Blog Posting # 625 @ 12 February 2021: EducateMHC
Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing!’
EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!
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INTRODUCTION:
• Manufactured Housing Shipments Falter in Year 2020
• Manufactured Housing Stock Prices Recover to Pre-Covid Levels
• Affordable Housing Under Assault Everywhere
• 2020 Election. Here’s What TIME magazine now tells us about it
• Lease Option Home-only Financing Today & Tomorrow
I.
MHShipments Falter Once Again & Stock Prices, for the most part, Recover to pre-Covid Levels!
If this time last year you hoped the annual shipment volume of new HUD-Code homes would eclipse 98,000 units – for the first time since 2006, prepare to be sorely disappointed! We started the year ‘strong’, with monthly shipment totals above what they were during 2019. Then the coronavirus hit! For the next three months (April, May, June), shipments were ‘off’ by 1,000+/- units per month; and, from that point on, seesawed through the remainder of 2020, ending with a dismal total of only 94,390 new HUD-Code homes shipped (Based on Institute of Building Technology & Safety reported unadulterated monthly totals alone!). That’s 225 fewer new homes than were shipped during all of year 2019!
Know what that means? If we had those 3,000 (lost) homes back (actually 2,775 net), we’d have likely shipped 97,165 new HUD-Code homes during 2020, achieving the highest level since 117,510+/-, way back in year 2006, or 14 years ago! Another unintended consequence of the coronavirus pandemic.
Given continued home-only finance uncertainty, in most local housing markets, the fact the manufactured housing industry ‘recovered so well’ by year end 2020, bodes well for hitting or even eclipsing aforementioned goal of 98,000 units by year end 2021. What do you think?
Then there’s the stock market performance of our nine public companies; four HUD-Code housing manufacturers (i.e. BRK-A, SKY, CVCO, & LEGH) and five land lease community portfolio owners/operators (i.e. ELS, SUI, UMH, MHPC, & MHC.U). Between March (coronavirus) and April, all these firms took major hits to their stock prices, with one halved in value! By February 2021 however, all companies returned to, or close to, their March 2019 stock price levels – with the one ‘hit the hardest’, rebounding to an even higher price than during March 2019.
Any of this ‘new news’ to you? If so, subscribe to The Allen Confidential business newsletter; available via www.educatemhc.com Every issue contains a ‘MHShipment Volume & Stock Market Report’ for your edification. There’s nothing like it anywhere else in the MHIndustry!
II.
Affordable Housing Under Assault
‘Homeless Seniors R Us’ is how homeowners/site lessees in some Upper Midwest land lease communities now describe themselves. Why? Because a few private equity giant firms, from outside the manufactured housing industry, have acquired land lease communities for their property portfolios, and then, too aggressively ‘jacked site rents’ and began charging additional for trash removal and water! For example, in one Montana community, site rent increased to $380 per month, and with addition of aforementioned charges, raised a typical resident’s total payout to $500/month.
And then there’s this gem, describing the repurposing of a land lease community in Puyallup, Oregon. Vacant rental homesites are being filled with 313 square feet Tiny Homes selling for $60,000., with 30 year leases. And the monthly HOA (Homeowners Association) fee is $800/month! Anyone see ‘affordable’ anywhere in that description? I sure don’t.
III.
TIME Magazine: Saving or Rigging of 2020 Election?
“-…a well-funded cabal of powerful people, ranging across industries and ideologies, working together behind the scenes to influence perceptions, change rules and laws, steer media coverage and control the flood of information. They were not rigging the election; they were fortifying it.” According to Molly Ball, a writer for TIME magazine.
Now, there’re two opposing perspectives, leaking one profound truth! The 2020 election was either RIGGED or FORTIFIED. What’s your opinion? Mine? The former.
IV.
Lease-Option Home-only Financing Today & Tomorrow…
Following two paragraphs are quoted and edited, from email correspondence between two land lease community portfolio owners/operators, discussing home-only chattel financing.
We’ve had very good experience with Country Place Mortgage in Dallas, TX. although they only finance Cavco/Fleetwood Homes. Also had very good experience with American Commerce Bank in Bremen, GA. And, very good experience with private investors who frequently finance our acquisition of homes through self-directed IRA accounts. We are not fans of one top market share chattel lending program, because of fees and interest rates a community owner is responsible for if the buyer/borrower defaults, and lender’s (alleged) refusal to substantiate the amount they claim a community owner is responsible for when a buyer defaults.
A discussion many community owners have had during the past five to 10 years, has been regarding interest in developing a lender who’d provide home-only acquisition financing to land lease community owners/operators selling on-site. Lease-Option programs implemented by community owners are very attractive to said owners, as well as homebuyer/site lessees who don’t qualify for conventional loans, manufacturer programs, and the industry in general; as they are well-secured for the entity advancing funds. The hurdle we invariably encounter is one of scale – lenders able to invest large amounts of capital at attractive interest rates, don’t want to do so at much less than tens of millions of dollars.
Times change, however, and interest rates are still at all-time lows, so perhaps it’s time to revisit this timely topic.
OK blog reader, you interested in being part of such a discussion should it take place, probably virtually, during the next several months? If so, let me know via gfa7156@aol.com
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George Allen, CPM, MHM EducateMHC