Welcome back to The MHP Expert! As always, we appreciate your time and attention, and we hope that our archives bring value to your MHP journey. Today, we’ll be talking about the current state of MHPs, including the change in transaction volume. For those who’ve been abreast of things for a while, you know that we saw a huge rise in positive activity following the pandemic.
The industry was one of few that managed to weather the storm, so to speak. But now, a full two years afterwards, we’re starting to see a bit of slow down in operations. Read on to learn more.
The Role Of Interest Rates
Since the noted peak, the transaction volume has slowed a great deal. Pricing has seemed to soften up a bit, and cap rates are overall higher than they were 6 to 8 months ago. It appears that the cause is the interest rates on achievable debt in deals. B
These rates climbed from 3-3.5% on average back in December, to around 5% now on most deals. That’s an increase of about 200 points on base rates. As a result, this alters the returns on the MHPs currently being sold. This put buyers and sellers at a bit of standstill. The former wanted a more favorable selling point, while the sellers wanted something higher to account for the hike in rates.
The MHP Expert
In the last month or two, we have seen the transaction volume increase a bit. This comes from compromises on both sides of the sales. That said, we’ll likely not see a volume rate as favorable as the one MHPs could claim last year.
Although the spread on returns has gotten thinner, that’s not to say it will always be like this. Like with any industry, there are ups and down due to a number of varying factors. To stay up to date on where the industry goes next, stay tuned to The MHP Expert!