George Allen / EducateMHC Blog Mobile Home & Land Lease Community Advocate & Expert

April 24, 2011

Affordable Housing, America’s Bugbear of Shelter Definition & Measures

Filed under: Uncategorized — George Allen @ 7:26 am

‘Affordable Housing’, America’s Bugbear of Shelter Definition & Measures

How Do YOU Describe & Measure Affordable Housing & Housing Affordability?

First, the bugbear. Per Webster’s College Dictionary, bugbear is ‘a persistent problem or source of annoyance’. Throughout the U.S. housing market, bugbear is the absence of clear description, and resulting internecine confusion – due to lack of consensus regarding measures of affordable housing, that are ‘perennial problems and sources of annoyance’, among realty, shelter and housing finance aficionados!

Here’s a recent example from April 2010 issue of Multi-Housing News (p.11): Two companies “…have won the bid to develop the 900 – unit initial phase of Hunter’s Point South, a mixed – use affordable housing project that will leverage $2 billion in private investment. The development cost for the residences in the first phase is $360 million.” Stop! That’s $400,000.00 to develop each affordable housing unit! How so? ($360,000,000. divided by 900 units). Prompts one to speculate what the unit sale price or apartment rental rate will be for each affordable housing unit. And, affordable to whom?
Answer: Anyone who can afford a likely (un)affordable price tag or be subsidized!

At the opposite end of the affordable housing definition/description spectrum is this lightly edited gem, from the former chairman of a national realty trade body: “Affordable housing has become a politically correct euphemism for subsidized housing. While source of funding for (payment) shortfalls for an affordable housing property is not always specified, more than likely it is supplied by the taxpayer, one way or another.”

Several years ago, PMN Publishing researched, prepared and distributed the seminal booklet titled HOUSING AFFORDOGRAPHY; subtitled, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, a.k.a.

• Housing’s ‘Anything you want it to be!’ Perennial Prevarication! Or,

• In the minds of many (then) recently displaced homeowners, ‘Housing’s dirty little secret!’

The gist of the booklet was comprised of four descriptions, and as many measures of, affordable housing perspective:

• The 30% Housing Expense Factor (‘HEF’) purist

• The Housing Opportunity Index (‘HOI’) devotee

• The Housing Wage (‘HW’) aficionado; and/or simply,

• One Who Believes, when a home buyer/mortgagor or apartment lessee commits to payments on a mortgage or lease; & a lender/mortgagee or apartment lessor underwrites a loan/mortgage or executes a lease, it’s affordable & that’s all there is to it! (Think back to the earlier $400,000.00 affordable housing example…)

The booklet, as popular and widely discussed as it was during its’ two year run in the realty and housing markets, is now out of print. But during the past year, a fifth measure has come to light, and is herewith added to the four descriptive measures:

• Income to Home Value Ratio (‘IHVR’)

A challenge to the reader. Take time to learn and understand the basics and nuances of these descriptions of affordable housing measures, and begin applying them to your workaday life and housing interests. And, as you happen upon additional descriptions and measures of affordable housing, please let us know via: GFA c/o Box # 47024, Indianapolis, IN. 46247.


The 30% Housing Expense Factor or HEF

A safe, working definition. ‘Housing is affordable when no more than 30 percent of a household’s annual gross income (i.e. household can be one or more income producers living in the same singular housing unit) or AGI, is consumed by the sum total of annual PITI (Principal & Interest dollars paid on one’s home mortgage, real estate Taxes & homeowner’s Insurance premium dollars), plus annual utility expenses (water, sewer, heating fuel) for the housing unit, but not including telecommunications costs (e.g. telephone, cable TV & Internet access)’1 Note. This safe 30% HEF sometimes varies (e.g. 25%, 28%) among realty, shelter and housing finance practitioners.

An alternate, but riskier working definition, has the 30 percent HEF, of a household’s AGI, comprised of only PITI, but not including annual utility expenses & telecommunications costs. This, in effect, creates a ‘two sides of the same coin dilemma’: the safe, or more conservative, ‘loaded’ 30% HEF, described in the previous paragraph, versus a riskier ‘barebones’ 30% HEF! Can you see how the temptation to buy ‘more house than one can afford’ quickly appears, when one’s entire 30% HEF is comprised of just PITI, without including the usual household utility expenses – that still need to be paid, but outside the widely recognized 30% HEF limit? Hence, the riskier rental and or home buying perspective!

Here’s another challenge for you. From now on, when you hear or read of this ‘30% affordable housing factor’, ask yourself: ‘Are they describing or advocating the safe (i.e. ‘loaded’) 30% HEF, or the riskier (i.e. ‘barebones’) 30% HEF – & Why?’ Know what you’ll learn? The measure is rarely clarified; and when one asks, the realty, shelter or housing finance practitioner will generally not know or say. That’s one reason why ‘affordable housing’ continues to be the bugbear of the American shelter industry.


The Housing Opportunity Index or HOI.

