Blog Posting # 775, Copyright 12 January 2024. EducateMHC
Parallel Perspectives. HUD-Code manufactured housing (‘MH’) 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 manufactured housing! EducateMHC is an online advocate, historian, trend tracker, and text resource for these two related business models! Reach EducateMHC via (317) 881-3815; email: gfa7156@aol.com, or visit www.educatemhc.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 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’), is an RV/MH Hall of Fame enshrine, a Vietnam veteran & retired lieutenant colonel of U.S. Marines, as well as author/editor of 20 books re MH, communities, business management & prayer.
‘Thanks for putting into print what no one else will say out loud!’
In a manner of speaking, the ink wasn’t dry on last week’s blog posting before responses arrived on my PC. All commentaries have been in support of the straightforward question directed to HUD-Code housing manufacturers who’ve seen, on the average, production of new homes drop by 22 percent year to date (‘YTD’) 2023, and product pricing rising 77 percent between years 2017 & 2022. Here’s the question:
“Are we, as an industry and affordable housing player, more interested in selling fewer new (manufactured) homes at higher prices, OR selling more new homes at lower, atttainable prices?”
That question prompted the title line of this week’s blog posting: ‘Thanks for putting into print what no one else will say out loud!’ And that wasn’t all that’s been penned to this end.
A veteran state MH association executive shared these observations and frustrations. “You are correct about the prices of new MHs staying stubbornly elevated. Many of our members got burned during Covid as prices (of new HUD-Code homes) skyrocketed! Our independent (street) MHRetailers could not adjust the price quoted to their customers, so they had to suffer lost revenue in many cases! Now manufacturers and retailers feel they can make just as much money selling fewer homes and that is what they are going to do. Working smarter, not harder! Unfortunately, this is not a good long-term strategy, and it will come back to bite us. Today, as I travel the state extolling the virtues of our industry to municipal leaders and others, saying we are ‘affordable’ is no longer my sales pitch, because it may no longer be true if prices do not dome down.”
And that wasn’t all sent my way. Here’re excerpts from yet a particularly savvy state MH association exec. Responding to my list of five – no, make that six, key reasons why new HUD-Code manufactured housing production is down 22 percent this year, he/she writes:
“…the two biggest obstacles the industry faces which were not mentioned in your blog, in blue states, remain trade unions who are the largest contributors to liberal democrat political candidates at all levels, who want to keep factory-built housing out of competition for labor; and HUD itself. HUD hands out Community Development Block Grants (‘CDBGs’) to pretty much every municipality that applies for one, but does NOT require utilization of HUD-Code housing in any of those municipalities (i.e. ‘promoting zoning discrimination’).”
Furthermore, “…next of my list would be the NIMBYs (‘Not in my backyard!’), university-educated socialist urban planners, and local building officials who refuse to trust third party inspections.”
And “Yet another reason production is down has to do with rental homesites in existing land lease communities. Most vacant sites have been filled by ‘new’ corporate owners, who, in the race to get into the (commercial real estate investment) game, paid too much for those communities in the first place.”- and have jacked site rent rates soon thereafter, causing turmoil.
It’s not too late for you to sound-off with your observations and opinions on this timely, albeit controversial topic: ‘Higher prices and fewer houses’ OR ‘lower prices and more houses’? What say you? Gfa7156@aol.com
As I opined last week, it will be interesting to see and hear IF this timely matter is addressed by the State of the Industry panel scheduled to address attendees at this year’s Louisville MHShow, early morning the 17th of January. Hope to see you there! GFA
About the Louisville MHShow. Yes, I’ll be there and will have updated training and marketing materials with me to distribute FREE to those requesting for them. They are:
- A plastic 3X5 wallet card with ‘Four Steps to Selling & Financing New Homes On-site Within Land Lease communities’ on one side, & ‘Six Right Ps of Marketing New Homes Within Land Lease Communities’ on the verso side. Also a similar wallet card is availablae for HUD-Code manufacturers selling homes into land lease communities.
- ‘George Allen’s Investment Real Estate Number Crunching Card’, featuring the cash-on-cash formula, a loan amortization chart, New Rule of 72 – for estimating value of an average land lease community, real estate asset class operating expense ratios (‘OERs’), and How to Use the 3:1 Formula for estimating rental homesite rate, compared with like-size conventional apartments in any local housing market. A real keeper of a card!
- A handy card describing three texts that should be on-site in every land lease community nationwide: 1) ‘Community Management in the Manufactured Housing Industry’, 2) ‘SWAN SONG’ a history of land lease communities, and my autobiography: 3) ‘From SmittyAlpha6 to MHMaven’. All available via educatemhc.com and archived in the RV/MH Heritage Foundation’s Hall of Fame in Elkhart, IN.
RVs as Affordable Housing
My major business writing project during year 2023, was to research and pen an academic article describing present day and future prospects of recreational vehicles (‘RVs’) as affordable, attainable housing. The finished product, ‘RVs as Affordable Housing’, was submitted to the publisher in October, and I suspect the periodical will be distributed during the first half of year 2024. Once it’s published, I plan to share it in toto with my readership here, and in other RV & MH-related publications, such as ‘Manufactured Housing Review’, our industry’s online trade media.
In the meantime, I continue to read and gather interesting additional material to this end. What I share here is a bona fide observation and prediction about ‘automobile trailers’, from 88 years ago! At that time, neither recreational vehicle (‘RV’) or mobile home (‘MH’) trade terms had been coined. So here’s the remark from Roger W. Babson’s article ‘We’ll Soon Be Living On Wheels’, quoted from the ‘Los Angeles Times’, in the February 1936 issue of Woodall’s ‘Trailer Travel’ magazine:
“Within 20 years, more than half of the population of the United States will be living in automobile trailers.” Wow! What a prediction! Did it happen? No. But during year 1956, there were 124,300 new mobile homes (oft called ‘trailers’) produced, and an indeterminate number of automobile trailers manufactured for recreational use. But it is interesting to read of the enthusiasm some had, at the time, for this new form of housing. What is sobering, however, as an industry, we haven’t produced that many homes since year 2005 (@ 146,644) and we’re not going to eclipse 100,000 units during all of year 2023! Read carefully: ‘It’s like we’re purposely going backwards and not forward these days!’ Why? Again, that’s the question for which we’re awaiting an answer from our HUD-Code housing manufacturers!
My major business writing project during year 2024? To research and author a comprehensive history of the RV/MH Heritage Foundation Hall of Fame in Elkhart, IN. Part I was penned by the late Dr. Carlton Edwards (a Hall of Fame inductee), covering the period of time between its’ founding in 1972 through 1993. I expect Part II will cover from 1994 on through year 2024. So, if you have information on this historic subject that you’re willing to share with me, let’s start a conversation via email: gfa7156@aol.com
George Allen, CPM, MHM