‘LEAD, FOLLOW…OR GET OUT OF THE WAY’

Blog # 531
INTRODUCTION: You’ll want to read this blog posting before you travel to New Orleans for MHI’s annual MHCongress. For that matter, read it even if you’re not making the journey. Why? Because one person, Mark Weiss, of the Manufactured Housing Association for Regulatory Reform (‘MHARR’) has stepped forward, and in ‘the emperor has no clothes on’ fashion, at least tries to call out the HUD-Code manufactured housing industry for its’ perennial lethargy, and leaderlessness, since the turn of the 21st century! I say ‘tried’ to do so, because the document I’m about to reference is shy on details (i.e. names & statistics) and awash with flaws. Read on…

I.

“LEAD, FOLLOW…OR GET OUT OF THE WAY”

That, my friends, is the title of the four page document distributed, on 24 April 2019, by the Manufactured Housing Association for Regulatory Reform, to manufactured housing and post-production sector businessmen and women nationwide.

My rejoinder (answer) here, is not to comment line-by-line, but make appropriate general remarks, and be specific where need be. Here goes….

Mark’s opening paragraph is a passable description of production & shipment turmoil experienced by HUD-Code manufactured housing, and land lease communities, during the past two+ decades, years 1998-2019. But in it Mark offers no explanation for the 21 year plummet from 372,943+/- new home shipments during 1998, down to 49,789+/- units by year end 2009.*1 Frankly, everyone active in the manufactured housing business since the turn of the century well knows that has to do with our loss of easy access to personal property finance (chattel capital) needed to fund loans on housing transactions within (then) manufactured home communities nationwide!

He does go on, however to accurately describe the slow ‘modest year-over-year gains (in shipments) between years 2009 and 2018, the latter realizing 96,555 new HUD-Code homes shipped. And how, just within the past six or so months, the industry has fallen off the anticipated pace to ship 100,000 new homes during years 2018 and 2019. And that becomes the springboard for moving into the second phase of Mark’s four page document; specifically:

1) “Identify the problem(s) lying at the heart of this market descent”

2) “Take concrete steps to address…those problems, once identified.”

So far so good. But here it gets a little confusing. On one hand, Mark cites the ‘myriad of problems affecting the industry & its’ consumers’ – mostly from outside the (housing) production sector (some of whom MHARR represent), but ‘not necessarily the post-production sector’. Huh? How can it be both ways? Simple. He mentions Department of Energy’s energy conservation standards maybe to be foisted on the manufactured housing industry, questions what administration will be in power by 2020, and describes HUD’s continuing sole- sourcing of monitoring contracts. Then Mark launches into a claim that objective analysis (By whom?) highlights market-limiting factors for the post-production segment of the industry – all due to ‘lack of coherent, focused, and aggressive leadership’, and absence of independent national representation of said post-production sector.

At this point Mark does something interesting. He equates this lack of national leadership across the board with what occurred, in and around 1985, when MHARR split off from MHI (nine years after implementation of the HUD-Code) to better represent the smaller, regional HUD-Code housing manufacturers. So far an interesting tale, if nothing else.

But here’s where we begin to run into trouble, of sorts.

Here Mark introduces MHARR’s Board of Directors as leaders to ‘take the bull by the horns’ in the interest of improved industry representation – and national advocacy. Yet, not a single individual is named! Why? Ask MHARR; but they simply don’t make their membership rolls public, whereas MHI does. Point? Don’t know ‘bout you, but as a post-production sector businessman, there’s a far better chance of me following the leader I know than the one I don’t! How ‘bout you? This, in my opinion, is major flaw # 1 of this argument.

Next, Mark identifies what he (MHARR?) views as three critical issues:

1) Zoning exclusion and/or discrimination re single-home placements, & development or expansion of land lease communities (Mark pens ‘manufactured home communities’)

2) Challenge other types of local placement restrictions or limitations on manufactured homes and land lease communities.

3) Publicly expose failure of GSEs & GNMA to fully & properly implement existing law (this is not identified in the paper), forcing homebuyers into higher-cost purchase loans.

This is OK as far as it goes, but once again, anyone in the manufactured housing business since the turn of the century well knows there’re nearly a dozen perennial (some say ‘evergreen’) issues that hold this industry back. For the complete list, scroll back through the blog archives to blog postings # 511 & 527.*2 Hence, in my opinion, this is flaw # 2 of this presentation.

