Manufactured Housing Conundrums revisited, & Lack of Leadership…
Blog # 433 Copyright @ 12 February 2017; community-investor.com
Perspective. ‘Land lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’
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Part I. We’ve archived all 432 blog postings to date, and often scroll back through them for reference purposes. Hence the material used for Part I today. More to come later.
Part II. Frankly, I’m tired of ignoring provocateurs spouting self-serving messages like, ‘Double your site rents in 2017’ in one instance, and ‘Want to use my resources? Hire me as your consultant!’ in another. Nor, in my opinion, can we continue to rely on salaried leaders of three national advocacy entities to ‘lead’ the entire MHIndustry & LLCommunity asset class. We need one or more charismatic leaders with, as we say in the Marines, command presence – and more! And who might that be?
Manufactured Housing’s Conundrums Revisited
(Conundrums? Riddles, Hard Questions)
Slightly more than a year ago, on 24 January 2016 to be exact, blog posting # 383 described the manufactured housing industry & land lease community mishmash of conundrum-like riddles and questions using 14 bullet points. It’s high time for an update. but we’re not going to revisit all of them this time around, but rather highlight significant advances and miscues occurring since then. And perhaps more conundrums in a future blog posting.
Relative to Community Series Homes, their popularity continues to increase, with some HUD-Code home manufacturers, reportedly, using them as loss-leaders. Result? TRIPLE the number of new HUD-Code homes shipped directly into land lease communities since year 2009 = 48,789 total units X .24% = 11,709; 2015 new homes; year 2015 = 70,544 total units X .41% = 28,923 new homes; &, year 2016 = 81,136 units X at least 41% = 34,007+ new homes. Again, TRIPLE the influx of new HUD-Code homes into LLCommunities since year 2009! Still forecasting 75% of annual shipments going into LLCommunities by year 2020, as manufacturers increasingly embrace this emerging market. Many still do not know how to prospect for properties and owners!
Are HUD-Code home manufacturers exercising price compression without sacrificing quality, energy efficiency and product reputation? In some cases, YES, but NO in one major regrettable instance! Otherwise, the Big Three C firms (Clayton, Champion, Cavco) appear to be ‘holding their own’, balancing price and product. At last report, MHI manufacturer members garner 80+/- percent of national market share of HUD-Code homes! Now, if MHI would just stop claiming, on its’ website, to represent the entire factory-built housing industry (It doesn’t! Only 5% @ HUD-Code, & maybe 5% @ modular housing, but NO production site builders or panelizers!), we’d find the remainder of their published statistics easier to believe – except of course, their routinely adulterated Institute for Building Technology & Science (‘IBTS’) monthly MH shipment totals (e.g. December 2016, where IBTS posted 6,995 units; MHI calculated something altogether different). Advice? Want MHIndustry ‘cred’ in DC? Be accurate on all fronts!
Where a year ago, only one HUD-Code home manufacturer had an in-house, or closely-related, independent third party chattel capital finance source, working in partnership with them, to factory-finance or seller-finance homebuyer/site lessee transactions on-site, most manufacturers do so today! That’s a major achievement right there. Now we just need to be able to securitize and liquidate seasoned mortgages, to free up capital to originate more chattel loans. Hence, the importance of the FHFA (Federal Housing Finance Agency) Listening Sessions taking place this month in Chicago, Washington, DC., and San Francisco – to help the GSEs (Fannie Mae & Freddie Mac) craft DTS (Duty to Serve) programs relative to manufactured housing and land lease communities. As a related aside, more LLCommunity owners were present at the Chicago Listening Session, than firms from any other segment of the manufactured housing industry!
Floor fees. Now, here’s the closest thing the manufactured housing industry has to a sacred cow conundrum! Prior to 1985, all floor fees went to one national advocacy entity and affiliated state associations. Since 1985, a second national advocacy entity joined in that funding mix. And, with the 2014 addition of a third national advocacy entity (As another related aside, one really must ask: ‘What’s causing new national manufactured housing advocacy entities to emerge?’), a new industry/realty asset class reality will have to be addressed: ‘Where should 500+/- land lease community portfolio owners/operators direct their floor fees be credited, to achieve the most bang for their bucks re: national& state lobbying efforts, general regulatory relief, national housing brand advertising, and industry image improvement? Read Part II following….
