Solving Our Nation’s Affordable Housing Crisis

Blog # 468; Copyright, 22 October 2017; at

Perspective. ‘Land lease communities, previously manufactured home communities, & ‘mobile home parks’, comprise the real estate component of manufactured housing.’

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This blog posting recommends ‘Solving Our Nation’s (Lack of) Affordable Housing Crisis, with Factory-built Housing & Land Lease Communities!’

Took longer than usual to collect, organize, and articulate key data and appropriate thoughts on this important and timely topic. Result? More affordable housing!

Watch for this Solution to be featured in the Allen CONFIDENTIAL! business newsletter, Allen Letter professional journal, and wherever COBA7 can secure media ‘white space’, an online e-zine presence in the Manufactured Housing Review, & distribution of reprints!

This message warrants distribution beyond our immediate circle of manufactured housing and land lease community businessmen and women friends and association executives to state and federal regulators, as well as local land planners, and zoning boards everywhere

You’ve permission to copy & distribute this blog posting! Thank You for doing so! GFA


Solving Our Nation’s (Lack of) Affordable Housing Crisis, with Factory-built Housing & Land Lease Communities!

Providers of single and multifamily residential housing talk about it, some take steps to ameliorate ‘this crisis’; but few set aside personal & corporate preferences to ideate (‘conceptualize’) what it’ll take to actually ‘ Solve Our Nation’s Lack of Affordable Housing Crisis!’ What follows here, is a foundation for such discussion, then thoughts as to how factory-built (Some say systems-built) housing in general, manufactured housing in particular, and land lease community lifestyle (a.k.a. manufactured home community), are likely the ideal, practical, dual solution to said affordable housing crisis.

Affordable housing, as a descriptive term, is widely known to have been hijacked by the low income housing crowd. But that need not be the case going forward, as we agree on a working, across the board definition of ‘affordable housing’.

Here’s one suggestion. ‘Housing is affordable, when an individual or household’s Annual Gross Income (‘AGI’) , when less than half the local housing market’s Area Median Income (‘AMI’) – defined by postal zip code and researchable online (e.g., can rent a conventional apartment and or buy a home in this locale, using no more than 30 percent of said AGI, for this shelter & its related household (utility) expenses.’ 30 percent of $36,000 AGI, or local housing market AMI, = $10,800 to rent a nonsubsidized conventional apartment unit and or buy a house. Using the approximate national AMI of $51,229; 30 percent = $15,368 to the same ends*1 Practical examples later…

In the meantime, to better understand the scope and depth of the Affordable Housing Crisis, and how its’ described, one should become familiar with six or more measures generally associated with this aspect of shelter categorization:

• Aforementioned 30 percent Housing Expense Factor, or HEF measure; common in some, if not many/most, of HUD’s, and other related housing programs.

• The Housing Opportunity Index, or HOI measure. Formerly, the National Association of Realtors (‘NAR’), or National Association of Homebuilders’ (‘NAHB’), and ‘Housing Affordability Index’ (‘HAI’) measure; partnerships between NAR or NAHB and a major lender, like Wells Fargo.

• The Housing Wage, or HW measure

• The Workforce Housing, or WFH measure

• The Income to Home Value Ratio, or IHVR measure

• Finally, the ‘One, or Anyone, Who Believes They Live in Affordable Housing’, a patently subjective measure *2

Today, study after study tells us the majority of renters & homebuyers pay in excess of 40 percent, sometimes 50+/- percent, of their AGI for housing that, according to the above measure, is not HEF affordable; or for that matter, by any other measure! Therein lies the Affordable Housing Crisis.

So, where do we go from here?

Introduction to Factory-built Housing and Land Lease Communities.

Some say 100 percent of new single and multifamily family residential housing is, in large part, even in toto, built with factory-fabricated components or as self-contained units. Many agree there are four types of factory-built housing in the U.S. *3

• Production (site) builders = 50+/- percent of national market share. Construct housing on-site, per local building codes, using factory-built components (e.g. roof & floor trusses, pre-hung windows & doors, etc.). A.k.a. site-builders & stick-builders

• Panelizers = 35+/- percent of national market share. Use two dimensional exterior & interior walls, roof & floor trusses, and furnish ‘packages’ needed to complete the home. Components fabricated in factories per local building codes.

• HUD-Code Manufactured Housing = 10+/- percent of national market share. Six-sided structures, singlesection & multisection, built in factories per the performance-based, federally preemptive (HUD) building code. Uses longitudinal steel chassis as foundation for floor system.

• Modular Housing = five+/- percent of national market share. Six-sided modules & utility cores, built in factories per local, state & regional building codes.