Relative to point # 3 above re GSE’s failure to perform re DTS – after more than a decade, Mark suggests this lack of progress has erected a ‘brick wall’ for post-production that “harms smaller industry businesses and HUD-Code consumers, while benefitting only the industry’s largest businesses.” Frankly, this statement deserves further explanation. While I think I know ‘what & who’ he describes, do you know ‘who & why’? Hence, major flaw # 3.

In a paragraph where ‘restricted zoning’ and ‘high interest rates’ are further described and abhorred, there’s, in my opinion, a Red Herring. MHARR evidently does not like MHI’s efforts designing and marketing a New Type (MHARR calls it ‘new class’) of manufactured home, claiming it is not affordable or within the mainstream of manufactured housing. Who sez? No facts or reasoning is provided to substantiate either of these two claims. Flaw # 4.

Near the end of this document, MHARR engages in some chest thumping, comparing what it views as leadership initiatives to lead on many key industry issues. Won’t go into them here, but most are indeed valid examples. But here again, flaw # 1 moves front and center. Just WHO is leading MHARR these days? Founding and longtime executive Danny Ghorbani is now two years retired – or is he? Mark is good at what he does – writing treatises like this, from time to time. But if my life depended on it, I could not name a single charismatic, capable, successful, motivated leader within that association who has enough of a handle on the post-production segment of the industry to do all that’s suggested in this document!

So, where do we go from here? Nowhere! That is, unless something very different happens than what did not occur at the following venues so far this year:

Lousiville MHShow. All this, a non-issue

Tunica MHShow. A poorly publicized & attended organization effort at end of the official show

MHCongress. Unless someone is motivated by this blog posting response to MHARR’s call to action, nothing will happen there either.

So, the challenge to ‘LEAD, FOLLOW…OR GET OUT OF THE WAY’ will, once again, fall as they say, on deaf ears!

That is, unless action is taken at the MHCongress, calling for unified action by MHI, MHARR, & now, NAMHCO, during former’s fly-in meeting in Washington, DC. on 10 June 2019! And then, if asked, I’d be pleased to host a day long MHAlive! Think Tank follow-up gathering, of the same principals, on 5 August 2019, at the RV/MH Hall of Fame in Elkhart, IN.*3

Bottom line? Mark has started this ball a-rolling. Let’s watch and see if our salaried and elected leaders finally ‘take the bull by the horns’, as MHARR’s board suggests, and moves our industry and realty asset class forward together and forthrightly!

Continue to read here each week. I’ll keep you informed. GFA

End Notes.
1. (+/-) designation accounts for the ambiguity in reporting monthly HUD-Code housing shipments by the Institute for Building Technology & Safety (‘IBTS’), HUD, MHARR, & EducateMHC, as opposed to different unit totals reported only by the Manufactured Housing Institute (‘MHI’). Not until year 2013 were we able to shed the ambiguity, with Official Annual Shipment Volumes now published in SWAN SONG, the history of land lease communities from 1970 to the present day. Available via www.educatemhc.com

2. In brief: responsibility for proper, safe & secure installation of new HUD-Code homes; HUD’s ongoing resistance to promoting manufactured housing as affordable housing; existing MH stock aging faster than replacement stock being fabricated; no relief for on-site homeowners/site lessees when it comes to realty-secured vs. chattel loans; continued up-selling of new homes valued in excess of what homebuyers can afford; lack of effort to improve industry and asset class public image; and lack of two secondary markets; finally, dearth of professional property management at all levels of operation in land lease communities nationwide.

3. This location has become historically significant for a couple reasons. On 28 February 2009, more than 100 HUD-Code housing manufacturers and community owners/operators met for the day – to decide how to save their industry. Result? Agreement on design for a Community Series Homes (named by Don Westphal later that year), that would see the percentage of new homes going into communities, jump from 24% in 2009, to more than 40% by year end 2015. And now, annually, the IMHA/RVIC hosts Two Days of Plant Tours & Home Sales Seminars teaching community owners/operators how to buy, sell & seller-finance new homes on-site! Next session? 17 & 18 Junes 2019. To register, phone (317) 247-6258.

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