MANUFRACTURED HOUSING
Blog Posting # 645 @ 2 July 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: It seems, whichever way we turn these days, we’re fighting battles in behalf of manufactured housing and land lease communities. Part I describes the perennial battle over contemporary (vs. archaic) trade terminology. Part II describes recent attempts to meddle with the HUD-Code, weakening our performance –based building standards as we know them, opening the door to products and raw materials not otherwise needed during fabrication.
I.
MANUFRACTURED HOUSING
The Industry & Realty Asset Class’ Perennial Puzzlement about Terminology
Recently received a MIDYEAR 2021 report, researched and distributed by a major real estate brokerage firm specializing in land lease community marketing. It’s cover price? $1,500.00
Why am I writing about it? Well, while it does contain some helpful and interesting statistics for the property type, it’s awash with both old and contemporary trade terms, making it at times, as confusing as it would otherwise be useful. I’ve been fighting this terminology battle most of my 40+ year career in manufactured housing and as a land lease community owner/operator.
Here’re some of the anomalies found throughout this otherwise seminal report.
Let’s begin with manufactured home community. Following national surveys by the now defunct Manufactured Home Merchandiser magazine in the early 1990s*1, ‘manufactured home community’ was selected as the official term of record describing what had previously been known as ‘mobile home parks’. This was codified in the J. Wiley & Sons published tome, Development, Marketing & Operation of Manufactured Home Communities, in 1992. The only deviant from that term, only on occasion by a few, was ‘manufactured Housing community’. And today, nearly 30 years later, and since 2011 (some say 2012), the contemporary term has become ‘land lease community’, by dint of the seven types of shelter now be found sited on rental homesites in these communiteis.*1 Oh, and within the subject report is found this denigrating term, “…smaller parks….” And so the puzzlement continues into year 2021.
Then there’s the matter of rental homesites (the contemporary trade term). In this report, read just about anything except ‘homesite’. Rather, the terms of choice here include space, lot and unit.
Years, no decades, ago, those of us who served the industry and realty asset class as self-appointed scorekeepers agreed, we were more ‘glass half full’ people rather than ‘glass half empty’. So we opted to refer to Occupancy (e.g. # occupied sites divided by total # of rental homesites), rather than Vacancy (the reciprocal of occupancy), when dealing with this common benchmark statistic. Take a look, you’ll find this is the case in every annual ALLEN REPORT (i.e. 32 to date), J. Wiley & Sons’ How to Find, Buy, Manage & Sell a Manufactured Home Community (1992), and in the MHIndustry Official Lexicon & Glossary – available via www.educatemhc.com However, in this report, it’s all about ‘vacancy’.
‘Rent control proposals’ are decried early on in the subject report. Agreed. However, informed industry and asset class pundits, again – for decades, have used the euphemism (i.e. make a negative term sound and read more positive) ‘landlord-tenant legislation’ in instances like this.
Oops! At one point the drafter of this report digresses and refers to ‘two star parks’, referring to the Woodall Star System of rating the quality of ‘mobile home parks’ before and up to 1976. Today, knowledgeable investors and value appraisers avail themselves of the ABClassification System, in place almost as long as the National Communities Council (‘NCC’) division at MHI has been operating, i.e. since 1996. And, as noted in the first sentence, the report slips back into ‘parks’ lingo.
I found just two, in my opinion – errors in this report. How would you interpret the last half of the following statement? “Some older communities…are being redeveloped into higher-density properties, cutting supply.” In my experience, older communities are oft functionally obsolete communities, and when redeveloped, two adjoining rental homesites are oft combined into one, reducing rental homesite count and density, not increasing it.*2
Second error? First, read this statement: “Lenders…are opening back up with financing available for quality properties.” I contend ‘they never closed or even slowed!’ Read the 23rd annual National Registry of All Lenders (dated March 2021), to learn real estate-secured mortgage originations total, among 24 lenders/brokers working with land lease communities (& RV park combinations), exceeded that of the previous year! Year 2019 = $7,253,000,000 and year 2020 = $9,766,000,000.*3 That’s a 2 ½ billion $ increase between years 2019 & 2020. It doesn’t get much better than that!
