Blog Posting # 665 @ 19 November 2021: EducateMHC
Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing!’
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INTRODUCTION: Get Ready for a Grand Thanksgiving Holiday with Friends & Family. If you’re talkative people you might want to get the described eBook ASAP, to prepare for those conversations! And, ever look back to ‘predictions of the future’, prepared and shared by folk who should know? Well Part II of this blog posting does that big time. Enjoy!
Hey, guess who’s buying copies of my autobiography, ‘From SmittyAlpha6 to MHMaven’? Real estate brokers, for clients to whom they just brokered a land lease community. And, folk using the book as Christmas presents. Just saying….www.educatemhc.com
Don’t let your Thanksgiving dinner table conversations be shattered by angry political conversations. The Leadership Institute provides political communications training for conservatives. And now there’s an eBook with practical instructions for everyone:
First section of the eBook discusses the foundational mindset necessary to have fruitful conversations.
Second section considers how to prepare for a political discussion with family members who disagree with you.
Third section deals with the practical elements of a good argument and discusses some relevant examples.
I’ve already read the nine pages eBook and wish I’d had it in my possession ‘years ago’.
THE FUTURE THAT IS NOW!
Ever look back at a formal ‘prediction of the future’ to see how it materialized over decades?
Well, on 23 November 1997 – that’s nearly 25 years ago, Walter R. Young, Jr., President & CEO of (then) Champion Enterprises, as well as MHI, delivered a speech to members of the Iowa MH Association celebrating their 50th anniversary. The talk was titled:
‘The Future of the Manufactured Housing Industry’. This speech was recorded for prosperity within the pages of the association’s 50th anniversary historical record. What follows here are direct quotes from Walter Young, followed by editorial comments penned in accords with contemporary (Year 2021) perspective.
“…since 1990, our industry has grown to the tune of 93 percent! The site-built industry…has grown just 30 percent. Today, our homes constitute 32 percent of the single-family housing market. Just seven years ago we held only 26 percent of the market. We are now a $23 billion industry.” P.65
*Yes, in 1990 we shipped 188,172+/- new HUD-Code homes; in 1997 we shipped 353,377+/- homes. We were ‘on a roll, but it didn’t last long.*1
“When I walked into Champion in 1990, they were filling out their Chapter 11 paperwork. They had lost $30 million in five years. Suppliers wouldn’t ship to us; banks wouldn’t talk to us. Our stock was overpriced at 50 cents a share.” P.66
*On 3 November 2021, Skyline Champion Corporation (SKY) stock price was $72.42 per share!
“It took a while for our industry to recognize customers simply wanted homes that looked like homes – not homes that looked like trailers. Our customers wanted the same creature comforts and the same level of quality site-built homes had to offer.” P.66
*As it turned out, our industry designed and shipped many Developer Series homes (a.k.a. ‘big box = big bucks’) homes during 1997 & 98; until ‘easy access to chattel capital’ ended at the turn of the century. And it took until 2018 before the CrossMod design was ready for market.
“At Champion, our customers are not (sic) longer limited to the two extremes of either ‘Generation X’ or the ‘AARP set.” P.66 (Which is to say ‘newly wed & nearly dead’).
*Generation Y (‘Gen Y’) ‘millennials’ are our customers now, during 2021. They’ll soon be followed by Generation Z (‘GenZ’) ‘zoomers’ – the children of Generation X folk from way back in Walt Young’s day. Hmm. Ever wonder what comes after Gen X, Y, & Z?
“Manufacturers have also changed. Although the industry has doubled in size, the number of manufacturers has decreased. In fact, at the end of 1995, the top four manufacturers in our industry held 50 percent of the (national) market.” P.67
*Today’s manufactured housing industry is less than one third the size it was in 1997 (i.e. 1997 = 353,377+/- & 2020 = 94,390 new homes shipped), with the top three (or Big 3-C) HUD-Code housing manufacturers (i.e. Clayton, Cavco, Skyline/Champion) garnering a whopping 82+ percent of national market share – upon the acquisition of Commodore Homes by Cavco Industries during 2021. Pareto’s Law: 80% of production from 20% of the participants.
