Let’s Not Waste This Latest MHShipment Crisis!
Blog Posting # 593 @ 10 July 2020; Copyright 2020. Educatemhc.com
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: Let’s stop sitting around doing nothing about our industry’s present new home shipment malaise-cum-crisis! No one else is sounding any sort of alarm, so I’ll do it here in Part I of this blog posting. Part II? A very important announcement relative to the RV/MH Hall of Fame!
Let’s Not Waste This Latest MHShipment Crisis!
2009 = 48,789 new HUD-Code homes shipped (lowest # since 1940s), & 2019 = 94,615. Yes, up from 2009, but 1,940 fewer than year before (2018); with 2020 looking even more dismal!
So, how did we address the first manufactured housing shipment crisis, circa 2009? Simple. More than 100 HUD-Code housing manufacturers and land lease community owners/operators met for a day (2/28/2009) at the then new RV/MH Hall of Fame facility in Elkhart, IN. Their express purpose that day? To jointly address the shipment shortfall crisis from two perspectives:
• Decide what manufacturers must do to entice community folk to buy more homes!
• Decide what features community owners wanted in new housing product to buy & sell!
Result? Manufacturers agreed to begin producing “…single section and modest-sized multi-section HUD-Code homes with updated, attractive, functional, and durability-enhancing features…” Quoting from sales literature at the time. The features? Shutters on exteriors of windows, vaulted ceilings, asphalt shingles and roof overhangs, linoleum in kitchen, utility room and front door areas, 40 gallon hot water tank, 200 amp service, wood cabinetry, non-plastic sinks, tubs and shower stalls. NOTE the numerous durability-enhancing features; to keep turnover maintenance expenses low, and speed ‘make ready’ between tenants and or homeowners/site lessees.
This ‘new line of manufactured homes’ did not receive a working name until seven months later, when landscape architect consultant Don Westphal proposed, at the Networking Roundtable, we call them Community Series Homes. This, in recognition of the demise of Developer Series Homes, manufactured during the 1990s, as ‘big box = big bucks’ land-and-home packages, in failed competition with traditional site builders.
Consequence of this action? During 2009, only 24% of all new HUD-Code homes were sold directly into land lease communities (i.e. bypassing independent-street-MHRetailers and ‘company stores’). By year 2015, more than 40% of all new HUD-Code homes were being sold directly into land lease communities. In other words/numbers: 2009 = 12,000 homes; 2015 = more than 28,000 homes. Some say 16,000 more Community Series Homes, upping the 2015 total to 70,544!
There’s one more piece to this ‘solving the shipment volume crisis’ puzzle to be acknowledged, though it’s seldom described or discussed. And that’s how land lease community owners/operators, many for the first time in their careers, learned how to effectively market and sell new HUD-Code homes on-site within their communities, not relying on aforementioned MHRetailers. How’d this happen? IMHA/RVIC (Indiana) state association led the way, with a novel ‘Two Days of Plant Tours & Home Sales Seminars’ program, again – hosted by the RV/MH Hall of Fame, in Elkhart. Here, community owners/operators learn:
• How to get their properties (and staff) ready to sell new HUD-Code homes
• How to spec and buy new homes directly from factories, in accords with their local housing market’s Area Median Income (‘AMI’), and not solely on the advice of corporate sales representatives.
• How to actually market and sell new homes, using product and property USPs (Unique Selling Propositions) and the Six Right Ps of Marketing.*1
• How to seller-finance new home-only sales transactions via cash, lease-option, and conventional sources of chattel or personal property financing.
Well, there you have the ‘answer to the first MHShipment crisis’; pretty much where we are today – as we face yet another similar crisis.
Again; HUD-Code housing shipment volume during year 2019 was 94,615; no one expects this year (2020) to eclipse that number. Guestimates? Some say 90,000; others suggest 92,902 = which is the number shipped during year 2017.
So, where do we go from here? Well that is not an easy question to ask and even more difficult to answer, for these reasons:
• ‘Let Kevin, Bill & Mark do it!’ One would expect the Big 3-C manufacturers (Clayton, Cavco, & Skyline-Champion) to be publicly (to avoid accusations of collusion) working this out among themselves, but are they? Not that I know of. So, likely a non-starter.
