Blog Posting # 774, Copyright 5 January 2024. EducateMHC
Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable & attainable factory-built housing! And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the commercial real estate (‘CRE’) component of manufacture housing! EducateMHC is the online advocate, historian, trend tracker, and text resource for these two related business models! Reach EducateMHC by phoning (317) 881-3815l email: gfa7156@aol.com, or visit www.educawtemhc.com, to order Community Management in the Manufactured Housing Industry. This is the sole professional property management text in print today! 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, a 45 year business career in MH and community ownership/management, and as an author & consultant.
George Allen, CPM®Emeritus, MHM®Master, is only emeritus member of the Manufactured Housing Institute (‘MHI’), an RV/MH Hall of Fame enshrinee, retired lieutenant colonel of U.S. Marines, & author/editor of 20 books re MH, communities, business management & prayer.
MH HEADED TO THE BOTTOM PRODUCTION-WISE? AH, BUT TO THE TOP, PRICE-WISE!
By dint of my personal nature, I am NOT a naysayer (i.e. ‘a person who habitually expresses negative or pessimistic views’ Webster). However, I would not be faithful to my manufactured housing journalist principles if I did not share information in the following paragraphs with you.*1
Between years 2010 and 2021 we saw annual HUD-Code manufactured housing production increase, from just 48,789 units in 2009 to 112,886 during 2022! However, during this year (2023) we’ve seen new MH production decrease, year to date, by 22 percent! We’ll be fortunate, as an industry, to eclipse 90,000 units by year end (2023) when the Institute for building Technology & Safety (‘IBTS’) publishes this data a month from now (i.e. during first week of February 2024). *2
So, why are we languishing this year? Three blog postings ago (i.e. #771 on 15 December 2023) I shared my observations on this very matter – in End Note # 3. Specifically,
“Some say 1) lack of easy access to ‘home only’ loans (a.k.a. personal property or chattel financing) & presently high interest rates, 2) pandemic era high prices on scarce building components & lack of available labor, 3) local regulatory barriers to all forms of affordable housing, 4) too few MH housing sales centers, a.k.a. independent (street) MHRetailers & ‘company stores’, and lately, 5) challenges working with local permitting and engineering authorities, even when land planning and zoning boards approve and desire development of raw land into land lease communities and subdivisions.”
Well, seems I missed an observation (i.e. #6): the increasingly high prices of new HUD-Code manufactured homes; ‘increasing more than site-built homes’!
Here’s what the Manufactured Housing Institute (‘MHI’) had to say on the matter in a communique to members on 4 January 2024. Remember, as you read, the majority of MHI’s operating funds come from their HUD-Code housing manufacturer members:
“The (Lending Tree) analysis found the average sales price of new manufactured home rose by 77.1% between 2017 & 2022, while the average sales price of new site-built, single-family homes, excluding land, rose by 46.7% over the same period. The average cost for a new manufactured home was $127,300 in 2022 while site-built homes sold for an average of $430,808.”
And here’s MHI’s explanation of that observation. “While many of the media reports focus on the overall difference in the percentage increase between manufactured and site-built homes, in real dollars manufactured homes cost an average of $303,508 less than new single-family homes. Additionally, many of these stories have focused on luxury developments in high-cost-of-living areas that do not represent the average American homebuyer.”
Be that as it may, WHY did the average sales price of new manufactured homes rise by 77.1% between 2017 & 2022? So far I’m not hearing or reading any plausible explanations relative to this question. Have you? We’ve been down this road before, several times. Frankly, it appears, as an industry, we’re clearly pricing ourselves out of our widely acclaimed affordable (i.e. some say ‘attainable’) housing market. Is this due to profiteering, greed, or what? We should remind ourselves of philosopher George Santayana’s famous quote: “Those who cannot remember the past are condemned to repeat it.”*3
In the meantime, we’re well on our way to a trend characterized by production of a marginal volume of new HUD-Code homes, stuck at or slightly below or above 100,000 new MHs per year, – versus 579,940 new ‘mobile homes’ in 1973, & 372,943+/- new manufactured homes in 1998. At the very same time we’re jacking the average sales price of our new MHs. This puts forth the pithy question: ‘Are we, as an industry and affordable housing player, more interested in selling fewer new homes at higher prices, OR selling more new homes at lower prices?’
Wonder if this timely trend – no, question, will be covered by state MH association execs addressing attendees at the Louisville MHShow the morning of 17 January 2024; specifically, the ‘State of the Manufactured Housing Industry’. Will you be present? I hope to be. Let’s ask for answers to the above question! For more information on this sensitive subject, read the EducateMHC ‘MHShipment Volume @ November 2023 & Stock market Report @ 3 January 2024’. Available for the asking via gfa7156@aol.com
End Notes.
- Principles of Journalism: Report the facts, check resources, and be understood via plain writing style.
- IBTS = HUD’s MH scorekeeper. It’s where HUD, MHARR, MHI, and EducateMHC subscribe, to receive this MH production data, month by month.
- George Santayana, ‘The Life of Reason’, vol. 1, 1905, p.284
UMH PROPERTIES CONTINUES TO IMPRESS
Simply put, ‘UMH Properties celebrates its 55th anniversary at the New York Stock Exchange on 10 January 2024. Congrats to Eugene, Sam, and the rest of their land lease community portfolio team!
George Allen, CPM, MHM