‘Housing Opportunity Index (‘HOI’), formerly known as the Housing Affordability Index or HAI. This oft quoted index links a lender and trade advocacy group, e.g. National Association of Home Builders or NAHB/Wells Fargo HOI, also National Association of Realtors or NAR/Wells Fargo HOI. Here’s how HOI is described on NAHB’s website:

In the U.S., an HOI is calculated quarterly by the NAHB, comparing
the Average Median Income (‘AMI’) in a locality with the median
home price. The index is stated as a percent of the population, with said
AMI, able to afford the median – priced house. For example, in
year 2000, a HOI of 81% of AMI households in Indianapolis (with an
AMI of $57,700 at the time) would be able to afford the median – priced
home of $122,000). In comparison, San Francisco, with an AMI of
$74,900 and median house price of $464,000 had a HOI of 10.3%.’2

Two important cautions. ‘NAHB assumes households can afford to spend 28 percent of their AGI on housing’ (Recall 30% HEF measure described earlier), but does NOT, in anything this realty writer has read, specify whether composition of the 28% HEF is ‘loaded’ or ‘barebones’ – hence the ‘first problem’ with the HOI: Does the unspecified HEF nuance favor the safer or riskier perspective?. A second possible flaw? To ‘work (these) numbers’, one needs to know the total number of homes sold in the targeted local housing market during the studied year, to calculate the percentage of citizenry ‘able to afford the median – priced home…’ This detail is rarely, if ever, provided. Case in point? This (April 2011) press release published in RISMedia’s REAL ESTATE magazine (p.7.):

Nationwide housing affordability, during the fourth quarter of 2010, rose to its’
highest level in 20 years…according to NAHB/Wells Fargo HOI data. The HOI
indicated 73.9% of all new and existing homes sold in the fourth quarter of 2010
were affordable to families earning the national median income of $64,400.”

See? Which HEF perspective is favored or built into the HOI; the safer or riskier perspective; and, how many homes ‘sold’ across the U.S., to compute the 73.9% HOI?
In this writer’s opinion, the HOI measure of housing affordability, as interesting and helpful as it may be, remains flawed as long as it’s a proprietary affordable housing measure sans HEF explanation and total home sale disclosure.


The Housing Wage or HW

‘Housing Wage (‘HW”) methodology comes at affordable housing and housing affordability differently. Instead of first estimating value of a home or lease, then calculating how much AGI is required to afford same; HW methodology calculates the amount a person working fulltime must earn to afford, for example, a two – bedroom apartment, in a given local housing market, without paying more than 30% of AGI in rent.’ 3

An example: If a 2BR2B apartment rents for $900/month and represents
30% HEF (usually ‘barebones’), mathematical extrapolation calculates
AGI to be $36,000., which,, when divided by 12 months, and in turn, 172 work
hours/month (40 hrs. X 4.3 weeks/month) = $17.44/hour is the HW required to
afford this 2BR2B apartment in this local housing market. But note, utility
expenses, unless included in the monthly rent rate, will still need to be paid.

Furthermore, it’s common to see results of HW analysis expressed in terms of ‘How many times the minimum wage’, the wage or salary – earner must make to afford, for example, a two – bedroom apartment. In the above example this would be, using 2009 Federal Minimum Wage of $7.25/hour, a factor of 2.4. Therefore, in this local housing market, one must earn 2.4 times minimum wage, in this instance, of $7.25 = $17.40/hour, to afford the aforementioned $900.00/month 2BR2B apartment.


Workforce Housing or WFH

Workforce Housing (‘WFH’) is generally defined as being homes and apartments for nurses, firefighters, policemen and teachers making between 60 and 120% of a local housing market’s (i.e. usually affluent communities where they work) Area Median Income or AMI. How to calculate this range in workforce housing salaries and wages?

1. Go to to ascertain the AMI for the targeted local housing market.
2. Calculate the 60 & 120% range figures.
3. Multiply the two ’60 & 120% dollar range figures’ by 30% HEF.
4. Divide these two totals by 12 months, to estimate monthly rent or mortgage payment required of this targeted workforce, to be able to afford to live in said local housing market.

For example. Given $63,800 AMI X 60% = $38,280; and $63,800 AMI X 120% = $76,560, or a wage/salary range of $38,280 to $76,560/year for workforce to be able to buy or rent affordable housing in this local housing market. Again, 30% HEF is usually calculated from the ‘barebones’ perspective, encouraging the tendency to ‘buy more house or rent more apartment’ than might be prudent, as utility expenses will still (maybe not, in the case of apartments) need to be paid ‘outside’ the 30% HEF allowance.

What HW does, is demonstrate to targeted workforce, their municipal employers, land planners, and local zoning boards, what salaries/wages need to be, to enable nurses, firefighters, policemen and teachers to live in the local housing markets where they work!


The Income to Home Value Ratio or IHVR..

Simply, this ratio achieves traction when a housing market’s median home value (e.g. US in 2010 = $172,134) is divided by its’ AMI (e.g. US in 2010 = $63,800) for same time period, in same housing market; in this case, resulting in a 2.7 IHVR.

In other words, households earning the U.S. AMI of $63,800 would have to purchase a home costing nearly three times their AGI, to own a median U.S. home valued at $172,134. Sound extravagant? Not when considering some local housing markets are still at 7 IHVR, requiring households to spend more than seven times their AGI to own a median priced home in their local housing market.


One Who Simply Believes that…

“Ownership housing is affordable if the price is right.” Shelterforce, Fall 2007.

Summary. “…the perspectives on affordable housing and housing affordability are as broad and imprecise as the perspectives and measures described in this brief review. In the final analysis, if there is no consensus or agreement, on a common definition or description of affordable housing and housing affordability, let alone practical and easy – to – use formulae, relative to the subject; then there’ll be few Ah Ha! home buying and renting experiences; and the final ‘One Who simply Believes…’ perspective, will remain as appropriate as any other definition and measure of this too variegated subject!” 4


What say YOU?