• Second. Who am I, to be addressing this crisis issue? As a 40+ years freelance, factory-built housing consultant and land lease community owner, I planned and hosted the 2/28/2009 meeting in Elkhart, and believe I could, with assistance from one or both national advocates for manufactured housing, do so again! Will that happen?
• Third. Some say this crisis is within the purview of two national advocates for manufactured housing – and they’d be right, except for one controversial reason:
The most recent design innovation, championed by one advocate, intended to address said crisis, has not been successful to date! Specifically, the CrossMod™ product line, according to 2019 DTS reports by Fannie & Freddie, saw only six MH Advantage loans (Think CrossMod™ homes) bought that year, of which only two were DTS eligible. So, there’s territorial jockeying, maybe even hard feelings in play at this point.
What do YOU think we should do going forward? If you offer no suggestions, and don’t encourage me to continue down this crisis-resolution road; well, guess ‘you’re part of the problem’ and there’ll be no short term crisis solution… Do I have a definitive answer in mind at present? No I don’t. But I’m a strong believer in ‘group think’ and brainstorming, where business matters are concerned. And as far as I’m concerned, We haven’t even started on this!
And there’s this bugaboo; a.k.a. ‘The cow is already out of the barn!’ When land lease community owners/operators routinely market and sell new HUD-Code homes on-site, as they do now, local housing market MHRetailers are understandably reluctant to send qualified, motivated would-be home buyers into communities to select a rental homesite, fearing they might be poached there. How to resolve this sensitive matter? Do we even want to do so?
In closing, I’ll say this. Just like it wasn’t until the strangely-named ‘Ah Ha! & Uh Oh! Worksheet’*2 came along, in 2009, weaning land lease community owners/operators away from 100% reliance on manufacturer’s rep advice as to new home specs and pricing, we now – in my opinion – must go the next step. How so? We know the AMIs of local housing markets – usually defined by postal zip codes, and how AGI (annual gross income) of would be homebuyers, ‘should’ determine how much new home is to be transacted. A dynamic combination of this core information should be researched, prepared, and widely distributed, in print and or online, throughout the U.S. In other words, provide a ‘next generation tool’ by which community owners/operators can determine 1) what their local housing market will bear and 2) what specific customers can truly afford!
POSTSCRIPT. Just how serious is the (home sales resources) disconnect, raised in the previous paragraph? Well, How to Successfully Sell New & Resale Manufactured Homes was authored by Gary Pomeroy, of Golden West Homes, way back in year 1977 – that’s 43 years ago! Sure, there’s been a plethora of HOW TO advice over the decades (e.g. the late Grayson Schwepfinger, Joe Morris,’ Lonnie deals’, et. al.), but Gary’s tome remains the ONLY text to specifically deal with this important subject! What I’m proposing here, is ‘someone’, who’s qualified, experienced and motivated in MH marketing and sales – within and outside land lease community environments (i.e. They’re two really different sales perspectives), to use this shipment crisis education opportunity, to help (save?) the manufactured housing industry, and frankly, ensure their personal professional legacy! Are YOU the person for whom this paragraph is penned? If so, and you’d like advice and or assistance going forward, email me at email@example.com This is not a project for me, but we have resources available to this end.
1. Six Right Ps of Marketing: product, Place, Price, Promotion, People, Process. For a FREE copy of a 3X5 plastic wallet card containing details of these six ‘Ps’, phone # @ end of End Note # 2.
2. “…estimates maximum recommended ‘affordable’ & ‘risky’ purchase prices for new & resale, privately-owned homes of any type, sited on realty owned fee simple with home or ‘home-only’ on leased land.” For a FREE copy of the ‘Ah Ha! & Uh Oh! Worksheet’, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.
RV/MH Hall of Fame Induction Banquet Postponed until 3 December 2020!
For additional information, phone (574) 293-2344. Event details to follow during months ahead. I’ve already changed my hotel reservations to ensure being present for this gala annual event!
George Allen, CPM, MHM