MH Trade Restraint or Protectionism?
COBA7® via community-investor.com Blog # 335 Copyright @ 8 February 2015
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 the primary national advocacy voice, official ombudsman, research reporter, & online communication media 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.
COBA7® Motto is: ‘U support US & WE serve U!’, and Goal of its’ three print & online publications is: ‘Not only to share information & opinions, but to transform & improve!’
Introduction to this week’s COBA7® blog posting at community-investor.com website:
Friends in the MHBusiness sometimes oft ask if I tire of ‘challenging & goading the MHIndustry & LLLCommunity realty asset class’ elected & salaried leaders to openly address Ongoing Issues (e.g. lack of easy access to chattel capital), Strategic Matters (e.g. restraint of trade) and Troublesome Barriers (e.g. financial ‘over regulation’) affecting manufactured housing shipments’ (i.e. ‘or lack thereof’); and the answer is YES! But know what? There’re too few businessmen & women afoot today, let alone investigative trade journalists, doing so! Hence; until that markedly changes, if it ever does, my career work path is laid out before me; and to great extent, rejuvenates me week after week, month after month, year after year! All I ask of YOU, is to read & ponder what I pen, then support me as you will – by word, deed, & affiliation with the Community Owners (7 Part) Business Alliance®, or COBA7®! 2015 promises to be one exciting year!
The two following op/ed pieces play to the frustrating yet stirring business scenario just described.
Sometimes, a Simple Statement Says It All!
And this is one of those times! Recently, a short op/ed story titled, ‘The Hidden High Costs of Mobile Homes’ made the rounds among businessmen and women engaged in manufactured housing and land-lease-lifestyle communities. The simple statement, actually a subtitle to that cited in the first sentence, reads thusly:
• “Since their creation more than (a) half-century ago, nearly everything about manufactured housing has improved – except the way they are sold and financed. High-interest loans, shorter loan terms, and sales tactics that turn what could be a good deal into an expensive proposition.”
Stop and read those two sentences again; then, sit back and ponder this question:
• Is it possible to reposition manufactured housing, from being an Expensive Proposition (especially when sited within LLLCommunities), into a Good Deal, featuring 1) low-interest loans, 2) longer term loans, & 3) effected by professional, courteous sales and leasing professionals?
Your answer? Mine is: ‘Why not replace the old business model with a new, fair and attractive one?!
Specifically, replace the half century paradigm, characterized by these negatives, pursuant to increasing number of LLLCommunity owners/operators filling their vacant rental homesites – rather than relying on declining number of independent (street) MHRetailers and ‘company stores’, using low-interest and short term loans, marketed and sold by professionals – with added surety of homes installed on realty controlled by the property owner.
This is already happening in increasing numbers, as enlightened LLLCommunity owners/operators either sell new home inventory ‘close to cost’ (to lowering the sales price) and or meld mortgage terms to fit homebuyer/site lessee’s ability to repay the loan and site rent each month. This is why LLLCommunity owners/operators, in many local housing markets throughout the U.S., are increasingly being referred to as the NEW BREED of MHRetailers & Lenders!
The secondary, but equally compelling challenge is ‘How to involve the owners/operators of single LLLCommunities, and small property portfolios, to embrace this new manufactured housing paradigm?
What say YOU? Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.
Trade Restraint or Protectionism?
The Regulatory Control Dilemma Few Talk About Openly,
‘Hiding One’s Light Under a Basket, or Protecting it from Wind?’
This subject is difficult to get first hand public information about, from official sources, whether they be government agencies, national advocacy bodies, or corporate executives and related stakeholders. But here’s the historical gist of the matter.
Allegedly, ever since annual shipment numbers of new HUD-Code manufactured homes ‘tanked’ to less than 50,000 per year (down from 372,843 in 1998), by end of year 2009 – and only averaging 54,146/year since then (2009-2014), the federal agency (‘HUD’) tasked with regulating the industry, has supposedly struggled financially (i.e. not enough label license fee income to fully fund the program). In fact, money has been so tight, it’s likely a reason the new manufactured housing installation standards, codified in 2007, have yet to be fully implemented and enforced eight years later.