Is there a practical, affordable housing definition and or description, as well as additional measures thereof, with which you’re familiar, that has not been covered in the previous paragraphs? If so, please communicate it/them to us, for possible inclusion in a new edition of HOUSING AFFORDOGRAPHY, at some point in the future. Use either the postal mailing address provided earlier in this bugbear expose’, or via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156.

Another subject altogether: ‘Update to Rankings in the 22nd annual ALLEN REPORT’

Turn to page # 18 in your copy of the 22nd annual ALLEN REPORT. Soon after the compilation of ‘# rental homesites owned/fee – managed’ data was complete, and landlease (nee manufactured home) community portfolio owners/operators ranked, American Land Lease in FL. (a.k.a. Green Courte Partners in IL.), listed as #9 on this year’s list, acquired six LLCommunities, containing 1,850 rental homesites, from CRF Communities (#24). Had this acquisition consummated a month earlier, and these two new totals been included in the above – referenced compilation, American Land Lease would likely have been ranked as #7 in the 22nd annual ALLEN REPORT.

Turn to page # 19 in your copy of the 22nd annual ALLEN REPORT. A month after publication of this year’s ALLEN REPORT, we learned there had been a significant reporting error in the property portfolio numbers for J & H Asset Property Management, in CA. Their correct portfolio numbers are 69 LLCommunities and 10,520 rental homesites fee – managed. This correction constructively moves them up in ranking from #70 to #14; an adjustment that’ll be effected in the next edition of the ALLEN REPORT.

Do YOU have your copy of the 22nd annual ALLEN REPORT? Well, our inventory is down to the last few dozen copies of this seminal statistical compendium. And we’re making this very special offer through to the end of May 2011:

For a total of $250.00, we’ll send you the 22nd annual ALLEN REPORT (cover price is $450.00), a one year paid subscription to the Allen Letter professional journal (12 monthly issues, usually for $134.95), and – as long as they last – a copy of the Manufactured Housing $$$ Primer, the first and only book ever published on the subject of chattel (personal property) finance as it applies to the manufactured housing industry (usually $29.95 postpaid). And postage/handling charges are included in the aforementioned $250.00. This Special Offer is not available on our website, but must be ordered by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, or (317) 346-7156.
End Notes:

1. HOUSING AFFORDOGRAPHY, George Allen, PMN Publishing, Indianapolis, IN., June 2008., p. 13
2. Ibid., p.19 (revised)
3. Ibid., p.23 (revised)
4. Ibid., p.31 (revised)

April 17, 2011

Searching for Wisdom of Solomon & Needing Courage of a David!

Filed under: Uncategorized — George Allen @ 5:04 am



State of the Manufactured Housing Industry & Landlease Communities….


Your response to ‘Conspiracy Theorists, Gather Ye Round!’ last week was overwhelmingly positive. The sole area of disagreement related to my contra view of our industry’s largest advocacy body’s desire to

“Eliminate unrealistic methods for appraisal (of) manufactured housing. Site – built oriented appraisal requirements have little applicability to manufactured housing and ultimately penalize manufactured homeowners.”

And those few rejoinders came entirely from chattel finance lenders and service firms. Hmm. Such single source response prompts one to ponder, ‘Why?’ There’ll be more views and verbiage on this controversial topic in a future blog posting. Want to input?

On the other hand, here’re remarks from blog floggers (readers) supportive of conspiracy perspectives offered:

• “GOOD JOB! Needed to be said. But will anyone listen? Now that’d be a FIRST, sadly enough. Will our ‘mystery leader’ step up? Keep up the good fight.” JK

• “KUDOS! This takes courage. I’d love to be part of such a conclave, should it occur. Please keep me posted, and best wishes in this effort.” TK

• “Let me tell you…nicely written. Am ready to step up and speak my mind. I’d love to take this job on, but my resources are limited. Let me know more.” JD

• “Good post George. You’ll get flack over some of those comments. Trouble with conference participation, is those who should participate, won’t do so.” SR

• “Here, Here, George! Well crafted and said, sir.” N

So, where do we go from here? That’s up to YOU, and the unnamed ‘charismatic, respected, well known, successful businessman or woman’ to whom last week’s blog post was directed. I know more than one individual, meeting that leadership description, read last week’s blog posting. So now we wait…Perhaps YOU need to encourage them to step forward.

Did YOU, as a member of the Manufactured Housing Institute, contact Thayer Long, or the institute’s chairman, Joe Stegmeyer? If not; why not? Furthermore, did YOU, as a member of the Manufactured Housing Association for Regulatory Reform, contact Danny Ghorbani, or the association’s new chairman, John Bostick? If not; why not? I can do no more, for YOU and our industry and realty asset class, than identify the collective, critical, and timely challenges and opportunities in play, then suggest corrective measures and alternative. It’s up to YOU to initiate and support appropriate action. If YOU have done so, good for YOU! If not; for the third time, why not? Or are YOU content, to simply sit back and continue to complain about how difficult and unfair the present national business climate is for our type factory – built housing? If so, shame – shame on YOU!


State of the Manufactured Housing Industry & Landlease Community Asset Class


‘An Industry in Search of the Wisdom of Solomon & Needing the Courage of a David!’

Let’s begin with HUD Code housing shipments for the past three years. All right there, at only 50,000+/- per year! That’s down down down, from the 372,843 renascence high in 1998. Year 2011? Just another 50,000+/- shipment year, unless there’re new sources of third party chattel finance.

Did you know? Clayton Homes has garnered a 48 percent national housing market share, where HUD Code manufactured homes are concerned. And that Cavco recently bought Palm Harbor out of bankruptcy, just as it did Fleetwood a year earlier.

