Imagine a real estate investment that aims to deliver strong returns while tackling America’s housing affordability crisis. Lot-leased manufactured housing (MH) has shed its outdated “trailer park” image to emerge as a high-growth sector attracting both high-net-worth, family office, and institutional investors.

Today, over 21 million Americans live in manufactured homes. Manufactured housing communities (MHCs) combine stable cash flow, low volatility, and meaningful social impact—offering affordable homeownership for retiring Baby Boomers, seniors, empty nesters, single-member homeowners, and veterans. This asset class is winning attention for the reasons that follow.

The Engine Behind the Growth

Manufactured housing consists of factory-built homes that meet rigorous HUD Code standards and are placed on leased or owned land. According to the 2025 Manufactured Housing Market Report, single-section homes account for 26% of the market, while multi-section homes and modular/prefab designs make up 63.6% and 10.4% respectively.¹

Globally, the MH market is projected to grow from $25.72 billion in 2025 to $37.17 billion by 2032 (5.4% CAGR).¹ However, because of the rapid growth in this demographic, supply cannot keep up with the demand. Top-tier MHCs are at 94% occupancy, generating 5%–8% annual rent growth over the past five years. Consequently, publicly traded MH REITs such as Equity LifeStyle Properties (ELS), Sun Communities (SUI), and UMH Properties (UMH) have outperformed nearly every other property sector, delivering cumulative returns of 390% from 2011 to 2021.²

The problem, or the investment opportunity, is that the market is supply constrained, and the cost of traditional homes is prohibitively expensive, leading a burgeoning market segment to shift toward cost-effective, high-quality alternatives.

Who’s Driving Demand?

Certain demographic trends are driving the shift into smaller homes, with affordability leading the charge. Traditional homes cost 35%–50% more per square foot than manufactured homes, and limited supply has pushed buyers toward MHCs.³

Moreover, more than 30 million Baby Boomers are expected to downsize or relocate in the next decade. Single-person households are the fastest-growing segment, representing 29% of total households.⁴ Retirees, empty nesters, millennials, and single-member households are turning to MH for its affordability and flexibility—especially in fast-growing 55+ migration states such as Florida and Arizona. Florida alone hosts 5,000+ MHCs.⁵

Examples like The Villages in Florida and Sun City in Arizona show how MHCs can provide affordable, amenity-rich lifestyles. The rise of remote work has also boosted demand for suburban and rural MHCs⁶, while institutional ownership has grown from 13% in 2017 to 23% in 2022.⁷

Building Communities

MH is more than a profit play—it’s a community solution. Federal and state policies are aligning to make it a cornerstone of affordable housing. HUD’s 2025 Update will streamline multi-unit approvals and promote eco-friendly infrastructure, while Fannie Mae and Freddie Mac’s Duty to Serve program expands financing and tenant protections.⁸

In addition, states are easing zoning laws to encourage MH development.⁹ Patriot Park in North Carolina offers veterans affordable homes with on-site services, while Veterans Village in Nevada combines state grants and private capital to deliver “cottage-community” housing. These initiatives highlight MH’s role in empowering residents to achieve homeownership later in life.

Why Lot-Leased Manufactured Homes Can Deliver

For the 55+ demographic, lot-leased communities offer exceptional value. Residents buy the home but lease the land—keeping purchase prices under 3× annual income versus 5–7× for owned-land homes.¹⁰ For investors, lot-leased MHCs offer compelling fundamentals:

• • Standout Risk-Adjusted Returns: MH REITs rank second among real estate sectors on the Sharpe ratio—a measure of return per unit of risk—reflecting durable cash flows and muted drawdowns.¹¹
  • Tenant Retention: Residents rarely move, ensuring steady income and lower volatility.
  • Built-in Rent Growth: Leases often allow 3%–5% annual increases or CPI adjustments.¹²
  • Limited New Supply: Zoning restrictions and community opposition curb competition, supporting lease rate growth.
  • High Margins: Operating margins often exceed those in retail or apartments by significant percentages.¹³
  • Tax Advantages: Land improvements qualify for accelerated depreciation.
  • Recession Resilience: Affordable housing demand rises in downturns.
  • Low CapEx: Tenants own their homes, minimizing landlord expenses.
  • Institutional Investors and Family Offices: Acquiring communities of lot-leased portfolio of finished MH communities with cap rates that are sub-6%.¹⁴

However, every investment has risks, and MH is no exception.

Zoning hurdles, potential rent controls, as well as infrastructure needs in older parks, along with the segment’s lingering stigma, are some of the risks. Investors can mitigate these by investing with developers and operators in landlord-friendly markets (e.g., Texas, Florida) who have completed thorough due diligence and market analysis to determine a project’s feasibility and who are developing modern, amenity-rich communities. To help manage potential liquidity risks, investors can partner with REITs or private equity platforms.

Policy Tailwinds and Investor Opportunity

The regulatory environment is turning increasingly MH-friendly. HUD’s 2025 reforms¹⁵, state-level zoning flexibility, and expanded federal financing through Fannie Mae and Freddie Mac all ease the way for new projects. Savvy investors who move early can capture both current yield and appreciation.

Bottom line: Manufactured housing has gone mainstream, seeking to deliver high-inflation-resistant risk-adjusted returns, experiencing strong demographic tailwinds, and the opportunity to support affordable homeownership for seniors, empty nesters, and veterans. For high-net-worth investors, lot-leased MHCs offer not only strong cash flow and high risk-adjusted returns but also the chance to address one of the nation’s most pressing challenges — affordable housing.

References

1. Coherent Market Insights, Manufactured Housing Market Report, 2024–2033. ↩
2. NAREIT
3. Manufactured Housing Institute (MHI), 2024 Industry Overview. ↩
4. gov
5. com
6. Business Insider, Remote Work Trends and Housing Migration, 2025. ↩
7. SkyView Advisors, Q1 2025 MHC Institutional Ownership Trends. ↩
8. Fannie Mae, Duty to Serve: Manufactured Housing Pilot, 2024. ↩
9. Urban Land Institute (ULI), State Zoning Reforms Impacting MH, 2025. ↩
10. Longterm Trends
11. NAREIT
12. Cabot Wealth, 2025 REIT Sector Analysis. ↩
13. Forbes
14. North Star Brokerage and Advisory
15. gov, 2025 HUD Code Revisions Overview. ↩