Lemons into Lemonade – Again?!
COBA7® via community-investor.com Blog # 304 @ 29 June 2014 Copyright 2014
Perspective. ‘Land-lease-lifestyle communities, a.k.a. manufactured home communities and ‘mobile home parks’, comprise the real estate component of manufactured housing.’
This blog posting ‘is a national advocacy voice, ombudsman press*, statistical research reporter, & online communications resource for all LLLCommunities in North America!’
To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance®, a.k.a. COBA7®, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764
* ombudsman press. ‘Manufactured housing’s ronin; fielding inquiries, complaints, etc.
Introduction to this week’s COBA7® blog posting at community-investor.com website
We are living in exciting, if not challenging, times! This week, we look at how the manufactured housing industry, beginning in 1976, turned a proverbial regulatory ‘lemon’, during the next 20 years, into business success ‘lemonade’ – and what it’s going to take today to launch a resurgence of prosperity now absent for the past five years!
COBA7 continues to identify and meet the practical business needs of land-lease-lifestyle community owners/operators coast-to-coast! Last month it was the mantle of Official Ombudsman (press) to the manufactured housing industry and LLLCommunity asset class. This month it’s the announcement of two new Signature Series Resource Documents long needed, and now formally requested by owners/operators.
LEMON INTO LEMONADE–AGAIN?
How the manufactured housing industry turned the sour-tasting, performance-based, HUD-Code building regulation of 1976, into sweet-tasting new home shipment success, when there’s chattel capital to be had for financing home sale transactions on-site in land-lease-lifestyle communities & elsewhere. But can the industry do it again?
The tripartite formula for preserving this unique and valuable source of quality, non-subsidized, truly affordable housing (i.e. ‘half the cost’ of site-built housing, not including underlying developed land), is simple and straightforward:
1. Maintain federal preemption of the HUD-Code relative to manufactured housing. Proof of value? Modular homes are another type, perhaps even more sophisticated form, of factory-built housing, but look how poor-to- marginal their annual production ‘numbers’ are, thanks to the plethora (i.e. ‘superabundance’) of state and local building codes affecting design, construction, and installation of ‘mods’
2. Uniform building standards – that apply nationwide, with variation for snow loads and a very few other performance-related factors.
3. Uniform building standard enforcement – that remains pretty much the same coast to coast.
Today, the only ingredient missing, from making this tripartite work well, is MONEY. Without rehearsing the sordid details, recently outlined in Mark Fogarty’s article titled ‘Manufactured Housing Suffers Worst Decline of Any Mortgage Niche’ in National Mortgage News, the HUD-Code manufactured housing industry continues to suffer dire consequences from the bursting of its’ chattel finance bubble shortly after the turn of the century.
Nearly 15 years following that debacle, when we have creditworthy prospective homebuyers, we rely on the (now) ‘Big Five + One’ independent, third party chattel lenders: 21st Mortgage Corporation; Triad Financial Services, Inc.; CU Factory Built Lending; U.S. Bank- Manufactured Housing; Green Hill Financial; and, Vanderbilt Mortgage (in-house @ Clayton Homes), to underwrite too few transactions.
With that said, the two parallel fallout trends that have emerged, since shortly after year 2000 – as annual new home shipments plummeted from 372,843 in 1998 to 49,789 by 2009, are:
1) Transition from reliance on home sales and placements by independent (street) MHRetailers, TO on-site marketing and sale of same, new and resale, by land-lease-lifestyle community owners/operators; and,
2) Transition from reliance on aforementioned independent, third party chattel lenders, TO all manner and degree of self-finance, ‘captive finance’ and otherwise on-site, including rental of property-owned manufactured homes.
Interestingly, writer Fogarty, an ‘editor at large’ at National Mortgage News, believes he knows, and therefore ‘understands’ the “…outlook for a resurgence of this kind of (chattel capital) lending.” He recites six obstacles standing in the way of resurgence; others opine ‘eight’:
1. Competition from distressed sales of site-built single-family loans (homes?)
2. historically low interest rates
3. record affordability for site-built homes (in some local housing markets)
4. limited conventional financing options due to titling of most manufactured homes as personal property
5. underdeveloped secondary market for (new) manufactured home loans
6. pending financial regulations that could further curtail manufactured home lending
7. almost nonexistent secondary market for resale home valuation, sales, and lending
8. continued limited access to chattel capital via independent, third party chattel lenders
So, is all this ‘too much’ to overcome during the weeks and months ahead? What do YOU think?
Well, there’s a soon-to-occur event where you’ll be Welcome to make your observations, considered opinions, even helpful suggestions, known to people who ‘make things happen’.
You’re invited to participate in two sequential National Public Forums, on 11 September 2014, during the 23rd International Networking Roundtable, at the DOLCE Conference Center, in Peachtree City, GA. For a descriptive registration brochure, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Attendance at this historic event (First time in manufactured housing industry history that businessmen and women from throughout North America are coming together to collectively plan their Free Enterprise futures!) How can you not want to participate? But remember, attendance is limited to 250, so don’t delay and miss this stellar opportunity!
COBA7 Announces Two New SSRDs!
Last month, the Community Owners (7 Part) Business Alliance®, or COBA7®, formally took on the mantle of Official Ombudsman (press) to the manufactured housing industry and land-lease-lifestyle community asset class. Already, businessmen and women, academics, even federal agencies, from across the U.S. are sending inquiries our way relative to needed statistics, hard to find information, requests for business contacts, and more.
Well, this month, in response to requests from COBA7® affiliates, we’ve started work on compiling two new Signature Series Resource Documents® or SSRDs®.
In the first instance, we’re culling our list of real estate brokers who specialize in the marketing of LLLCommunities, to produce an SSRD that’ll list, this time around, those who generally work nationally. Future editions might expand to include regional representation.
In the second instance, we’re culling our list of HUD-Code home manufacturers, including those affiliated with the Manufactured Housing Institute (‘MHI’) and the Manufactured Housing Association of Regulatory Reform (‘MHARR’) – the latter being more difficult to obtain as their member list isn’t often made public, as well as ‘non members’ of either body, to create an SSRD that’ll be helpful to everyone in the MHBusiness.
Plan is to have both new SSRDs ready for distribution at the 23rd annual International Networking Roundtable, 10-12 September 2014, in Peachtree City, GA. Just One More Good Reason for YOU to participate, wouldn’t you say? Hope YOU do so.