Trends. More new homes being sold into landlease (nee manufactured home) communities. Why? Fewer ‘repos’ & ‘resale’ homes available for purchase and installation on – site; so, some LLCommunity portfolio owners/operators now routinely buy several new HUD Code homes at a time, at a discount, to market and sell on – site ‘at cost’ or various profit margins, depending on the nature of the local housing market in which the property is located. Homes designed for LLCommunity in – fill are now known as Community Series Homes or CSH – often singlesection, with front load porches, or small multisection homes. And CSH models are marketed to income – producing property owners, by Business Development Managers (‘BDM’) employed by the HUD Code home manufacturers.

Finance. The ‘Big Four + One’ group of chattel lenders is still active in the MHIndustry, but not originating and underwriting many chattel loans on new and resale manufactured homes. These firms are 21st Mortgage Corporation, Triad Financial Services, CU Factory – built Housing, U.S. Bank – Manufactured Housing Finance; and, Vanderbilt Mortgage and Finance, Inc., Clayton Homes’ in – house lender.*1

Then there’s the landlease community real estate asset class. While reasons very, for the segue from ‘manufactured home’ to ‘landlease’ community trade terminology, it won’t hurt to review the matter here. Unlike years between 1976 and roughly 2006, when this income – producing property type only sited ‘mobile homes’ (pre – 1976 vintage) and ‘manufactured homes’ (post – 1976 vintage); contemporary LLCommunities, depending on the nature of local housing markets, now also site modular homes; ‘park model’ RVs, a.k.a. ‘granny flats’; transient ‘RVs for a season’; even stick – built homes constructed on – site (in Florida) to look like HUD Code manufactured homes. It simply makes sense to apply a label that better describes the presence of as many as six different types of housing to be found on – site; hence landlease community, or LLCommunity, for short.

Some salient ‘stats’ from the 22nd annual ALLEN REPORT*2:

• There’re approximately 50,000+/- landlease communities in the U.S., and 500+/- portfolio owners/operators (i.e. each owns and or fee manages a minimum of five such properties or 500+ rental homesites)

• Average LLCommunity portfolio size during 2010 = 24 LLCommunities

• Average property size during 2010 = 222 rental homesites

• Most LLCommunity owners/operators are domiciled in CA, MI, IL, & FL.

• National Average Physical Occupancy during 2010 = 89.2 percent.

• National Average Operating Expense Ratio during 2010 = 41.8 percent, compared to the Allen Model @ 40 percent OER.

• Estimated value of self – finance ‘contract sale’ paper held among 500+/- portfolio owners/operators during 2009 = $3 ½ billion; 2010 = $5 ¼ billion; and estimate for 2011 = $5 ½ + billion.

• No new construction of LLCommunities reported during 2010.

• Professional property management in LLCommunities: 13 Certified Property Managers® reported, as well as 37 Accredited Community Managers®, and 171 Manufactured Housing Managers. Are all your property managers certified?

Trends. Consolidation of LLCommunities into portfolios slowed to a crawl during 2010, given the difficulty in obtaining realty financing, but likely to resume during 2011. Read the 13th National Lenders’ Registry for details, and a list of 18 realty loan originators.*3 Maybe see self – finance (i.e. ‘buy here – pay here’ & ‘captive finance’ methodologies) slow during 2011, as more portfolio owners/operators switch to carefully crafted Lease Option programs on – site. Look for one or two new REITs (real estate investment trusts) to be formed, as they initiate IPOs (initial public offerings – of stock) during late 2011 and early 2012. At least for the time being, ‘park closures’ are not the hot item they were, mainly due to constraints on development financing. More and more ROCs (resident – owned communities) are appearing outside Florida and New England.

A ‘Hot Button’ Trend. Watch as more and more LLCommunities drop any mention of ‘manufactured’ from print and online advertising of homes and properties! At least one HUD Code home manufacturer, Skyline Corporation, has done likewise. Some LLCommunity portfolios are even rebranding, introducing new contemporary housing – like websites! One wag has already identified this evolving (‘Nix manufactured from housing’) phenomenon, as the default National Image Improvement Campaign the manufactured housing industry wasn’t able plan, fund, and effect during the past several years.

Announcements. Have you met Lisa Brechtel yet? She’s the new MHI executive who heads the National Communities Council (‘NCC’) division. Her direct phone number is (703) 558-0666. If you haven’t done so already, contact her for information about attending the annual NCC Forum on 26 April, and the Manufactured Housing Congress on 27 & 28 April, both in Las Vegas.

In case you weren’t aware, the seminar ‘How To Estimate Affordable & Risky Price Points on New & Resale Manufactured Homes In & Outside Landlease Communities’, that was so popular at the Super Symposium II in Albany, NY., last month, will be repeated on Thursday, April 28th, at the MHCongress in Las Vegas. If YOU market and sell new & resale homes, and don’t know how to use AMI (Area Median Income per postal zip code) and or AGI (Annual Gross Income of a homebuying individual or household) to estimate ‘affordable’ &/or ‘risky’ price points (Really need to know both, to help customer make up their mind!) in any local housing market in the U.S., YOU owe it to yourself to be present for this rare opportunity to learn How To Do So, and receive the FREE ‘Ah Ha! & Uh Oh! Formulae Worksheet’! To register, phone Lisa Brechtel @ (703) 558-0666.

Some thoughts on the future of HUD Code manufactured housing and the landlease community real estate asset class.

