Blog Posting # 797, Copyright 14 June 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 (‘CRS’) component of MH! EducateMHC is the online advocate, official historian, trade term & trend tracker, as well as information resource for both business models, and to some extent, for the recreational vehicle (‘RV’) industry as well. Access EducateMHC via (317) 881-3815; email: gfa7156@aol.com & via www.educatemhc.com to purchase Community Management in the Manufactured Housing Industry, and SWAN SONG, 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 and community ownership, as well as prolific non-fiction author and popular 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 columnist and editor at large. He’s a Vietnam combat veteran and retired lieutenant colonel of U.S. Marines, and author/editor of 30 books & chapbooks on MH, communities, business management & prayer.
Housing Insight from The New York Times
The Real Estate section of last Sunday’s New York Times featured a lengthy article titled: ‘Little Boxes Could Hold a Housing Solution’ by Francesca Mari. The gist of the piece had to do with ‘modular home construction seen as a potential cure for U.S. shortage 50 years ago’. What caught my attention were historical recollections and practical observations, relative to Operation Breakthrough in 1969, that affect the HUD-Code manufactured housing industry we know today. Here goes…
Operation Breakthrough “led to a national code that regulated the previously lawless trailer-home sector. (Trailer homes are categorized as personal property, not real estate, and they move across state lines, making them subject to interstate trade laws and thus federal regulation.) This made mobile homes safer and expanded their production, bolstering a form of affordable housing that now accounts for 10 percent of single-family homes.” Point? When a uniform national building code was established, industry responded. The barriers to building housing fast, in other words, weren’t technological, but institutional. And that institutional speed bump continues into the present day, with local regulatory barriers (Think NIMBY) to all forms of affordable housing, not must HUD-Code manufactured housing.
And the article goes on to say: “What’s most likely to force the adoption of industrialized housing (a.k.a. new contemporary trade term: offsite construction) in the U.S., however, isn’t excitement about modular houses, but labor shortages. In fact, a skilled labor shortage has already affected one area of homebuilding: roof trusses, the structural timber frameworks that support a roof. Trusses require precisely cutting angles, a skill few workers possess, and so the structures (oft referred to as components) are now mostly made in factories.” (Parenthetical remarks added for clarity)
Furthermore, “Worker shortages are bound to get worse. The median age of a construction worker is 42, according to the Bureau of Labor Statistics. Traditional construction means working unpredictable hours in unpredictable elements and requires physical strength to climb and hoist materials on a job site. In a factory, those constraints don’t necessarily apply.
In conclusion, and recalling a key point made earlier, “Speed is how industrialization achieves affordability. Even when the labor and material cost savings are modest, the introduction of many more units in a relatively short period of time has the effect of lowering the market price of all units.”
And You Think We Have it Tough These Days….
When 111 firms were surveyed by Affordable Housing Finance magazine, regarding their development and operating costs during year 2023, here’s what they learned:
Survey covered 364 developments with 41,535 affordable housing units (i.e. apartments)
$402,115 = average development cost per unit for new construction projects, up 21.5 percent from the previous year.
$7,232 = average operating costs per unit per year during 2023; or $603/unit/month.
Industry Pioneer Retires – kind of…
Quoting from a Press Release published in the June 2024 issue of the WMA Reporter magazine, “Dick Bessire recently announced he was stepping down as President & Director of the property management company he co-founded in 1979 – Bessire & Casenhiser, Inc.” The firm, one of only a handful of professional land lease community fee-management firms in the U.S. today, will now be led by Dick’s longtime business partner, Keith Casenhiser – RV/MH Hall of Fame enshrinee, and his son, Chad Casenhiser.
How do I remember Dick? Originally, and ‘way back’ in time, he, Keith and I were Certified Property Manager (‘CPM’) members of the Institute for Real Estate Management. And for 30 years, every annual update of the ALLEN REPORT found Bessire & Casenhiser listed among the largest dozen community portfolio owners/operators in the U.S. and Canada. While a longtime member and supporter of WMA, CMHI, and MHET (Having been honored by first two organizations with their highest, most prestigious awards in 1990 & 2016), he will be most remembered for his spectacular rebirthing of the Lido Peninsula MH Community in Newport Beach, CA.
Lido was built in 1949 and featured 26 units per acre – which is still the case today. Well, Dick led the effort to convert many if not most of the pre-HUD ‘trailers’ into new – sometimes two story – HUD-Code manufactured homes. Those innovative homes now sell for between $500,000 and $1,000,000 apiece. And rental homesite rates vary from roughly $2,500 to more than $5,000 per month.*1
How will I miss Dick Bessire? For decades, he and a few colleagues in California have been my ‘go to guys – and gals’ relative to understanding how the left coast state does business. For that matter, I have ‘go to resources’ in most states and in a few provinces. Without exaggeration I can say that virtually every weekly blog bears the influence of one or more of these individuals. GFA
End Note.
- Though retired, I keep a very thick file handy which contains what I consider to be key documents describing various landmark matters and instances in our industry’s history. This taken from an email message from Dick that I saved for just this sort of occasion. The George Allen library was donated to the RV/MH Hall of Fame library, in Elkhart, IN., a year or two ago.
George Allen