Of the four types of factory-built housing, including component assembly, only the HUD-Code manufactured housing alternative, by dint of

• fabrication occurs indoors under climate-controlled conditions

• assembly lines draw from bulk purchased-building material & appliance inventories

• using local, skilled, but not necessarily journeyman, labor, &

• benefitting from a plethora of production line efficiencies,

routinely ships singlesection & multisection housing units, at half the ‘cost per square foot’ – not including value of underlying realty, of contemporary site-built housing! *4

But therein lies the challenge! How to further Solve Our Nation’s (Lack of) Affordable Housing Crisis, using this type factory-built housing? Following are forward-looking ideas and suggestions to explore to this noble and timely end:

• Refine designs of planned new HUD-Code homes, emphasizing space and energy efficiency (e.g. via more insulation, but avoiding trendy but expensive and as yet, unproven innovations), use of quality materials to enhance the durability of said homes. PRODUCT. As volume of new homes, shipped directly into land lease communities increases, continue to refine the design, features and fabrication of Community Series Homes or CSH Models.

• Understand and satisfy local housing markets into which new HUD-Code homes will be shipped, keeping features in line with needs and preferences of prospective homebuyers/site lessees. PLACE. And, as the industry’s distribution mechanism(s) utilize additional ‘independent (street) MHRetailers’ &/or on-site sale of new homes within land lease communities by owners/operators. In doing so, refine where and how new homes are displayed, e.g. at retail home sales centers, and or on-site in land lease communities as ‘spec’ulation housing opportunities, rental units, and otherwise..

• Research and exercise price point sensitivity keyed to local housing market AMI! PRICE. A caution here: Manufacturers must eschew (‘shun’) temptations to wantonly increase the cost of housing product leaving the factory, blaming ‘whatever is in the news at the time’, e.g. hurricanes; ever increasing fuel costs, NOT; and, new regulations that may or may not be true. And in the case of chattel capital financing of new HUD-Code homes, move – as an industry, away from ‘risky’ to ‘affordable’ price point calculation mechanics. More about this later.

• Build one or more Unique Selling Propositions (‘USP’s’) into new homes, and engage in brand advertising locally, regionally, even nationally. PROMOTION. At the same time, take steps, in print and online marketing, to improve public perception of HUD-Code homes nationwide. A recent suggestion has been to advertise as Tiny Houses. Then, when prospective homebuyers visit, and see just how prohibitively small they are, suggest the larger manufactured home, or Millennial Housing (see paragraph to follow), is the right size for them.

• Provide HUD-Code home sales training, as needed, at all levels and among as many MHRetailers and in-community sales forces as possible. PEOPLE. Monitor home sales performance via data reporting, regular supervision, as well as use of covert and anonymous mystery shopping services.

• Bring the gist of the previous five bullet points together into marketing and operations plans, keyed to local housing markets and manner of distribution. PROCESS. Again, monitor performance and adjust accordingly, to ensure success.

There has been talk of late, to design, fabricate, deliver, and sell, a New Type of (Manufactured) Home, constructed in accords with the HUD-Code, but not referred to as being manufactured housing per se (Some suggest ‘Millennial Housing’), featuring 5/12 roof pitch with asphalt shingles and housing siding, a built-in porch, and possibly a garage at one end of the home. If the price point of this new type factory-built home, and underlying realty cost (including rental homesite rates in land lease communities) can be kept within the new home purchase range of the average American citizen earning the $51,229+/- national average AMI, and or average manufactured housing customer earning $36,000+/- per year, this New Type of (Manufactured) Home could/would go a long long way to Solving Our Nation’s (lack of) Affordable Housing Crisis!

How’s all this to work? Well,

• In the first instance, given an AGI (or AMI) of $51,229 X .30 HEF = $15,368. Following the ‘risky’ route (i.e. sans utility $ in monthly PITI payment & paid separately each month), where 100 percent of $15,368 (before deducting $333/month site rent), leaves $948 to pay the monthly mortgage payment (i.e. based on 9.5 percent interest over 20 years) = $113,000 price point (i.e. max amount of mortgage for house purchase). In the second example, given same AGI or AMI X .30 HEF = $15,368, but following the ‘affordable’ route (i.e. utility $ as part of monthly PITI payment), only 75 percent (Not aforementioned 100 percent) of $15,368, or $11,527 – reduced once again by the $333/month site rent, to where $628. pays the monthly mortgage payment (i.e. same loan terms as above) of $628/month = $75,000 price point. (i.e. max amount of mortgage for house purchase).