Then, a couple years ago, effort was made on the federal level, to gauge industry reaction and identify supposed (business) consequences if HUD oversight disappeared from the manufactured housing regulatory scene altogether. While most of the results of this brief field study remain anecdotal, it was easy to see how ‘the industry’ was uncomfortable with even the thought of deregulation. Uncomfortable enough, it turned out, to accept – without protest (that I heard of), a 165 percent increase in label license fees during the Fall of 2014. And now, in early 2015, we learn of a supposedly $-rejuvenated HUD, now intent on enforcing those installation standards of eight years ago!
Why uncomfortable? The HUD-Code manufactured housing industry has learned to live with said national, performance-based building code, one that preempts all local housing codes! And since the code’s implementation in 1976, the manufactured housing industry, to its’ credit, has turned this otherwise regulatory lemon into sweet lemonade – in time, supplying up to 25 percent of the national housing market share of new homes in 1998. Eleven years later, that percentage plummeted to less than 5 percent and has remained there for the past six years.
But here’s ‘the rub’. Is the manufactured housing industry’s supposed reluctance to deregulate, a form of ‘trade restraint’ (i.e. Perpetuating a significant ‘barrier to entry’ for would be new manufacturers, among other factors), or ‘protecting’ it from other (predatory) housing producers, including local zoning boards, who’d likely use deregulation to outlaw manufactured housing altogether? In other words, does HUD regulation also serve as a basket of sorts, dimming our ‘affordable housing’ message to otherwise prospective homebuyers (i.e. When was the last time you saw, read, or heard of any overt, let alone covert, promotion on the part of HUD, encouraging American citizenry to ‘Buy a manufactured home!’? Maybe never, and also our ‘protector’, again, from other types of less affordable shelter who’d be only too happy to see us go away?
All this is the sort of pithy trade conversation, evidently going on behind closed doors in Washington, DC. but certainly not in pubic circles, among – again – government agencies, national advocacy bodies, corporate executives and their stakeholders. Bottom line? Which is indeed Best for the majority of us? Business as usual, at the whiff and whim of HUD-Code home manufacturers; or ‘turn us, as an industry, loose in the housing market place, to create a new business model that works better than the one we suffer today – realizing the significant risks that go with doing so?’ As long as it’s not talked about openly and seriously, it’s doubtful we’ll ever know, let alone see it happen. Just telling you sheep…
Back to the reason we’re, as an industry and realty asset class, way overdue for a National Strategic Planning Meeting, facilitated by the two national advocacy bodies presently representing manufactured housing in Washington, DC.; both effectively controlled by HUD-Code home manufacturers and no one else. So, ‘Yes’ or ‘No’ to the status quo?
When we distributed a DRAFT copy of this week’s blog posting to the dozen MHIndustry businessmen and women I consider to be ‘Serious Thinkers & Contemporary Influencers’, we received this (edited) reply from one of them (a state MHAssociation executive):
IF HUD ‘went away’, what would we lose? Lots!
Local & state building code legislators and enforcers would pressure the MHIndustry into modular housing code construction regulation. Modular home production is a fraction (@50+/-%) of HUD-Code home shipments (e.g. 64,331 manufactured homes in 2014).
In states where RVs & modular homes are banned from LLLCommunities, laws would have to be changed to allow such sitings. Until change is effected, only ‘mobile homes’ & aging ‘manufactured homes’ would be available; no replacement manufactured homes.
State tax codes often provide tax relief for HUD-Code manufactured homes (e.g. sales tax exclusion of 35% in WI). And real estate taxes are oft supplanted by lower personal property or user taxes on HUD-Code manufactured homes. Not available to modulars.
So you see, this is not a simple Yea or Nay issue, for sure. But it certainly is one worth talking about openly – if and when we can get the elected and salaried leaders of manufacturer-controlled national advocacy bodies to arrange for us to do so during year