Immediate Response to ‘Four Ways to Restore Affordability’ to Mfd. Hsng. & LLCommunities!

Immediate Affirmation of ‘Four Ways to Restore Affordability’ to

Manufactured Housing & Landlease communities!


I hadn’t even turned off my PC, after sending this week’s BEBA (Blast Email Blog Alert) to 500+ recipients, when positive responses started arriving, & have kept coming – even today, three days later, as I post this special mid – week blog. Talk about striking a responsive nerve!


So, what’s the excitement about? If you’re reading this blog posting for the first time, my advice to you is to STOP RIGHT HERE, and scroll back through the previous two weeks of blog postings at this website (, to bring yourself up to date regarding the first practical plan designed to SAVE OUR (manufactured housing) INDUSTRY! And this isn’t ‘just my opinion’ either; it’s overt enthusiasm shared by businessmen and women across the U.S. today! The only question is, Are YOU paying attention, MHARR & MHI? (These are manufactured housing’s two national advocacy bodies, domiciled in our nation’s capitol.)

Moving forward and by way of brief review, the gist of this week’s blog posting, Sunday, 12 February, involved four major segments of the HUD Code manufactured housing industry taking simple but major steps to Restore (housing) Affordability to the industry and its’ landlease community real estate asset class.

1. 80 percent of all new HUD Code manufactured homes are built and shipped by two firms, both direct, dues – paying members of MHI. They’re challenged to switch emphasis from ‘big box = big bucks’ multisection and humongous singlesection homes, to Community Series Homes (i.e. CSH = smaller multisection & singlesection homes with durability – enhancing features), to fill an estimated 250,000 vacant rental homesites across the U.S. Also, price these homes ‘affordably’, and ‘keep score’ by counting new homes ‘sold’, not just the ones they’ve shipped – finally breaking 60 years of ‘trailer sales’ tradition!

2. Independent ‘street’ MHRetailers and ‘company stores’ number fewer than half that were in business ten years ago. They’re challenged, once and for all, to shed their 60 year business model of ‘hawking units like car dealers’, and begin marketing and selling new homes as Realtors® do. However, without an adequate supply of accessible chattel (personal property) capital for originating new and resale home loans, little will change, and business survival will be questionable.

3. Independent, third party chattel lenders face a tricky conundrum. They’re challenged to ensure mortgagor customers aren’t buying more home than they can afford; and, at the same time, to revamp loan origination and underwriting, restoring ‘household/utility expenses, but not telecom services’ back into the traditional 30% Housing Expense Factor (‘HEF’). Admittedly, not an easy break with a lending practice that’s been ‘going on’ for awhile – but it needs to be done, the sooner the better.

4. Landlease community owners large and small. These folk have a tri – part Restore Affordability challenge: 1) ensure rental homesite rent is ‘in sync’ within local housing markets; 2) when engaging in self – finance of on – site home sales transactions, make the same change to the 30% HEF as just described; and, 3) keep homebuyer/site lessee’s combined home payment (e.g. PITI & household/utility expenses) and site rent amount lower than they’d pay for an equivalent – sized site – built home in the same local housing market.

OK, there you have the four part plan in brief. Now, what have our online peers been saying about these challenges to Restore manufactured housing Affordability’, these past three days?

“The beauty of your affordability model, is easy to apply; and frankly, simplicity is a good way to avoid ‘paralysis by analysis’. The one piece I keep coming back to though, in terms of manufactured housing affordability, is the difference in annual gross incomes among prospective homebuyers, and prices of inventoried homes in different parts of the same local housing market. Is there a way to match groups of homebuyers with similar AGIs, with appropriately priced housing inventory(ies)? (lightly edited. GFA) Answer? ‘Not to my knowledge or experience, outside multi – retail sales centers owned by a sole proprietor.’ Anyone ‘out there’ have a different take on this query?