Read the following sentence and tell me what’s missing. “…higher (rental) rates are bolstered by strong demand, facility improvements, and a lack of significant supply growth.” In my opinion, a fourth factor is: “…and predatory property management practices on the part of some new owners of land lease communities.” Do you agree?
Bottom line to all this? Simple. Manufactured housing and land lease communities legacy goes back more than 70 years. With all the shipment turmoil we’ve endured over the decades, it should be – but so far hasn’t been, fairly easy to agree on contemporary trade terminology that enhances the image, attractiveness, and public acceptance for and of the industry and realty asset class. Are you on board with this? Use this article and content as your motivator to begin ‘talking the talk as well as walking the walk’!
End Note.
1. Seven types of shelter: pre-HUD ‘mobile homes’, post-HUD ‘manufactured homes’, modular homes, Park Model RVs, RVs for a season, stick-built homes fabricated on-site to look like manufactured homes (only in FL.), and now ADUs or Accessory Dwelling Units such as Tiny Homes.
2. Functionally obsolete communities are often older properties with rental homsites developed to accommodate 10 & 12 wide X 40’ long ‘mobile homes’ back in the 1960s and before.
3. This Resource Document, like the aforementioned ALLEN REPORT, is also available for purchase via www.educatemhc.com
II.
GEMS FROM MHARR
Remember that quote from famous author George Orwell (e.g. Animal Farm & 1984) describing why Americans should respect their combat veterans?
“People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.”
Well, an apt variant of that pithy remark applies to shy manufactured housing professionals (‘you’) should appreciate the regulatory reform work of the Manufactured Housing Association for Regulatory Reform:
‘Manufactured housing businessmen and women enjoy peace of mind only because a watchdog national advocate, like MHARR, stands ready to challenge product statutes and initiatives affecting their industry and livelihood.’
Such was the case recently, when MHARR’s Mark Weiss, in ISSUES & PERSPECTIVES, led with this salient and suggestive headline: ‘INVASION OF THE BUILDING CODE SNATHCERS’. In it, Weiss ‘made the case’ against individuals and organizations seeking changes to HUD-Code standards, based on building codes never intended to apply to manufactured housing.
IN his words: “….there seems to be a growing tendency within the Manufactured Housing Consensus Committee (‘MHCC’) standard development process, for some members – and others – to seek changes to the HUD Code standards based on standards, concepts, or testing mechanisms (or all three) derived either in whole or in part from other general building codes that are not and have not been developed specifically for manufactured housing under the mandatory criteria and requirement of federal manufactured housing law.”
Why is this a key issue? (It’s actually been ‘around’ for a while). Because other building codes “…are not statutorily required (‘like the HUD-Code’) to balance cost versus benefit, (and) are part of the reason the cost of construction for manufactured homes, per square foot, is roughly half that of site-built homes, according to the most recent annual statistics from the U.S. Census Bureau.”
And Mark continues: “….the MHCC must constantly be on guard against proposals for new and modified standards (whether based on other building codes or not), that are little more than an attempt by special interests to ‘legislate’ new or additional demand for products or raw materials they…sell to the industry.” Ah Ha! The movie behind these efforts to change standards!
The Press Release concludes with this summary statement: “…HUD and the MHCC should reject any effort or tendency to infiltrate provisions from other general residential building codes into the HUD standards or enforcement regulations including, most especially (but not limited to) provisions designed to coerce the purchase and utilization of any given supplier – or group of suppliers’ – products.”
So, as stated at the front end of this blog posting, as an industry, we are fortunate to have a ‘watchdog national advocate’ in Washington, DC, supportive of what we do in behalf of
affordable factory-built housing!
George Allen, CPM, MHM
EducateMHC