GSE Recognizes ‘Entry-level’ Single Family Housing Shortage & Does Not Fully Address It!
Blog Posting # 638 @ 14 May 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: Three potentially explosive topics today! How dialed-in are you on these emerging ‘evergreen issues’ relative to manufactured housing & land lease communities?
GSE Recognizes ‘Entry-level’ Single Family Housing Shortage & Does Not Fully Address It!
Did you read MHARR’s May 2021 Issues & Perspectives feature titled ‘Freddie Mac Unwittingly Proves Its’ Own Failure’? If not, you really should! Obtain a copy by phoning (202) 783-4087.*1 Why?
In it, Mark Weiss summarizes an analysis by Freddie Mac Vice President and Chief Economist Sam Khater’, titled ‘The Significant Shortage of Starter Homes’, dated 15 April 2021. Herein he states ‘entry-level’ single-family homes in the U.S. stands FOUR million units below existing demand.’ (American Enterprise Institute estimates double that amount, at EIGHT million)
In any event, “Freddie Mac’s analysis concludes the ‘main driver’ of the entry-level housing supply/demand gap, is a “long-term decline in the….supply of entry-level single-family homes, or ‘starter homes’, “which has dropped from an average of 418,000 units/year during 1970s to 65,000 in year 2020.
The Freddie Mac analysis makes these two points: “…renters can’t buy houses that don’t exist’ & “…we must build more single-family entry-level housing.” MHARR Weiss points out the GSEs “…have not provided the necessary level of consumer financing support for that segment of the market….”
And that’s where the proverbial ‘rubber meets the road’, in this industry observer’s opinion. Though Weiss does a yeoman’s job pointing out the GSEs “…prejudice and bias – a willful ‘blind spot’.” relative to MANUFACTURED HOUSING FINANCED WITH CHATTEL CAPITAL, he does not detail that sorry situation – until later in the analysis. And there he rightly decries GSE’s Duty to Serve Support (‘DTS’) of “…significantly more costly MH Advantage, Choice Home, and so-called ‘Cross-Mod’ homes” that do qualify – (understand this) – for real estate-secured financing!
So, a Two Part Bottom line.
‘Home-only’ or chattel capital financing of manufactured housing mostly destined for siting on rental homesites within land lease communities, continues to be difficult to obtain, resulting in far less than capacity production of ‘entry-level’ single-family homes in the U.S.! Yes, that’s the boogeyman standing in the way of our providing affordable housing when it’s needed most: NOW!
However, real estate-secured financing (i.e. conventional home mortgages) for manufactured housing destined for siting on scattered building sites conveyed fee simple, is far easier to obtain. But production is slowed here by frequent unit price increases, fluctuating and distant delivery dates, as well as labor shortages at factories and among building product suppliers. And this too results in far less than capacity production of ‘entry-level’ single-family homes in the U.S!
There’s even more to read in MHARR’s summary of Freddie Mac’s analysis of the shortage of starter homes in the U.S. today. So, get a copy, read it, and let your thoughts be made known!
How? Via firstname.lastname@example.org
1. MHARR = Manufactured Housing Association for Regulatory Reform
Well, It’s Happening!
In Vietnam, circa 1968 & 69, many of us, when not afield, lived in underground bunkers constructed of heavy timbers, aluminum matting for roof support, and sand bags all around. These in forward combat bases like Khe Sanh, Dong Ha, Quang Tri, and dozens of other locales. Their protection was comforting, particularly during ‘incoming’ rocket attacks. But there was a problem: Getting everyone to come out into the open to do their jobs, e.g. patrolling, route reconnaissance, admin and mess hall duties, and more. Some folk simply found it difficult to emerge and get back to living and the fighting as was expected of them.
