UMH Properties, Inc. (UMH): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for the real competitive picture for UMH Properties, Inc., especially now that they sit on $1.6 billion in assets as we head into late 2025. Honestly, the landscape is a fascinating mix: the severe national affordable housing shortage is a huge tailwind, making their cost-effective manufactured home solution a strong substitute for high-rate traditional homes (mortgages over 6%), and high switching costs help keep residents put. Still, you have to watch the specialized supplier leverage and the price sensitivity of that 50-80% of Area Median Income customer base. But here's the kicker: despite rivalry from bigger REITs, UMH Properties, Inc. is pushing nearly 10% annual same-store NOI growth, showing their strategy is working. Dive below to see how the five forces-from supplier power to the threat of new entrants-shape the next move for this operator with its 27,000 developed homesites.

UMH Properties, Inc. (UMH) - Porter's Five Forces: Bargaining power of suppliers

You're assessing UMH Properties, Inc.'s supplier leverage, and honestly, the manufactured home builders-your primary suppliers for inventory-have held some sway lately. Supply chain difficulties have been intermittently present in manufactured housing, which can slow occupancy uptake even if demand is strong. To be fair, UMH Properties, Inc. has been partially sheltered from the worst of this; as of early 2025, they held approximately 500 homes in inventory. What this estimate hides is the duration: at full sales and rental pace, that inventory would last just under 2 quarters. That's a tight window if disruptions persist.

The specialized nature of HUD-Code homes definitely limits the pool of qualified national suppliers, which naturally boosts their power. The industry is highly regulated by the U.S. Department of Housing and Urban Development (HUD) Code. You saw extensive updates with the 4th and 5th Sets of the HUD Code, which became enforceable on September 15, 2025. These major regulatory shifts mean suppliers need specific compliance capabilities, further concentrating the field. While HUD Code manufacturers produced 8,726 new homes in September 2025, a 1% decrease year-over-year, the overall cumulative production for 2025 was up 2.7% through September, totaling 79,475 new homes compared to 77,376 in the same period in 2024. This environment of regulatory change and steady, though fluctuating, demand gives established, compliant builders leverage.

UMH Properties, Inc. actively works to mitigate this supplier power through internal efficiencies. They use a Purchasing Platform to manage costs and consolidate demand. This system allows community supplies, typically bought at various hardware stores, to be ordered ahead of schedule online. This exact ordering leads to less waste in building supply and decreases management and maintenance travel time. Still, we don't have a specific percentage showing the cost reduction achieved by this platform as of late 2025.

Utility and municipal service providers often act as local monopolies, increasing their power, especially when UMH Properties, Inc. is executing its value-add strategy. When UMH acquires a community, like the one in Georgia for $2.6 million in October 2025, they immediately begin infrastructure upgrades. Bringing in new utilities or securing favorable long-term rates for the 27,000 developed homesites UMH Properties, Inc. operates is critical, but local monopolies in water, sewer, or power access can dictate terms. We don't have specific financial data detailing the impact of these utility negotiations on UMH Properties, Inc.'s operating expenses for the 2025 fiscal year.

Here's a quick look at UMH Properties, Inc.'s scale, which is key to understanding its purchasing position:

The supplier landscape for UMH Properties, Inc. is defined by these key constraints and mitigating actions:

• Supply chain issues intermittently slow occupancy uptake.
• HUD Code regulatory changes require supplier adaptation.
• UMH Properties, Inc. has 10,800 rental homes and 27,000 sites to supply.
• Centralized purchasing platform helps manage supply ordering efficiency.
• Local utility monopolies present a non-negotiable cost factor.

Finance: draft 13-week cash view by Friday.

UMH Properties, Inc. (UMH) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for UMH Properties, Inc. (UMH) is generally considered constrained, largely due to the structural economics of manufactured home community residency. Residents own their manufactured home but lease the land site, creating a significant hurdle to switching. This is evidenced by UMH Properties, Inc.'s low customer attrition; the company reported an annual rental home turnover of below 30\% in its portfolio, which includes approximately 10,800 rental homes across 145 communities as of late 2025.