So, there you have a conundrum update relative to HUD-Code home manufacturers. In coming weeks we’ll do something similar for the remaining ten bullet points, as they relate to 1) land lease community operations, 2) affordable housing crisis matters, & 3) hybrid approach to manufactured housing finance within LLCommunities.
LACK of LEADERSHIP THROUGHOUT
“Hear Me Out Before You Judge The Headline” GFA
• There is no one person to identify as leader of the manufactured housing industry (including the 50,000+/- land lease community realty asset class) today. It’s not Tim Williams, head of 21st Mortgage Corporation, & present chairman of the Manufactured Housing Institute (‘MHI’). Nor is it Mark Weiss, esquire, executive director of the Manufactured Housing Association for Regulatory Reform (‘MHARR’). And it isn’t Samuel Zell, chairman of real estate investment trust, ELS, Inc.- largest owner of 390+/- LLCommunities in the world. And it sure isn’t me, administrator of the Community Owners (7 Part) Business Alliance (‘COBA7′), a division of GFA Management, Inc., dba PMN Publishing. Anyone else? So much for the leadership vacuum amongst the industry& asset class’ three national advocacy entities and our billionaire investor friend.
• While the trade press is rarely, if ever, thought of in terms of ‘leading an industry’, recent business developments require a review of what’s happened of late. As of December 2016, all subscriber-supported print trade publications are GONE! No Manufactured Home Merchandiser, The Journal, Modern Home, & Community Management magazines. (Yes, a new publisher and trade rag may yet appear, but hasn’t to date). What’s left is a couple online ezines, one of which berates (‘scolds’) to draw attention – featuring maverick writers and out of context commentary – likely sullying reps in the process. The other ezine, and this weekly blog posting, continue to plod along, content with educating the manufactured housing industry, communicating what there’s need to know, ultimately, some are wont to say, leading by example.
So, what’s this all about? Once again, and for about the tenth time at least, noise is being made to better utilize industry funds for – as was identified in Part I of this week’s blog posting – 1) national & state lobbying efforts, 2) general regulatory relief, 3) national housing brand advertising, and 4) industry image improvement.
The commentary runs like this. From some quarters, ‘Strip all responsibilities from MHI and force them to concentrate on national lobbying for the manufactured housing industry! Others? Better financially support MHARR and ‘turn it loose’ on the regulatory constraints hamstringing housing manufacturers. Finally, assemble a team of marketing experts, drawn from national advocacy organizations, to craft and fund a true national housing brand advertising program. And finally; reach out to ALL land lease communities nationwide, and scattered site homeowners, encouraging them to get on board a sweeping industry image improvement effort.
Is all this possible? We won’t know until we try. And here’s ‘the rub’ in all this: Finding a nationally known and respected, capable, experienced, and motivated LEADER we can all support, and Do So; OR, default to those who repeatedly and publicly claim to ‘want the job’ and let the chips fall where they may. Yikes! Let’s hope the former prevails over the latter alternative.
While all this, so far, has been and is, ‘easy to say’ (or write), it’s a far more difficult task to organize, plan, and effect. Take advertising for example. As was pointed out, this month, by a savvy MHIndustry executive. There’re at least three major hurdles to developing and effecting a national advertising campaign for manufactured housing:
1. Money. Advertising is expensive. Will all ‘players’ be willing to participate? Another good reason to revisit the floor fees allocation situation..
2. Advertising focus. Affected, start to finish, by self-interest. For example: Community owners will press for ads selling Community Series Homes into their properties; while manufacturers, per past practice, will likely press for ‘Big Box = Big Bucks’ developer series homes, with their greater profit margins
3. Once again; who to oversee the ad program? Sure, there’s a ‘volunteer’ or two out there angling for this responsibility, but has their past performance(s) on the national scene as ‘leaders’ qualify or disqualify them for this precedent-setting task?
Methinks this MHIndustry executive has put his finger on the pulse of the challenge at hand. Where do we go from here?
A good start might be at the MHI Winter Meeting in San Antonio this week. No, not in one of those storied closed session attended only by major corporate or political players, but an Open Meeting among all present at the meeting. Why? Because private sessions, at MHI meetings, already have a bad rep for ‘what goes on behind closed doors’, with, in this industry observer’s opinion, decisions benefitting a favored few.
George Allen, CPM,. MHM
COBA7, Box # 47024, Indianapolis, IN. 46247 (317) 346-7156