For many, active in the MHIndustry & LLCommunity asset class, Randy Rowe’s Five Point Plan to facilitate a shipment rebound, anytime in the near future, will require:

• Better manufacturer home warranties, customer service, and responsibility for home installation..

• More chattel financing sources than we have at this time

• Ensure economic security of homebuyers/site lessees

• Multiple listing services and other features of a secondary market for manufactured home sales

• A national marketing (image improvement) program of some sort

Randy introduced this Five Step Plan at the 19th International Networking Roundtable in Phoenix, during Fall 2010; and, David Lentz of American Land Lease, presented it at Super Symposium II in Albany, New York, earlier this month. FYI: This year’s Roundtable is tentatively scheduled for 14 – 16 September. *4

So, where does all this leave us today? A lot depends on your reaction and response to the Great and Greater Conspiracy challenges described in last week’s blog posting. Perhaps YOU should go back and read it again, to be inspired and motivated to do your part in returning the HUD Code manufactured housing industry to good economic health!

As opined at the beginning of this State of the MHIndustry & LLCommunity asset class, we are indeed an ‘Industry in Search of the Wisdom of Solomon & Needing the Courage of a David!’ What we await now, is for one or more industry leaders, replete with Solomonesque Wisdom & Davidic Courage, to step forward and free us from the bondage of ‘This is the way we’ve always designed, built, shipped, then sold, and sometimes serviced, manufactured homes’, to renewed Free Enterprise Success as builders of the most affordable, energy efficient, quality sufficient homes in the U.S.!


George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247 k (317) 346-7156

End Notes.

1. This information taken from the Manufactured Housing $$$ Primer, available from PMN Publishing for $29.95 postpaid. Phone (317) 346-7156.
2. 22nd annual ALLEN REPORT available for $250.00 (includes a one year subscription to the Allen Letter professional journal) by phoning: see # 1 above.
3. 13th National Lenders Registry (realty & chattel) available FREE by phoning #1.
4. For an invitation to attend this annual seminal event for LLCommunity folk, see # 1 above

April 10, 2011


Filed under: Uncategorized — George Allen @ 4:25 am


Great & Greater Conspiracies; State of MHIndustry & LLCommunity Asset Class

Let’s get something straight, right up front! Portions of what I pen here will anger a few individuals, but confirm the beliefs of many others. And it’s this type industry news reporting & opinion sharing, that’s prompted a scant number of salaried corporate & trade association executives – but interestingly – not sole proprietors & business owners, to get upset & holler, ‘Harm to the industry!’ Well, I think not. After 60 years of manufactured housing industry history; during 30 of which, I’ve been invested in as a landlease community owner & industry consultant, it’s high time we revisit our roots as affordable housing, seek new ways to rejuvenate our housing product, the way we market it, how we treat our customers, & much more! Frankly; if I don’t speak out, I seriously doubt anyone else will, and our industry will continue to suffer on, maybe even die, in silence! GFA


The Great Conspiracy isn’t a conspiracy at all! It’s the well known but embarrassing phenomenon of self – immolation (Webster: as in ‘killing oneself – or industry – as a sacrificial victim’). In the case of manufactured housing, this self – defeating state of affairs is characterized by ‘resistance to change’ (e.g. Like automobile plants, we count our ‘shipments’, not homes ‘sold’, & cling to vestigial trade lingo like it’s Biblical writ); greed (e.g. Think, ‘Bigger boxes = bigger bucks!’); and, frequent lack of product (installation) responsibility (warranty) once the house leaves the factory (e.g. Remember ‘DAR’? It’s the industry’s continuing mantra, in some circles, as in ‘Drop (that house) And Run!’). And there’s more. How ‘bout cyclic short term abuses of chattel and realty finance sources, followed by reaping self – sacrificial long term consequences of going without (e.g. Only 50,000+/- new HUD Code homes ‘shipped’ during years 2008, 2009 & 2010)? Of course, there’s also the perennial, not – so – private, lobbying – defeating, internecine squabbling between our national advocacy trade bodies inside the Washington, DC beltway. Will it ever end? Plus, landlease (nee manufactured home) communities are not without blame! Too many still deserve to be viewed as nothing more than ‘trailer parks’, awash with negative societal mores and perpetuating a very poor public image of an otherwise desirable, affordable lifestyle. And in the same breath, do we dare mention the nefarious (in some eyes) or business risk – mitigating (in other eyes) practice of ‘churning’ our (property owner) self – financed homeowner/rental homesite lessees? And the list goes on….

Is there a solution? I believe there is. But we need a charismatic, respected, well known, successful businessman or woman leader, to step forth and publicly announce, ‘The HUD Code manufactured housing industry is at an impasse! And if we’re to move forward together, and profitably, during the next decade, we’ve simply got to Get Our Act Together, the sooner the better!’ Building on that proverbial line in the sand, this leader (We do have at least one, that I can know of, in this industry – but will he/she heed this call?) and cohorts, might consider following the twice set precedent of 2/27/2008 in Tampa, FL., & 2/27/2009 in Elkhart, IN., at two National State of the Asset Class (‘NSAC’) caucuses, by now calling for a two day Open Strategic Planning Meeting of businessmen and women ‘with skin in the game (of their respective companies and associations)’, committed to participate in this historic event at their own expense! Maybe require advance preparation on the part of everyone attending. For example; early on, submit a short (500 words or less) letter, describing ‘why’ they’re participating, and ‘what’ they’d like to see accomplished. Once responses have been collected, prepare and distribute a preliminary packet of information, containing industry benchmark statistics and brief summary of aforesaid input. Furthermore, such an event – to be effective – must be a joint effort between members of the Manufactured Housing Association for Regulatory Reform (‘MHARR’) & Manufactured Housing Institute (‘MHI’), Open to non – member business owners who wish to attend! Ultimately, however, proceedings should be planned and guided, under the authority of an independent third party strategic planning meeting specialist, for event results to be accepted industry wide.

