There’s Only ONe HUD-Code HOusing Shipment # Each Month (&) ‘State of MHIndustry & LLCommunities!’
October 2019; Copyright 2019; www.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: Time for a change! With new leaders coming on board at the Manufactured Housing Institute (‘MHI’), now is the ideal time to begin reporting monthly new HUD-Code housing shipments in the same manner as IBTS, MHARR, HUD, & EducateMHC! This reporting discrepancy was first reported, in the Allen Letter, during Summer of 2015. Let’s start year 2020 off right! And ‘State of the MHIndustry & LLCommunity Asset Class’? I share this message a dozen times each year. Suggest your state MHAssociation invite me to share it with you.
Rely on EducateMHC’s Monthly ‘#s & $s’ Report Documenting New HUD-Code Housing Shipments!
Every month, the Institute for Building Technology & Safety (‘IBTS’), HUD’s contractor for researching and reporting manufactured housing shipments, distributes a statistical report to subscribers. For example, on or about 1 October, the IBTS reported 8,646 new HUD-Code singlesection and multisection homes shipped nationwide during the month of August 2019.
HUD reports the same total: 8,646
MHARR reports the same total: 8,646
NAMHCO reports the same total: 8,646
EducateMHC reports the same total: 8,646
MHI reports 8,631 new HUD-Code homes shipped
What’s wrong – and ‘why’, with this statistical reporting picture? If five out of six reporting entities agree on the monthly shipment volume, ‘why’ the outlier’s different total number?
Has to do with the ‘accounting or not’ of DESTINATION PENDING (‘DP’) units – new HUD-Code homes not scheduled for delivery, to any particular destination, at the time of reporting #s to the IBTS. MHI, for decades, has reduced IBTS’ monthly total (e.g. 8,646 units during August) by that month’s number of DP units (e.g. -24), then added back the number of DP units from the previous month (e.g. +9 from July), to arrive at its’ own reported volume of new HUD-Code homes shipped = 8,631. Rationale for this process? Likely, an attempt to account for eventual distribution of all DESTINATION PENDING units. The ‘problem’ with that thinking however, is IBTS has long known some DP units will almost never be distributed, i.e. unit accounting when a plant closes oft exposes DP units, months and years after their fabrication.
So, what’s the logical resolution to this reporting dilemma that only adds to the consternation, by federal legislators and regulators, over how one industry – the manufactured housing industry, appears to be incapable of agreeing on just how many new HUD-Code homes are shipped monthly throughout the U.S.? The answer, in this industry observer’s opinion, is for all six reporting entities to agree on monthly shipment volume, beginning with IBTS published totals.
So, where can one obtain a copy of the EducateMHC Monthly ‘#s & $s’ Report – showing how all six reporting entities report each month’s shipment volume? Visit www.educatemhc.com
State of the MHIndustry & LLCommunities
This past week saw the 10th anniversary celebration of the SECO Symposium. Held at the Airport Hilton in Atlanta, GA., it was attended by nearly 500 manufactured housing and land lease community businessmen and women. The Big Three C: HUD-Code manufactured housing firms (Clayton Homes, Skyline Champion, & CAVCO Industries), and a hefty number of small to mid-sized land lease community owners/operators, many of whom are ‘new to the business’, characterized the group at large. The only national manufactured housing/land lease community advocate present was the National Association of Manufactured Housing Community Owners (‘NAMHCO’) – lobbyist for the real estate asset class in Washington, D.C.
Also interesting to note that all MH trade publications of note were present at SECO:
• MHInsider magazine, a product of MHVillage & DATACOMP in Michigan
• Manufactured Housing Review, a quarterly online publication
• Allen Letter and the Allen CONFIDENTIAL! Published by at www.educatemhc.com
As has been the case in years past, I was asked to deliver the ‘State of the Manufactured Housing & Land Lease Community Real Estate Asset Class’ address. But this time around, instead of focusing entirely on statistics and emerging trends, I shared highlights of the past year, in terms of performance and pressing concerns. Here goes:
• 96,555 new HUD-Code homes were shipped during year 2018. According to the U.S. Census Bureau, they were valued (retail) at $6.4billion, or $66,200/manufactured home (close to the $70,000/MH figure oft quoted within the MHIndustry). Production (wholesale) value of the year’s shipments, based on MHI’s research & 2013 baseline, pencils out to be $4.2 billion or $43,126/MH, leaving a $2.2 billion margin or 23,000 per new manufactured home. It’s time for an update to the year 2013 baseline $ factor.
• How many new HUD-Code homes will be shipped by year end 2019? Time will certainly tell, but it’ll likely NOT eclipse the 100,000 ‘goal’ of the past two years. Why? Continuing lack of reasonable access to chattel capital for new HUD-Code home sales transactions on-site in land lease communities! Here we’ve moved up from only 24% of new HUD-Code homes shipped into LLCommunities in 2009, to more than 40% by year end 2015 – and now likely stalled.
• During year 2019 we celebrated the 30th anniversary release of the ALLEN REPORT (a.k.a. ‘Who’s Who Among Land Lease Community Portfolio Owners/operators Throughout North America!’). Now, during October and November we’re researching the data needed for the 31st ALLEN REPORT, scheduled for distribution during January 2020. If you’re a property portfolio owner/operator and have not yet submitted the completed questionnaire used to compile said report, please let me know via email@example.com and I’ll send you another blank one. And if you’ve not yet been listed among the ‘known 500 portfolio owners/operators’ – who own and or fee manage five or more communities, and or 500+ rental homesites – whether MH & RV or purely MH, get listed now! Also phone (317) 346-7156.
• Beware national rent control legislation making its’ way through Congress! It’s written to include anyone owning/operating two or more land lease communities. How to fight this? Belong to and support your state manufactured housing association, and encourage staff to keep you informed, and how you can help fight this national plague! How to know if your local housing market is guilty of bringing unwanted landlord/tenant legislation to our doorstep? Use the traditional 3:1 ratio. Market survey the 3BR2B conventional apartments in your area (e.g. $900/month), then divide by ‘3’ to estimate what land lease community rental homesite rent might be (e.g. $300/month). If site rates in your local housing market are at or above a 2:1 ratio (e.g. $450+/month), then it’s possible these rents are part of the focus creating this challenge.
And there was more, but you have the gist of the presentation here.