The Community Owner’s Lament
Blog Posting # 649 @ 30 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: OK, hold onto your seats. This will be a whirlwind trip through today’s ‘community owners’ lament’; possible consequence of CONSOLIDATION; some findings from the JCHS @ Harvard; and finally, a reminder to register to attend the final Networking Roundtable & Retirement Celebration.
The Community Owner’s Lament
“20 – 25 percent price increases in one year; delivery dates a year out; price increases between order and delivery; and two plus months wait to address warranty issues. It isn’t fun being in the manufactured housing sales business anymore!”
It pains me to read email messages like this. They’re generally from land lease community owner/operator friends who only got into the manufactured housing sales business because so many independent (street) MHRetailers were going out of business due to lack of easy access to chattel capital.
So, where do we go from here? That’s a pretty complicated question. So many considerations. Pricing and availability of lumber, and other OEM products. Whether large property portfolio owners/operators have more purchase power with HUD-Code housing manufacturers, than small one or two property owners. Availability, or not, of personal property finance, a.k.a. home-only loans or chattel capital. Lack of meaningful support from the FHFA and two GSEs, Fannie Mae & Freddie Mac.
And, you know what else is complicating this entire Evergreen Issue (i.e. ever present)? Read Part II following here….
Do you know, or have you read the following news headline this past week?
‘CAVCO INDUSTRIES ANNOUNCES PLANNED ACQUISITION OF MANUFACTURED AND MODULAR HOME BUILDER, THE COMMODORE CORPORAATION’
Well, that’s all fine and good. Two well known, longtime ‘players’ in the HUD-Code manufactured housing business merging.
BUT, did you pick up on this statement within the first paragraph of the Press Release?
“Commodore is the largest independent builder of manufactured and modular housing in the United States.”
Whoa! Did I just read that the ‘largest independent builder of manufactured housing’ is going out of business (i.e. being absorbed by CAVCO)? Yes, I sure did. And what does that mean?
To begin with, it means the 70+ market share commanded by the Big Three C firms: Clayton Homes, Cavco Industries, and Champion Home Builders grows LARGER while the market share of independent builders grows SMALLER!
So, where does CONSOLIDATION end? When the Big Three C firms command 90 – 95 percent of the national manufactured housing production market?
Here’s the pithy question for you. Do you see the day to day pricing, delivery, and warranty issues cited in Part I above, ameliorating or getting worse?
Know what? A similar case can be made about the CONSOLIDATION of thousands of sole proprietor developed and owned land lease communities being absorbed by the 500+/- known portfolio owners/operators present today.
MAJOR FINDINGS IN THE 2021 STATE OF THE NATION’S HOUSING REPORT
The following information was published recently by the Joint Center for Housing Studies at Harvard University. And what were those major finding?
1. Inventories of Homes for Sale Fell to a Record Low in Early 2021
2. With Inventories at Record Lows, High Homebuyer Demand is Pushing Up Home Prices Rapidly.
3. Rents in Several High-Cost Markets Were Down Substantially as of Early 2021
4. Households of Color and Renters Are More Likely to Have Fallen Behind on Monthly Housing Payments.
5. The Number of People Experiencing Unsheltered Homelessness Climbed Again in 2021
I offered this information without comment, to let you reflect on your own. The key question, in my opinion, is how do one or more of these observations affect manufactured housing shipments and land lease community operations?
If you haven’t already registered to attend the upcoming final Networking Roundtable & Retirement Celebration, 12 August 2021, at the downtown Hilton Hotel in Nashville, TN., do so very soon via www.educatemhc.com
Scott Roberts will be sharing proprietary information as to his firm’s ‘development of raw land into land lease communities and the expansion of existing properties’. If you don’t already know this, raw land development in this fashion is the reemerging trend afoot in HUD-Code housing today! Don Westphal, landscape consultant, will be present, as will be real estate-secured mortgage originators active in this business model.
And, thinking back over Parts I, II, & III of this blog posting; ask yourself: ‘Where else can I go in the manufactured housing industry and find receptive ears, and opportunity to communicate, about these and other timely and impactful issues? Answer? There is no other opportunity except for the annual Networking Roundtable. So be there to participate! GFA
George Allen, CPM, MHM EducateMHC