Well, I’m seeing a similar phenomenon unfold as we emerge from quarantine during the coronavirus pandemic. I, for one, am tired of being confined to home – though it’s been fun to be with Carolyn, doing puzzles, reading, and writing. No, I’m ready to travel some, and re-engage with my friends and associates in manufactured housing. But it doesn’t seem ‘everyone’ is of the same mindset – yet. Right now, can you think of more than one or two in person industry events scheduled in your state, nearby, or even nationally? I can’t, really. That was, until this week. Know what I’ve learned?
After the annual RV/MH Hall of Fame induction banquet kicks off the 2021 meeting season on 16 August 2021 – and then another as yet unannounced (national) meeting later that month (26 August),‘there’s really nothing scheduled until September and October; then ‘watch out’!
Ah, but first, more about the upcoming RV/MH banquet. You really do want to attend, for several good reasons. FIRST, it’s our opportunity to emerge as an industry, from this pandemic. SECOND, there’s nearly a dozen manufactured housing celebrities being inducted into the RV/MH Hall of Fame this time around (combining Classes of 2020 & 2021). How many of these distinguished manufactured housing and land lease community folk do you know?
• Ken Anderson
• Keith Casenhiser
• Charles Lott
• Debra Pizer
• Alan Spencer
• Steven Adler
• Burt Dickman (deceased_
• Ron Dunlap
• George Porter
• Jerry Ruggirello
And THIRD. This stellar event attracts hundreds of attendees (400-700). It’s where one gets to meet and network with the pioneers and leaders of our industry and land lease community owners/operators from throughout the U.S. See you there? For tickets, phone ((574) 293-2344.
OK, what’s next? A ‘meeting traffic jam’ in late September! Here’s what I know for sure so far:
• Annual SECO Conference has become a ‘must attend’ event! It was virtual in 2020 and will be virtual again, 27 September – 2 October 1021. Phone Spencer Roane, MHM @ (678) 428-0212
• Supplier Show at the RV/MH Hall of Fame in Elkhart, IN. This is an in person event also during the last week of September. Again, for more information, phone (574) 293-2344
• Shed Builder Expo! Huh? You read it right. The shed-building industry has a large annual in-person show, this year in Grand Rapids, MI, 28-30 September. Some shed builders are trending their structures towards Tiny Houses and ADUs…see May issue of The Allen Confidential for a photograph of one.*1 For more info, phone (616) 575-9998
• Reunion of TBS 2-68, in Quantico, VA., 9/29-10/2/2021. Yes, a ‘red herring’, but this is the USMC officer’s class I was in before heading for Vietnam. First time we’ll be back together in 53 years.
Hey, if you know of more meetings on the horizon, please let me know via email@example.com I’ll share that information here.
1. ADU = Accessory Dwelling Unit; usually less than 400 square feet in size. Otherwise, ADUs would be subject to the HUD-Code. Increasingly popular in CA as rental units sited in back yards, and they’re ideal for filling functionally obsolete rental homesites in land lease communities.
Financing Is No Longer The Only Challenge…
Here’s the lament of a land lease community owner frustrated with selling new HUD-Code manufactured homes on-site in land lease communities these days.
“You are between a rock and a very hard place. The new home you order today will be 20-25 percent more expensive than the identical home you ordered a year ago! It may get delivered a year from now, but don’t count on it. Between placing the order and actual delivery, the manufacturer will likely increase the price two or three times. Consequently, the homebuyer will need 25-30 percent higher down payment, and 25-30 percent more personal or family income to qualify for home-only financing, whether conventional or seller financed.”
“All this would seem to reduce the pool of prospective homebuyers. And when the government stimulus checks stop, and folks are forced to go back to work, we may see wages drop some, due to an oversupply of labor. If so, the prospective homebuyer pool will become even smaller. Also, if/when interest rates increase, qualification will become more difficult.”
“On the other hand, all housing alternatives are increasing in cost/price, so just maybe, manufactured housing will continue to be a comparatively less expensive, albeit affordable, attainable alternative.”
U.S. Population now at 331,449,281 According to U.S. Census Bureau