Are YOU one of the charismatic, respected, well known, successful businessmen and women leaders about whom I write and challenge in the foregoing paragraphs? Probably. This particular blog posting is being sent to those who fit the multifaceted description. Now ‘the ball is in your court’. Your response?

The Greater Conspiracy is more difficult to pin down with specifics. In a big nutshell, it’s generally described (Have no doubts about the fact the Greater Conspiracy exists, as it’s a matter of discussion, within industry gatherings, from coast to coast, or I wouldn’t be wasting blog space here!) as quiet collusion among some industry executives (i.e. Grass maybe perceived as being greener on the other side of the ____ fence); our competitors for national housing share (i.e. Not enough business to keep stick builders & factory – built aficionados employed over the long haul!); even regulators of our unique housing product type (i.e. We didn’t ask for this added work in the first place!). Some of the symptoms are difficult to pigeonhole, as to whether part of the aforementioned Great Conspiracy or a Greater Conspiracy. So, let’s begin with one recent example.

When MHIndustry & LLCommunity businessmen and women converged on Washington, DC. recently, they were given prepared ‘talking points’ to use when meeting with their respective members of Congress, relative to changing pending Dodd-Frank legislation. One recommendation read:

“Eliminate unrealistic methods for appraisal (of) manufactured housing. Site – built oriented appraisal requirements have little applicability to manufactured housing and ultimately penalize manufactured homeowners.”

Who suggested that wording? NOTHING COULD BE FURTHER FROM THE TRUTH.

It’s the continued use of traditional ‘(depreciating) book value’ methodology that seriously harms manufactured home owners when selling their homes! Site – built housing’s ‘market comparable’ appraisal methods are clearly applicable to manufactured housing, especially those sited on realty owned fee simple! So, who’s at fault here, for perpetuating this just quoted mistruth? ‘The industry’ – who penned it (i.e. As another apt example of self – immolation, per the Great Conspiracy just described), and or the ‘GSE’s’ (Government Sponsored Enterprises) who, year after year, opt for ‘the easy way out’, by endorsing ‘depreciating book valuation’ methodology to estimate the value of HUD Code manufactured housing – as part of this Greater Conspiracy, to eventually do away with our industry?

Furthermore, and in other arenas, who are/were major dissenters, when (past) attempts were effected to improve design and serviceability of HUD Code manufactured homes? Think’ removal of frames’ from beneath HUD Code homes, as but one example. Then there’re site – builder trade associations, afraid of lower – priced, factory – built competition taking (more) work from their carpenters. And who, until a recent U.S. Supreme Court decision declared ‘black balling’ of HUD Code manufactured housing from (home sale) multi – list systems across the country as being illegal, has effectively derailed the creation and nurturing of a functional secondary market for the listing and resale of manufactured housing product? It’s one more reason we see so few licensed real estate salespersons and brokers pursuing listings within and outside landlease communities.

Know the clearest indicator of a Greater Conspiracy? In my opinion, it’s HUD’s abject failure to fully and properly implement key reform provisions of the Manufactured Housing Improvement Act of 2000 (‘MHIA@2000’)! Here we are, nearly 11 ½ years after passage of the Act, and HUD has all but neutered the federal regulation, without complying with relevant provisions within the Act; has diminished and ignored the enhanced federal preemption of MHIA@2000; has failed to appoint a non – career program administrator, per HUDs whim; has utilized the same federal contractor (Albeit under different entity names), for more than three decades (i.e. Talk about job security, at our industry’s expense!); and, has re – codified two new MHIA@2000 programs – installation and dispute resolution – in the process, rendering them non – preemptive, and outside the authority of MHIA@2000’s Manufactured Housing Consensus Committee (‘MHCC’). Are you angry yet?

What to do about the Greater Conspiracy? Frankly, I don’t think there’s much we can do at this point in time, except…. If we have folk within our industry, who have divided loyalties to our competitors and regulators, then they need to be confronted. But beyond that, the immediate, timely and strategic challenge, as described earlier, is to call for a national meeting of truly concerned businessmen and women, willing to invest their personal and corporate resources to be an integral part of a national plan to rejuvenate, and reposition – if necessary, HUD Code manufactured housing! Are YOU one of those (hopefully) many individuals? If so, here’re several things you can do TODAY:

• Make your views, on this matter, & personal availability known, to Joe Stegmeyer, chairman of MHI, via Thayer Long @ (703) 558-0678.

• Make your views, on this matter, & personal availability known, to John Bostick, chairman of MHARR, via Danny Ghorbani @ (202) 783-4087.

• Make your views, on this matter, & personal availability known, to me, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or

• Or, if you’d prefer to make your views known directly to either of the above board chairmen, let me know….

Continue to faithfully read this weekly blog posting for progress in combating the Great & Greater Conspiracies affecting the HUD Code manufactured housing industry.

DISCLAIMER. I am not one of the charismatic, respected, well known, successful business leaders of which I write in the previous paragraphs!

