly the average mobile home with land has normally sold for a little less than the average lot price in Leon County.
The graph above shows land values in brown, and mobile home values in purple. Notice how large the separation had become back during the boom, but now see how things seem to be getting back to normal. Note how rapidly lot values are falling in comparison to the less severe slope of mobile home values. These seem to reflect the different changes that we saw as the market was climbing to its peak.
Pay Attention To Lot Values
Why do we monitor lot values and mobile home values? Typically, 20% to 35% of the cost of a home is reflected in the value of the land beneath it. If land is getting cheaper, home values might not rise, even in an inflationary environment.
We look at mobile home values as they represent the entry point for home ownership as well as a basis point for land values. When land becomes scarce, we have a future inventory of develop-able residential lots in our mobile home parks. Pay attention to the differences between mobile home values and land values and you just might get ahead of the next move in the housing market.
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