Tne BEST & WORST of Times for the Manufactured Housing Industry!
Blog # 419 Copyright 2016 COBA7 @ 30 October 2016; community-investor.com
Perspective. ‘Land-lease Communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’
This blog posting is the sole national advocacy voice; official ombudsman & historian, research report & online communication media for North American LLCommunities!
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INTRODUCTION: This past week, 24 – 28 October has seen the BEST and WORST sides of the manufactured housing industry and its’ real estate component, the land-lease community asset class! How so?
Part I describes the absolutely incredible, incomparable meeting venue planned and hosted by HUD-Code home manufacturers and LLLCommunity owners/operators in the greater Southeast this past week – in Atlanta, GA.
Part II describes the absolutely incredible, incomparable – what some folk are already calling a ‘power grab’, by the Department of Housing & Urban Development’s (‘HUD’) manufactured housing program, relative to ‘changing existing rules’ regarding ‘Manufactured Home Foundations in Freezing Climates’. Read what follows here, and decide if we’re looking at a déjà-vu experience (circa 1974-76), now again in year 2017 & beyond – and let me know your thoughts!
‘SECO Summit in the South’
Now a Major MHIndustry Show!
Some Pundits Calling it the ‘New Tunica MHShow’!
WOW! More than 255 registrants convened in Atlanta from the 25th to 27th of October! And 60 percent of attendees were land-lease community owners/operators from more than two dozen states, some from as far away as California!
SECO (That’s short for Southeast Community Owners) hosts describe their Summit in the South as being “for community owners by community owners’! And it sure is that, from beginning to end. How so?
• Large group tour of local Legacy Homes plant, complete with luncheon
• A special home sales training seminar by freelance consultant Ken Corbin
• Five Community Series Homes, or CSH Models on display throughout the event. Two supplied by Fleetwood Homes, one each by Legacy Housing, River Birch Homes, & Schult Homes. One of these manufacturers walked away from the SECO venue selling 100 floors, and had more leads to call when back in the office!
• Plethora of moderated panel presentations & discussions on pithy topics!
• Stand alone presentations on specific timely topics, e.g. Carl Becker, esquire; holding forth on lease-option methodology as a preferred form of on-site seller-finance of new home sales transactions; along with state MHAssociation execs. Jay Hamilton (GA) & James Ayotte (FL) extolling the benefits of membership and mutual support. Maybe more state execs next year!
• Three dozen vendors displaying unique products and useful services
• And much much more!
An innovation other MHIndustry meeting planners might consider emulating, is SECO’s novel electronic audience ‘pro & con’ scored feedback, via Smartphone, as each session concluded.
The SECO16 planning committee numbered no fewer than 15 businessmen and women with deep personal and corporate roots in the manufactured housing industry and land-lease community asset class. The group is led by Spencer Roane, MHM® of Pentagon Properties; and actual event, managed and coordinated by Genevieve Katelle. For more information, simply contact Genevieve@secoconference.com
Furthermore, the SECO 17 planning committee has already started planning next year’s venue, likely moving to a larger local area hotel, and counting on attendance of 400+/- manufactured housing industry professionals!
‘Deja-vu’(as, ‘We’ve seen it all before’),
but now, in 2017???
HUD’s recent moves to regulate all ‘Manufactured Home Foundations in Freezing Climates’ nationwide, is viewed*1 as being akin (‘similar in nature’) to what was experienced during years 1974-76, when the HUD-Code was foisted on the (then) booming mobile home industry!
At this writing, formal reports have not yet surfaced, describing what occurred last week during the MHCC*2 meeting in Washington, DC. relative to the subject matter of Part II of this blog posting at www.community-investor.com. Going into the meeting however, it appeared the manufactured housing industry’s two national advocacy entities, MHARR & MHI, were nearly, if not clearly, of one mind, relative to ensuring HUD goes through the regulatory process, if planning to use the 38 page ‘Manufactured Home Foundations in Freezing Climates’ study*3 as a new manufactured housing installation enforcement protocol, considering how it…
• Calls for requirements well beyond present day regulations.
• Recommends dispensing with local flexibility within present regulations
• Recommends difficult and costly requirements for existing rental homesites in land-lease communities, e.g. Removal of perfectly good concrete foundations (if not extending below the frost line), to be replaced with new concrete foundations extending below the frost line @ $5,000.00+/- capital cost per rental homesite!
• Relies on just one engineer to author said report. Per an MHI memorandum: “…reliance on one engineer and one specific set of engineering and design methodologies does not allow for other professional engineered designs.”