As I’ve said time and again, of late, I’m attempting to retire, but would be pleased to see the manufactured housing industry and landlease community real estate asset class rejuvenated, and at least on its’ way back, to a new renascence, like we enjoyed in 1998; but this time, without abusing our customers and financial resources. GFA


I know I promised a State of the MHIndustry & LLCommunity Asset Class this week. Well, it’s prepared, but requires the entire blog space; so once again, will not be included here. Perhaps I’ll have to effect a special posting somewhere along the line.


If you’re reading this blog posting every week, but are not yet a paid subscriber of the Allen Letter professional journal, please consider doing so now. What are you missing? April’s issue is headlined by ‘Something Old, Something New, Something Borrowed, Something Blue’ – describing four measures for successfully filling vacant rental homesites in landlease communities! For the first time, there’s (national) political commentary for your reading curiosity. Also, the only MH & LLCommunity ‘stock watch’ published anywhere in the industry/asset class, along with major rate indices for LLCommunity loans. And you’ve just gotta see Troy & Cheryl Brost’s ‘love letter’ to their friends in the MHIndustry. Let me ask you this: ‘Where else in the MHIndustry & LLCommunity asset class will you find 1) 13th annual National Registry of LLCommunity & Chattel Lenders; 2) 12th annual ‘Who Ya Gonna Call During 2011?’ list of freelance consultants; and 3) First published definitive description of Lease – Options, in the LLCommunity? Answer? Nowhere! And did I mention book reviews of LLCommunity owner Chuck Irion’s Roadkill Cooking for Campers and Autograph Hell; plus, Glen Beck’s The Overton Window (Read this and you’ll not look at national events & trends the same, ever again.). To subscribe, phone (317) 346-7156 or via this website.


George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indpls, IN., 46247 (317) 346-7156.

April 3, 2011

Pithy SALMAGUNDI or just more POTPOURRI?

Filed under: Uncategorized — George Allen @ 5:07 am

Pithy SALMAGUNDI or just some more POTPOURRI?

Piggish?, Half Loaf trumps No Loaf, ‘MHParty of the Year!’, More on Rebranding, Super Symposium II Precis’, & Era Ends as Greentree is Sold!


What a week it was! Nearly 150 convened and confabulated in Albany, NY., at Nancy Geer’s Superb Super Symposium II – including REIT firm, UMH Properties’ corporate staff and regional property managers, especially Eugene & Sam Landy, & Christine Lindsey, MHM. Know what? This was also, the only manufactured housing/landlease community gathering to date, during which industry/asset class’ chattel (personal property) freelance finance/service experts, Dick Ernst (972/503-3201) & Ken Rishel (217/971-3968 enjoyed ample time and audience to fully ‘splain’ in vogue ‘buy here – pay here’ & ‘captive finance’ self-finance methodologies, from their perspectives! And now,’ Lease – Option’ appears on the scene. Too bad YOU missed it.

Icing on this cake, was meeting and listening to new National Communities Council (‘NCC’) exec Lisa Brechtel, describe the focus and scope of her work, in our behalf, in Washington, DC: (703) 558-0666. Other notables present at this educational soiree’? Terry Decio of Skyline Corp., David Lentz of American Land Lease, Dr. David Funk of Cornell University, Kian Wagner of Green Courte Partners, Jim Freyer of Haylor, Freyer & Coon, Robin Pfeil of Triton Valley Estates, and the DeMarco Brothers of Security Mortgage. If you’d like a FREE copy of the material I presented at this event, including the ‘Ah Ha! & Uh Oh!’ worksheet – for calculating ‘affordable’ & ‘risky’ price points of new & resale homes sited in & outside LLCommunities, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, and request it.


If you’re a bona fide real estate investor, do you agree or disagree with this ‘one of six’ recommendations for making the most of the recession, recently published in the March/April 2011 issue of URBAN LAND magazine: “Be realistic about the hurdle rate. Writing in January 2010 for National Real Estate Investor, Ethan Penner, executive managing director & president of CBRE Capital Partners, noted, “The desire to get a real estate return in the high teens or 20 percent is piggish.” Penner’s thesis (suggests) an appropriate return expectation for real estate should be around 10 percent.” True or false? Whadaya think? Wonder if he owns investment real estate (i.e. ‘has any real skin in the game’, as they say) or simply sells it; and such a statement helps keep client expectations in check. I’ve long been taught ‘Profit is the reward for taking risk.’ So, it stands to reason, willingness to take big risk opens the door to big profits, just as taking big risks leaves one vulnerable to big failure as well. Any commentary out there?


Consider marking 1 August 2011 on your MHIndustry & LLCommunity asset class planning calendar. Why? There’re whisperings of a ‘MHParty of the Year!’ that day in Elkhart, IN., at or near the RV/MH Heritage Foundation’s Hall of Fame, Museum, and Library. Details likely to follow during weeks ahead. And, if you’ve never visited the excellent facility, then this could be a double – barrel treat!


‘Half a loaf is better than no loaf!’ That’s the reaction evoked by the following quote, again – from March/April 2011 issue of URBAN LAND magazine, describing ‘affordable housing’:

“Housing is considered affordable if 30 percent or less of a household’s income is dedicated to paying the rent or a mortgage.” Cited in ‘Affordable Housing’s New Profile’, p.116.