For the customer base, price sensitivity is a major factor, as the product serves the affordable housing segment. While specific late-2025 data on the exact percentage of customers falling within the 50-80\% of Area Median Income bracket is not explicitly detailed in recent reports, the affordability proposition remains central. For context, in early 2025, a household with an annual income of \$40,000 could rent a home from UMH Properties, Inc. for approximately \$1,000 per month, requiring only one month's rent and a security deposit to move in. This highlights the segment's reliance on cost-effective housing solutions.

UMH Properties, Inc.'s average rental cost provides a strong value anchor in the market. For the third quarter of 2025, UMH's rentals averaged \$1,026 per month. Despite this, the company has demonstrated an ability to pass through costs, with same-property rental and related income increasing by 7.8\% year-over-year in Q2 2025, and the company projecting a 5\% annual rent increase for 2025, which could add an estimated \$11 million in new revenue.

The availability of in-house financing through its subsidiary, UMH Sales & Finance, Inc., further limits customer leverage. This captive financing option reduces dependence on external lenders, who historically have been more restrictive. As of Q3 2025, UMH Sales & Finance, Inc. had built a loan portfolio totaling \$99.6 million with a weighted average interest rate of approximately 7.1\%. This structure helps residents secure financing for the home itself, tying them more closely to the community ecosystem.

Here are key operational metrics that frame the customer power dynamic:

The customer's position is weakened by several factors:

• Switching requires moving or selling an owned manufactured home.
• Low annual turnover suggests high resident retention.
• In-house chattel financing creates a financial tie-in.
• Affordability focus means alternatives may be scarce or lower quality.

UMH Properties, Inc. (UMH) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for UMH Properties, Inc. (UMH) right now, late in 2025. The rivalry here isn't a simple head-to-head slugfest; it's more about outperforming in a sector with strong tailwinds.

UMH Properties, Inc. faces direct competition from larger, more diversified Manufactured Housing REITs (MHC REITs) like Sun Communities and Equity LifeStyle Properties. These peers often have broader portfolios that include RV resorts and marinas, which can temper their pure-play manufactured housing performance metrics. Still, the rivalry is intense at the operational level, particularly concerning site occupancy and rental rate increases.

Where UMH Properties, Inc. clearly separates itself is in organic growth. UMH's same-store Net Operating Income (NOI) growth has been running closer to 10% annually over the last decade. For the third quarter of 2025, UMH reported same property community NOI growth of 12.1% year-over-year, with year-to-date growth at 10.1%. To put that in perspective, the larger, mixed-asset peers have been averaging about 5% same-store NOI growth over the same decade.

This performance gap is reflected in valuation, which signals how the market views the rivalry. You see a clear difference in multiples based on this organic growth profile:

Competition from smaller, private community operators remains fragmented, which generally benefits the larger, institutional players like UMH Properties, Inc. when it comes to acquiring assets or setting market standards. UMH Properties, Inc. currently owns 145 communities with approximately 27,000 developed homesites. The sector itself is seeing consolidation, but local competition is less structured.

The broader industry dynamic is actually easing direct price wars. The entire sector's growth is fundamentally driven by a severe shortage of affordable housing. This macro condition means demand is structurally high, allowing operators to focus on maximizing existing asset performance rather than aggressively undercutting competitors on price.

• The national manufactured housing stock is approximately 7.9 million units, representing only 5.4% of all housing units.
• The average new site-built home price in 2024 was around $424,176, while a new manufactured home averaged about $123,300 (excluding land).
• UMH Properties, Inc.'s rental occupancy rate improved from 84.0% in 2020 to 93.9% in Q3 2025.
• National manufactured housing occupancy has risen by an average of 90 basis points annually since 2014.

So, while UMH Properties, Inc. competes with giants, its superior organic growth-evidenced by its 10.1% to 12.1% same-property NOI growth in 2025-allows it to outperform operationally, even while trading at a lower multiple than its larger peers.

UMH Properties, Inc. (UMH) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for UMH Properties, Inc. is primarily driven by the high cost of traditional homeownership, which pushes potential buyers toward renting or manufactured housing as a more accessible alternative. This dynamic is amplified by persistent high interest rates in the conventional mortgage market.

High mortgage rates make traditional single-family homes less affordable. As of the week ending November 21, 2025, the average 30-year fixed-rate mortgage in the US was reported at 6.40%. This level, which has remained consistently in the low-to-mid 6% range throughout the latter half of 2025, keeps the barrier to entry high for conventional buyers. For context, the average 30-year fixed rate has ranged between 6.26% and 7.19% so far in 2025.

