Blog Posting # 790, Copyright 26 April 2024. EducateMHC
Know this! HUD-Code manufactured housing (‘MH’) is federally-regulated, performance-based, affordable-attainable, factory-built housing! (A.k.a. offsite construction). And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the commercial real estate (‘CRE’) component of MH! EducateMHC is the online advocate, official historian, trend tracker, and information resource for both business models. Access EducateMHC via (317) 881-3815; email: gfa7156@aol.com, & visit www.educatemhc.com to purchase Community Management in the Manufactured Housing Industry. And SWAN SONG is a history of land lease communities & official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven describes personal combat adventures in Vietnam as a USMC lieutenant, a 45 year entrepreneur business career in MH & community ownership, as well as non-fiction author and freelance consultant.
George Allen, CPM®Emeritus, MHM®Master, is the only emeritus member of the Manufactured Housing Institute (‘MHI’), a founding board member of MHI’s National Communities Council (‘NCC’) division, an RV/MH hall of Fame enshrine, MHInsider magazine editor at large, & Allen Legacy columnist, Vietnam combat veteran & retired lieutenant colonel of U.S. Marines, and author/editor of 30 books & chapbooks on MH, communities, business management & prayer.
Just How Bad Are Rental Housing Costs Today?
In the March/April 2024 edition of ‘Affordable Housing Finance’ there is this troubling collection of dismal housing statistics quoted from a national housing report by Harvard University’s Joint Center for Housing Studies (‘JCHS’). Here goes:
22.4 million renters are cost burdened. Consequences? Evictions & homelessness on the rise.
These 22.4 million renter households spend more than 30% of their income on rent & utilities.
12.1 million of these 22.4 million renter households are spending more than 50% on these costs
JCHS’ managing director Chris Herbert: “…issue of housing affordability is no longer a problem of just the poor.” P.8.
“Since 2001, median rents have risen nearly continuously in inflation-adjusted terms and are 21% higher as of 2022. Yet incomes have risen only 2% in the same period.” P.8.
FHFA’s Housing Mission Report for Year 2023
Released 4/17/2024, this report describes “…activities taken by Fannie Mae & Freddie Mac (‘the Enterprises’), and Federal Home Loan Banks in 2023 to promote access to financing for affordable, sustainable, and equitable housing and targeted economic development.” OK, so
what did they do during year 2023?
“…the Enterprises purchased over 136,000 single-family mortgages for low and moderate income borrowers….” How many of these were HUD-Code manufactured homes? None I saw.
“…Enterprises collectively purchased approximately 15,000 Special Purpose Credit Program loans through lender-sponsored initiatives and their proprietary SPCPs….” HUD-Code homes?
“…Enterprises partnered with vendors responsible for collecting rent payment data from participating multifamily housing property owners and formatting it for dissemination to credit bureaus.” And HUD-Code manufactured housing figures into this activity how?
“The Enterprises invested over $1.7 billion last year in Low-Income Housing Tax Credit (‘LIHTC’) equity, including transactions that support housing in Duty to Serve designated rural areas…”
This followed by two activities pursued by FHL Banks. Unclear if MH was involved in any way.
But Wait! In a separate, subsequent (4/24/2024) Press Release from the Manufactured Housing Institute (‘MHI’), readers are told how ‘HUD & FHFA Bring Manufactured Housing into Affordable Housing Conversation at Senate Hearing’. Read what follows here carefully, bearing in mind what you just learned from the FHFA Housing Mission Report for Year 2023.
“Manufactured housing also plays an important role in building the supply of single-family affordable housing – not only in rural areas on privately held land and in manufactured housing communities (‘MHCs’) but also in fee-simple subdivisions and infill housing in urban areas. (&) FHFA supports the responsible growth of the manufactured housing market, as this represents an opportunity to help address the nation’s affordable housing supply challenge.” Director of the Federal Housing Finance Agency (‘FHFA’) Sandra Thompson
So, where does reality (i.e. ‘the Mission Report’) end and 2024 ‘gas lighting’ begin? Just what does the FHFA and GSEs really do in behalf and support of the manufactured housing industry?
Communities: Ugly Stepchild of Manufactured Housing
Harvard University’s Joint Center for Housing Studies (‘JCHS’) strikes again -but ‘strikes out!’
In a recent report dated 4/23/2024, titled ‘Harnessing the Potential of Manufactured Housing to Expand Entry-Level Homeownership’, writer Chadwick Reed redirects the focus of readers to yet another study: ‘Overcoming Barriers to manufactured Housing; Promising Approaches from Five Case Studies’. Here’s where it gets interesting. Read carefully.
“While all of the cases featured in the new report focus on applications of manufactured housing in fee-simple, real-property development – where a new manufactured home is permanently affixed to its foundation, titled as real estate, and sold to a homebuyer – they vary widely in most other respects.”
So, where’s the ‘ugly stepchild’ in any of these esoteric studies? The land lease community – into which 51 percent of new HUD-Code housing production is shipped and installed for on-site marketing, sale, and financing? Communities (i.e. those featuring rental homesites) are not even mentioned. So here, ‘half a loaf’ is ‘no loaf at all’ – or so it seems. Wakeup JCHS and be more inclusive in your coverage of HUD-Code manufactured housing and its’ sister component, land lease communities – or perhaps you’re still thinking in terms of ‘mobile home park’ lingo.
Back to the ‘Overcoming Barriers…’ report. Here’re the key insights and strategic approaches the authors cite:
Education and advocacy are critical. Education of local officials and communities; advocacy by the industry itself.
Zoning restrictions require flexibility. And I would add ‘endurance’. Changing zoning codes is not a one shot affair – ever.
CrossMod homes have particular appeal. Unlike “traditional manufactured homes often built for niche applications like manufactured home parks or farm housing.” – CrossMod homes “…designed to provide an alternative to conventional site-built single-family housing.” IMHO, it appears the writers here have sipped the Kool Aid. I’m still waiting for trade publications to honestly and accurately ballyhoo the annual unit sales gains of CrossMod homes.
Development processes are unique. While the CrossMod design accomplishes what was intended, developing said homes into a typical single-family neighborhood will be new to most manufactured housing developers – who’re neither licensed contractors or savvy with the manufactured housing product. (Remember the ‘land-home’ debacle at the turn of the century?)There are far fewer independent (street) MHRetailers today than 20 years ago. But, putting this type factory-built housing (a.k.a. offsite construction) onto rental homesites within land lease communities is a simple matter.
Time savings may come in time. This is the learning curve usually characteristic of HUD-Code manufactured homes.
So there you have it, matters to consider if putting manufactured homes into subdivisions and on scattered sites conveyed fee simple; just doesn’t do much for infill where land lease communities are concerned.
OK, Here’s Saving the Very Best for Last!
Given the volume of emails and phone calls I’ve been receiving from MH and land lease community associates across the U.S., an increasing number of you are well aware a movement is a-brewing. A grassroots movement to double the annual production of HUD-Code manufactured homes by filling vacant rental homesites and upgrading land lease communities with new homes.
In the words of RV/MH Hall of Fame enshrinee Dan Rolfes, of Ohio, I’ve been encouraged to ‘keep my powder dry’ for another week or two, until key details can be ironed-out in the planning/working document. So, keep your eyes peeled here for another week or so…if you’re interested in seeing our industry double new home production this year and next.
To the best of my recollection, this is the first time since mid-year 1963, that a significant number of entrepreneur businessmen and women from the industry at large, plan to come together for a worthy business model purpose. If you’re already ‘on board’, you know it; if not, then watch here for more information and how to become involved! GFA
George Allen