First off; ‘Thank You’, Dan Withee & Ricky de la Rosa, co-authors of this piece, for describing up front, the perspective from which you write!’ The Housing Expense Factor or HEF, is one of four measures of housing affordability documented in HOUSING AFFORDOGRAPHY, published in June 2008.*1 BUT, here’s ‘the other half that loaf’: What’s included in the referenced mortgage payment? Barebones, being just principle & interest (‘PI’); or Loaded, including principle, interest, taxes, insurance, and household utility, but not telecommunications expenses? Which is it? Makes a whale of a difference to the mortgagor & mortgagee, as to ‘how much house is purchased’ & ‘how much risk is incurred’. For example, a barebones HEF = more house & more risk, while a loaded HEF = less house & less risk; hence, more affordable! Why? Taxes, insurance, and household utility bills still have to be paid; and it’s easier to do, when they’re included within the HEF; more difficult when paid outside the HEF!

Perhaps the day will come when international and national real estate – related trade bodies like ULI, NAR, NAHB, MBA, and others, will finally and once and for all, identify which of the four measures of housing affordability they ascribe to, then explain the ‘dollars, cents & percentage’ parameters being used to ‘make their case’, relative to the ‘affordable housing’ perspective they’re espousing in trade publication features and books. When that day finally (if ever) arrives, we – the affordable housing practitioners & providers – will have been given ‘the entire loaf’ with which to plan and work, not half a loaf or less, as is the sad case today!


Rebranding? You bet! In landlease (nee manufactured home) community circles, think ‘the original Hometown America’ of a decade ago, and American Land Lease’s new Solstice (adult living) & Clearview (family living) brands of today. Then there’s Chuck Fanaro’s iconic SaddleBrook Farms outside Chicago; Rob Tunnell’s luxurious Baywood in Delaware; Doug Daniel’s showcase communities in Springfield, IL.; Troy and Cheryl Brost’s beautiful SongBrook in Eugene; even Skyline Corporation’s intentional segue away from ‘manufactured housing’ to ‘factory – built housing’ terminology, in all its’ advertising! Yes, there’s a new wave a – building & a – flowing, from coast to coast. Are YOU an integral part of it yet? Send me your examples and observed evidences of rebranding throughout the MHIndustry & LLCommunity asset class! Mail to GFA c/o Box # 47024, Indpls, IN. 46247 or via

It was suggested privately, during last week’s Super Symposium II; that at MHI’s annual meeting this Fall in Phoenix, salaried and elected leaders of this body politic, should trek into the desert, dig a deep hole, and drop in a plaque with the words ‘manufactured housing’ printed on it. When the hole is covered over, return from the desert, carrying a similarly – sized plaque, with the word ‘housing’ or words ‘factory – built housing’ printed on it, symbolically marking the end of manufactured housing as our industry’s everyday, much – abused moniker, rebranding as factory – built housing going forward! What do YOU think of the idea? Tell Thayer Long @ (703) 558-0678.


Loan servicer Green Tree to be sold! According to the StarTribune, ‘Walter Investment Management Corp., announced it has reached a deal to acquire Green Tree for $1.065 billion. The once – troubled Green Tree started out servicing loans on manufactured housing, but that sector now makes up just 36 percent of its’ business. The firm has a $37 billion portfolio composed of 745,000 residential home improvement and home equity loans, manufactured housing loans, and consumer installment loans.” This marks the closing of one sorry chapter in manufactured housing history.


State of the MHIndustry & LLCommunity Asset Class. Just occurred to me, you probably haven’t had anyone describe the present state of our industry and income – producing property type, to you, this year. While I’ve run out of space to do the subject justice in this week’s blog posting, perhaps I’ll share it with you next Sunday – assuming, of course, there’s not some ‘breaking news’ I need to get to you in lieu of such an overview. Here’re some tantalizing tidbits contained therein: new home shipment volume for 2010; Clayton Homes’ approximate national market share; average property portfolio size during 2010; national average physical occupancy & OER during 2010; and, Randy Rowe’s Five Point Plan to Save the MHIndustry! This latter ‘plan’ was first espoused at the 19th annual International Networking Roundtable during Fall 2010, but was renewed, with vigor, by David Lentz, during his presentation at the aforementioned Super Symposium II in Albany this past week. So ‘the plan’ is alive and well to many of us!


A minor but important shift in trade terminology. Increasingly, I see association execs, trade publications, and property owners/operators adopting and using the’ landlease community’ label for our unique real estate asset class. That’s great! But there’s a minor tweak yet to be made, and it’s this: ‘landlease community’, when the two words land & lease are combined, rightly narrows the focus relative to this homeowner/site lessee lifestyle. However, when the two words remain separated, as in ‘land lease community’, we run the very real risk of being ‘cornfused’ with other types of ‘land leased realty’. Do we want that? I think not. Landlease Community has given us a needed and timely panacea to recreate, to rebrand ourselves, featuring superb curb appeal, resident – friendly environs, and intrinsic home value. Let others continue to operate using lesser, vestigial word descriptions. Just let’s not confuse ourselves, and our residents, as to the ‘really right label’ for this new multifamily rental property reality! Agreed?

End Note.

1. Measures of housing affordability: Housing Expense Factor (‘HEF’), Housing Opportunity Index (‘HOI’), Housing Wage (‘HW’), & ‘One Who Believes’…

SPECIAL ANNOUNCEMENT. Copies of the 22nd annual ALLEN REPORT continue to be available for purchase. The $450.00 cover price has been discounted to $250.00. And as an added bonus, if you purchase the report, for this latter amount, we’ll include a complementary annual subscription to the Allen Letter professional journal, a savings of $134.95. As the number of print MHPublications has dwindled, the newsletter’s subscriber base has continued to grow month after month. To place your order, phone, (317) 346-7156, or the aforementioned MHIndustry HOTLINE.

George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

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