The resulting affordability crunch directly benefits the manufactured housing sector where UMH operates. The national affordable housing crisis ensures a large pool of households seeking cost-effective solutions. According to the National Association of Home Builders in 2025, 74.9% of U.S. households-approximately 100.6 million households-cannot afford a median-priced new home of $459,826. Furthermore, research from Harvard's Joint Center for Housing Studies in 2025 indicated that only 6 million of the country's 46 million renters earn enough to qualify for a mortgage on a median-priced home.

Apartment rentals and other multifamily units are direct substitutes for UMH's core offering of community lot rentals and home sales. However, these substitutes often fail to meet the value proposition UMH provides, particularly concerning space and ownership potential. While UMH's Q3 2025 average rental was $1,026 per month, apartment rentals often do not offer the benefit of a private lot, which is a key feature of a manufactured home community site.

Manufactured housing, as offered by UMH Properties, Inc., presents a superior cost-to-quality ratio compared to other low-cost housing options like traditional new builds. The cost differential is stark, positioning manufactured homes as the most cost-effective path to homeownership for many Americans.

The affordability gap is further underscored by the financial realities facing renters. The National Low Income Housing Coalition's 2025 report established the national Housing Wage-the hourly wage needed for a full-time worker to afford a modest rental-at $33.63 per hour for a two-bedroom unit. This high wage threshold for renting solidifies the appeal of owning a manufactured home.

The demand for UMH's cost-effective solution is structurally supported by the following factors:

• Mortgage rates remaining above 6% throughout late 2025.
• 74.9% of U.S. households priced out of median new homes.
• UMH new home sales averaging $140,000 in Q3 2025.
• UMH Q3 2025 rental income averaging $1,026 per month.
• Manufactured home cost per square foot is nearly half that of site-built homes ($87 vs. $166).

UMH Properties, Inc. (UMH) - Porter's Five Forces: Threat of new entrants

The threat of new entrants into the manufactured housing community sector where UMH Properties, Inc. operates is generally considered low to moderate, primarily due to substantial upfront investment requirements and significant regulatory hurdles. New players must overcome the scale UMH has established over five decades.

Significant capital is required to acquire and develop large land parcels for communities. This isn't a small-scale operation; it demands deep pockets for land acquisition, infrastructure build-out, and home inventory. For context on the capital intensity, UMH Properties, Inc. recently secured approximately $91.8 million in proceeds by adding seven communities to its Fannie Mae credit facility. The total investment basis for just those seven communities was $73.2 million, illustrating the capital outlay needed for even moderate portfolio expansion. The appraisal value of those seven properties reached $145.1 million, showing the scale of assets required to generate meaningful returns in this space.

Restrictive local zoning and complex permitting processes create high regulatory barriers. Navigating the municipal and county-level approvals for developing new manufactured home sites or even expanding existing ones is time-consuming and costly. This regulatory friction acts as a significant moat, as new entrants must master these local complexities before breaking ground. UMH Properties, Inc. itself notes risks related to 'changes in real estate and zoning laws and regulations' in its forward-looking statements, confirming the sensitivity of the sector to regulatory shifts. It definitely takes time to get these projects approved.

UMH is entrenched with approximately 27,000 developed homesites across 12 states. The company operates 145 manufactured home communities, giving it a national footprint that provides economies of scale in management, procurement, and financing that a startup simply cannot match initially. This established presence means new entrants face immediate competition for desirable land and residents in key markets.

The company holds a large land bank of 9,600 land plots for future, accretive development. This internal pipeline, sitting on approximately 2,400 acres, represents future capacity that UMH can deploy without the immediate, high-stakes competition of acquiring already-developed, fully occupied assets. This ready-to-develop land bank is a major barrier, as a new entrant would need to secure and entitle similar acreage, a process that can take years.

Here's a quick look at the scale UMH commands, which new entrants must contend with:

The barriers to entry are multifaceted, combining financial muscle with regulatory expertise. New entrants must consider the following structural challenges:

• Securing multi-million dollar financing for land acquisition.
• Mastering varied state and local zoning codes.
• Competing against UMH's 27,000 existing sites.
• Deploying capital for infrastructure upgrades.
• Developing the 9,600 future lots UMH has banked.

Finance: draft 13-week cash view by Friday.