So, what happens now? Well, most of us ‘in the field’, so to speak, will simply have to Wait & See what comes next from HUD, MHARR, MHI, & COBA7®. Frustrating isn’t it? Especially since we only recently learned this ‘new industry issue’ has been around for months, and we’re only just now learning about it!
Well, it’s not too early for you, as businessmen and women, to start thinking ahead, as to what might be done to blunt or redirect this latter day assault on the HUD-Code manufactured housing industry! For starters, state manufactured housing associations, along with their respective SAAs, are certainly going to feel added financial pressure, if and when these onerous, expensive installation regulations go into effect during 2017 and following.
And just as the HUD (building) Code, when implemented during 1974-76 effectively torpedoed new ‘mobile home’ shipments (i.e. In 1973 = 579,960 shipments; then 1974 = only 338,393l and in 1976 = only 246,120) to an average of but 250,000+/- new ‘manufactured homes’ per year until 1998; when our too short, mini-renaissance, saw 372,843 new homes shipped. Today (year end 2015) we are at 70,544 and climbing!
NOW, imagine what will likely happen to the present day ‘40+ percent of new HUD-Code homes (circa 2015 = 28,000 units) going directly into land-lease communities’, if HUD’s power play goes unchecked! Most LLCommunity owners/operators – talking here of the 85% of 50,000+/- properties nationwide, containing fewer than 100 rental homesites apiece -cannot afford to retrofit perfectly good rental homesite foundations @ $5,000.00+/- apiece! So, given the 42.4% drop in new ‘mobile home’ shipments between years 1973 & 1976, might this mean a similar plummet from today’s 28,000 shipments, to only 11,872 new HUD-Code homes going into LLCommunities? If so, also say ‘Good bye’ to the estimated 75% of 100,000 new homes (or 75,000 new HUD-Code homes) projected, by this industry observer, to go into LLCommunities by year 2020! Probable bottom line? 75,000 units, down to only 31,000 shipped, if that! OUCH!
Is HUD trying to finally kill the manufactured housing industry and its’ land-lease community lifestyle? Is anyone out there paying attention? If so, let me know your thoughts on this timely and critical subject, via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.
One final, but serious wrap-up thought, on this contentious matter. A scant few years ago, rumor had it, HUD approached Congress about sun-setting the HUD (building) Code relative to manufactured housing, indicating this type factory-built housing, today, is of far better quality than the ‘mobile homes’ of 40 years ago.*4 (For a leading indicator of this reality, observe the minimal number of product and installation complaints making their way thru the Dispute Resolution process since its’ passage in 2007). Also, shipping only 50,000+/- new HUD-Code manufactured homes per year was allegedly, not enriching, let alone balancing, HUD’s $ coffers. Anyway, for shadowy reasons, sun-setting did not occur (Likely having to do with home manufacturers not wanting to lose the code’s ‘federal preemption’ marketing advantage, where their product is concerned), so license fees increased dramatically. But now, federal (Installation & Dispute Resolution) legislation ‘on the books but back-burnered’ since year 2007, has taken a dramatic and potentially expensive 180 degree turn, in effect threatening the continued existence of this nation’s last form of genuine, non-subsidized, high quality, energy efficient, ‘affordable housing’ – when there are far fewer places to site said homes.*5 Among the first to go, will be the aforementioned estimated 85% of 50,000+/- land-lease communities too small (i.e. fewer than 100 rental homesites apiece) to be able to afford the soon to be mandated ‘new concrete installations’ at $5,000+/- apiece! Is this our future?
1. ‘in my opinion’, as a veteran MHIndustry observer & reporter
2. MHCC = Manufactured Housing Consensus Committee
3. For detailed treatment of this 38 page document, read Part III of blog # 418, posted 23 October 2016, at www.community-investor.com
4. Again, ‘in my opinion’, as a veteran MHIndustry observer & reporter
5. Definition of ‘affordable housing’ as referenced in this blog posting: “Housing is affordable when individuals or households ‘…earning less than half the Area Median Income or AMI, can afford to rent a conventional apartment and or buy a home in their local housing market’.” Pages 109 & 110. Quoted from Bruce Savage’s The First 20 Years!, PMN Publishing, Indianapolis, IN. 2013 – in turn borrowed from George Allen’s Book of Formulae, Rules of Thumb, & Helpful Measures, PMN Publishing, Indianapolis, IN., 2012.
George Allen, CPM®, MHM®
Box # 47024, Indianapolis, IN. 46247