WASHINGTON WATCHDOG BARKS AGAIN!
Blog Posting # 658 @ 1 October 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: Today’s blog is chockfull of timely and interesting information. Are you following what’s going on in Washington, DC. about DOE’s proposed energy standards for manufactured housing? How ‘bout the extremely high prices being paid these days for institution investment grade land lease communities? And finally, an advance look at the happenings at SECO21. Enjoy!
WASHINGTON WATCHDOG BARKS AGAIN!
New DOE Regs Sacrifice Housing Affordability on the Altar of Climate Change.
That title and subtitle tell us, as manufactured housing businessmen and women, a lot!
First off; the Manufactured Housing Association for Regulatory Reform (‘MHARR’) in its’ 15 September 2021 letter to the Manufactured Housing Consensus Committee (‘MHCC’), once again, faithfully informs ‘everyone’ of the U.S. Department of Energy’s (‘DOE’) rulemaking relative to ‘Energy Conservation Standards for Manufactured Housing’. That’s what a ‘watchdog’ does! But more on that a little later….
AND, while jumping a bit ahead of myself here, this line – about ‘sacrifice housing affordability’ was taken from a short article penned by Judge Block, in the City-Journal (Iowa) on 14 September 2021. It puts this timely matter into clear perspective: “New (energy) regulations sacrifice housing affordability on the altar of climate change.” (I.e. More expensive energy-sophisticated houses = far fewer buyers!) So, how’s this all come together to this end? Starting with Mark Weiss, writing in the aforementioned ‘letter’, recommends the MHCC…
“…reject DOE’s proposed manufactured housing energy standards rule, in its’ current form, as a baseless, unnecessary attack on the availability and affordability of manufactured housing, which will…exclude vast numbers of lower and moderate-income Americans from the American Dream of homeownership in order to satisfy the ideological predilections of ‘climate’ extremists.” Why?
“…HUD-regulated manufactured homes, under existing HUD manufactured housing standards for energy and energy-related functions, already offer occupants lower monthly energy costs than other types of homes….” (And all sorts of energy savings examples are cited following)
AND, the new DOE regs would all but price manufactured housing out of the affordable housing market. How so? “An NAHB analysis presented…in 2014, demonstrated that for every $1,000.00 increase in the purchase price of a single-section manufactured home, 347,901 households (would be) excluded from the market.” A $1,000.00 increase in a multisection manufactured home would see 315,385 households excluded from the market. And these margins become much worse when extrapolating these stats under the full, unmodified 2021 energy savings proposal. To which Judge Block comments: “This amounts to pulling out the rung at the very bottom of the housing market.”
But that isn’t all! Judge Block, rehearsing some of the same arguments just cited, drives right to this point: “Furthermore, the poor tend to have a much greater need for money today than for money tomorrow; energy savings accruing decades from now are of no use if you go bankrupt this year.”
So there you have it. A ‘bark’ from our ‘watchdog’, and colorful concurrence from Judge Block.
A personal recollection. I attended the last go-round with DOE on their proposed energy standards. Know what (negatively) impressed me the most? How there were no businessmen and women (except yours truly) in the room at the time. In other words, once again, bureaucrats were planning the fate (‘eventual demise’?) of our industry. Hardly anyone in the room had profit motive in mind; rather were espousing social activist (i.e. energy conservation) goals and mandates at any cost! And here we go again – or so it seems.
HOTTEST SELLER’S MARKET IN LLCOMMUNITY HISTORY!
“Investment Property Group has acquired Skandia Mobile Country Club for $58,000,000 from the Coulter Family Trust. On 17 acres in Huntington Beach, CA., the property has 167 mobile home units.”
Hmm. That pencils out to a whopping $347,305 value per rental homesite in the land lease community. Remember a scant few years ago when a similarly –sized land lease community in Eugene, OR, sold for $100,000 per rental homesite – and everyone was aghast?
And the average monthly rent, in this property’s county, according to Yardi, is $2,164.00
So, what happens now? Since longtime, experienced owners/operators have acquired this land lease community – hopefully, little to no immediate changes. However, if the ‘buyer’ had been one of the notorious ‘outside the industry’ investment groups plaguing the realty asset class of late, residents could expect immediate and substantial site rent increases, sub metering of utilities (if not already in place), reduction of amenities, and introduction of new fees; predatory landlord features designed to boost the property’s cash flow in order to pay cumbersome debt and cover operating expenses.
Have you been participating in the 11th annual SECO conference this week? If so, you know how very well it’s been going.
Spencer Roane, MHM, interviewed me for 45 minutes Tuesday afternoon. Boy, did we cover a variety of timely, sometimes Evergreen, topics, e.g. industry and realty asset class consolidation, chattel capital for home-only loans, and much more. At the end of our session I offered everyone a ‘free’ copy of a speech outline I’d prepared, containing some of what Spencer and I discussed, but many additional subjects as well. So far, more than a dozen attendees have requested a copy. Do you want one? Simply ask via email: firstname.lastname@example.org
We also talked about my autobiography, From SmittyAlpha6 to MHMaven. While this was authored as a summary of my Adventures of a Lifetime, it also contains helpful and interesting information about manufactured housing and land lease communities. If interested in learning more, and possibly ordering a copy (There really aren’t too many copies remaining in inventory), visit www.educatemhc.com
Wednesday afternoon (which hasn’t occurred as I pen these lines) will find me interviewing Sam Landy of UMH Properties (‘REIT’). Can hardly wait! Why? Because Sam, unlike the CEOs of other large land lease community property portfolios, has promised to share his firm’s proven operations formula for keeping their more than 24,000 rental homesites occupied and his homeowner/site lessees happy! So, hope you tuned in at 5PM Wednesday to hear Sam.
George Allen, CPM, MHM @ EducateMHC