Senior Analyst Paul Adornato of BMO Capital Markets says that the manufactured home segment is doing quite well, and that one of the biggest names in the sector, Sun Communities Inc (SUI), is poised to benefit from renewed interest from customers.
“We have it rated [Sun] an ‘outperform.’ Sun caters primarily to families or all-age communities. This is basically the lower-end demographic of the single-family housing market,” Adornato said.
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Adornato says that since the single-family housing bubble in the U.S., mortgage underwriting has become more stringent, resulting in customers turning toward manufactured housing.
“The typical resident of a manufactured home community, folks who were given a mortgage to buy a $150,000 or $200,000 house during the bubble, are no longer being offered that mortgage, so they are returning to the manufactured home communities. This is a very, very strong driver of Sun‘s business — the return of the core customer,” Adornato said.
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