“We’ve seen Centex purchase Cavco. Pulte has been using manufactured housing in several of its developments, and just recently, opened a retail center. And, Zaring has begun retailing.” P.67
*Three of these four firms have passed from the HUD-Code housing scene….More to follow?
“We’ve seen community ownership change hands from ‘Mom & Pop’ parks to corporations and real estate investment trusts or REITs. Four REITs continue to grow in size through aggressive acquisition and consolidation. Chateau Communities, for example, now manages 43,000 spaces! All four REITs manage over 100,000 spaces.” P.67
*Nope. Chateau Communities is long gone, having sold out to Hometown America in 2003. And yes, the four REITs continue to grow in size, from the 88,450 rental homesites owned/operated in 1994, to 300,566 rental homesites today during year 2020. Unfortunately, no more ALLEN REPORTs ‘keeping score’ from year to year.
“Let’s do some crystal ball gazing….” P.67 Here’s what Walt predicted in 1997.
“In 10 years I see factory-built housing supplying 50 percent of our nation’s new housing. If we do our job, we can improve America’s home ownership from 65% to 70% in 10 years.” P.68
*Not without financing! Today we’re lucky if we’re supplying five percent of U.S.housing starts.
“Our homes will continue to evolve dramatically. Multi-sections may grow to over two-thirds of our mix.” P.68
*Nope! Constant vacillation balances between 45 & 55 %es; singlesection & multisection.
“The financing and zoning issues that plagued us in the past will become faint memories. Fannie Me and Freddie Mac will be common names in the industry.” P.68
*No & Yes! Financing and zoning issues continue to plague our industry. And yes, the two GSEs have become commonplace, of sorts, but have not delivered chattel $ via their Duty to Serve (‘DTS’) plans. But ‘affordability’ is rumored to be a much higher priority during year 2022.
“…consolidation may well change the face of the retail business as we know it today. There will be independents out there. But, we predict independents will make up a much smaller piece of the retail mix in even the next three years.” P.68
*Boy, Walt was right on this one! Shortly after the turn of the century, 10,000+/- independent (street) MHRetailers and company stores went out of business when the industry lost its’ easy access to chattel capital. However, that slack was subsequently taken up by the marketing and sale of Community Series Homes (‘CSH’) on-site in land lease communities, beginning in 2009.
“We at MHI are attacking this installation issue head on. With a small group representing all aspects of the industry, we are developing some creative approaches that will economically motivate all of us to solve this consumer issue. We must solve this issue ourselves, for no one else can.” P.69
*13 years after that line was penned and stated by Walt Young, the Frost Free Foundation (‘FFF’) system appeared (2010); a.k.a. ‘Alternative Shallow Frost Protected Foundation Design for Manufactured Homes’. This was a collaborative effort among George Porter, Hayman engineering, and the Systems Building Research Alliance (‘SBRA’). Initially approved by HUD, for use with manufactured homes in land lease communities, only rarely is it mentioned or used. So, in this industry observer’s opinion, the installation issue remains unsolved to this day!
“As we look to the 21st century, all of us need to work to further promote the image of our industry. Together, we need to educate consumers about the evolution of our homes, our quality standards, the many benefits of manufactured housing, and the financing options available.” P.69.
*Well, this is certainly one industry goal articulated, more than two decades ago, that remains valid (unfulfilled) to this day. There is no formal, funded, national image-improvement program in effect now, just as there wasn’t way back in 1997. .
“…we want to establish a secondary market with Fannie Mae and Freddie Mac for personal property manufactured home loans.” P.70
Yet another 24 – 25 year prediction still awaiting fulfillment!
1. Why the +/- notation after shipment totals? Acknowledgement of the differences in reporting this shipment data by the Institute of Building & Technology Safety (‘IBTS’), HUD, & MHAARR, versus MHI.