“I applaud your continuing efforts to defragment this industry, but seriously doubt ELS, Inc., and Clayton Homes have the ability to change their business models, and promote inter – segment cooperation. Nevertheless, keep the bully pulpit going.” cp

“Good thoughts George. Your excellent suggestions involve some major industry changes. For example, if HUD Code manufacturers do build more CSH homes, they would/should promote them, instead of the ‘big boxes’. That additional promotional exposure would certainly help the rest of the industry! Also, the manufacturers need to define the dividing line between their ‘big boxes’ and modulars. My ‘take’ is that manufactured housing will eventually (maybe now) divide into two segments: the CSH and lower end ‘big box’; and those homebuyers, wanting a factory – built home in the $50,000 plus price range will ‘go modular’.” (lightly edited. GFA)

“Another ‘interaction (inter segment) example’, is that even MHRetailers who make the business model changes you suggest, can’t really sell anything without chattel financing – creating somewhat of a chicken and egg scenario.” So true.

“Yet another (inter segment) reality, is that chattel lenders need to look beyond debt ratio underwriting, and recognize (Actually, ‘remember’) the historic advantage of financing new homes in landlease communities, enlisting on – site management’s assistance with collections, often lowering the frequency and cost severity of ‘repos’. Furthermore, when repossessions do occur, they don’t have to be moved; rather, remodeled in place, and on – site personnel enlisted to assist with reselling. And the community owner might even buy the repo unit. Goal here? Recreate a complementary, symbiotic working relationship between lender and LLCommunity owner/operators.” (lightly edited. GFA)

“Come on George, tell us who the corporate decision – makers are; who needs to get on board this ‘Four Ways to Restore Affordability to Manufactured Housing’ plan to Save Our Industry! The two HUD Code home manufacturers and ‘four plus one’ chattel lender executives are easy to ID. Have any of the seven responded to this blog yet? I’d like to know just that! And as you imply, MHRetailers are probably a lost cause, without a major influx of chattel finance. But the LLCommunity folk. Now there’s a mystery. Who’re you talking about here? Looking at the six biggest portfolio owners listed in the 23rd annual ALLEN REPORT, none of them are openly or directly involved in the machinations of manufactured housing, let alone landlease community affairs. How do we get them to care their properties too, will be ‘going down the tubes’, if they aren’t already, as they price rents out of some, if not all, their markets? I mean, you can only ‘give away’ new homes (i.e. ‘Selling at minimum or no retail margin or profit.’ GFA), in the face of high rents, for just so long. So, who do we look to, to ‘take the lead’ in Restoring Affordability to our property type? And hey, do you know most of these guys don’t even have all their properties paying dues as members of their respective state associations? Come on, tell us more!” (edited. GFA) At this writing, home manufacturers and chattel lenders have been absent from this discussion.

Pretty impressive response, wouldn’t you say? But know what? All this momentum will quickly slow and stop, if we don’t keep the pressure on our elected and salaried industry and asset class leaders. Remember, many of them will be convening in Arlington, VA., @ 26 – 28 February 2012, for MHI’s annual Legislative Conference. Will YOU be present to make your feelings known regarding issues (e.g. S.A.F.E. Act, Dodd – Frank bill, ‘MHIA@2000’, and more…) affecting manufactured housing and landlease communities today? For information regarding this upcoming national meeting, phone (703) 558-0666 and talk to Lisa Brechtel.

In the meantime, know this coming Sunday’s regular weekly blog posting is tentatively titled: ‘LEST WE FORGET…’ and subtitled, ‘Will MHInitiative®’s ‘How to Save Our Industry?!’ Challenge to the Manufactured Housing Institute, also be aired at the Legislative Conference in Arlington, VA., on 26 – 28 February 2012?’ There might well be more riding on this meeting than the event organizers realize….


George Allen, CPM®Emeritus, MHM® Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

Leave a comment

Name .
Message .

Please note, comments must be approved before they are published