• In the second instance,, given a lower AGI (or AMI) of $36,000 X .30 HEF, and respective 100 percent and 75 percent allocations, for ‘risky’ & ‘affordable’ calculations, subject to same $333/month site rent and mortgage terms, the resulting price points for the ‘risky’ transaction is $68,000 while the ‘affordable’ transaction restricts the would be homebuyer/site lessee to a $41,000 purchase.*5

Aha! Isn’t this the metaphorical ‘fly in the otherwise (affordable housing) healing ointment’! Yes, as just demonstrated, and it has to do with the manner in which housing payments have been calculated in the manufactured housing industry decades past and today. Estimated household utility (e.g. heat, electric, water/sewer) expenses have generally not been included within the PITI (Principal, Interest, Taxes, Insurance) mortgage and site rent payments, leading to an otherwise ‘risky’ HEF of more than 30 percent. However, when utility expenses are included in the PITI and rental homesite payments, the ‘risky’ investment becomes ‘affordable’ at 30 percent. This simple change in calculation makes a significant difference in the ‘amount of house’ a prospective homebuyer/site lessee can truly afford, albeit ‘risky’ or ‘affordable’. And yes, the ‘amount of house’ a manufacturer can build, and a housing retailer, sell.

• Again, with an AGI or AMI of $51,229, the ‘risky’ approach allows for a home purchase of $113,000. Whereas, taking the ‘affordable’ approach, the homebuyer/site lessee can really only afford $75,000 worth of house – but will likely be less liable to default and or have financial difficulty paying his/her mortgage, site rent, and utility bills each month.

• And the ‘like figures’ for homebuyer/site lessees with a lesser AGI or AMI of $36,000, the ‘risky’ approach allows for a home purchase of $68,000. Whereas, taking the ‘affordable’ approach, the homebuyer/site lessee can really only afford $41,000 worth of house.

So, there you have it! Where will the manufactured housing industry go from here?

Entice the average national AGI customer (or local housing market AMI) of $51,229 to purchase a home ‘affordably’ at max value of $75,000, or in ‘risky’ fashion at max value of $113,000? Furthermore, where the average manufactured housing homebuying/site lessee customer is concerned, with an AGI (or local housing market AMI) of $36,000 will they be encouraged to purchase a home ‘affordably’ at max value of $41,000, or in ‘risky’ fashion at max value of $68,000? *6

Now, there’s something to ponder and decide, going forward…



The trailer courts & camps of the 1950s, mobile home parks of the 1970s, and manufactured home communities of the 1990s, were not and are not, the land lease communities of today and tomorrow! *7

So, what makes land lease communities an integral part of the Solution to Solve
Our Nation’s (lack of) Affordable Housing Crisis? In three words: ‘underlying developed realty’, a.k.a. ‘rental homesites’ right sized and configured for HUD-Code manufactured homes and their homeowners/site lessees!

Prospective homebuyers, with an AGI of $36,000, when offered right price point housing alternatives, when rental homesite rent is @ $333.00/month, or thereabouts, can afford a new factory-built home priced at $41,000. if calculated ‘affordably’; or, $68,000. if calculated as a ‘risky’ investment sans utility bills included in the monthly PITI payment. Where else is someone (or household) earning $36,000/year going to be able to buy a home, and secure (rent) the underlying realty, at either of these price points? Answer? Nowhere!

But land lease communities, like their manufactured housing industry counterparts, also have challenges to resolve – if they’re to Solve Our Nation’s (Lack of) Affordable Housing crisis!

• In this case, the multifamily rental property must be clean and safe, with superb curb appeal and more! Rental homesites must be large enough to accommodate singlesection and multisection homes. Streets and utility infrastructure must be in good repair. PRODUCT. In a word, offer a desirable, sustainable lifestyle to ‘newly wed & nearly dead’, euphemistically speaking. Adopt the land lease community mindset (Think lifestyle!) and leave manufactured home communities and ‘mobile home parks’ far behind!

• The land lease community must be well-located for the market mix of homebuyer/site lessee it serves. Location might indeed be the USP (Unique Selling Proposition) for the land lease community. PLACE. And other USPs might include proximity to desired health services, convenient shopping, quality education; rural versus suburban environment, etc..

• It is important the rental homesite rent be in sync with other forms of multifamily residential properties in the local housing market. One way to ensure this is to survey conventional apartment rents for 3BR2B units, and divide that area dollar average by ‘3’, e.g. $900/month average apartment rent = $300/month site rent. PRICE. And taken together, monthly PITI mortgage payment, utility payments, and site rent, to be within the 30 percent HEF cited earlier. And some say the combined total should be 10+ percent (Schwep Rule), or $50.00/month (Schrader/Smith Rule), below the rent rate for said 3BR2B conventional apartment unit or townhouse in the same local housing market.

• What is being advertised? Property location, features, new homes, etc? Is there off-site and on-site signage present and is it in good condition? PROMOTION. Until maximum physical and economic occupancy is achieved on-site, use every form of advertising: print, broadcast, signage, online, and more. Keep close track on the volume of online and telephone responses, number and nature of on-site visitors, and the ‘conversion rate’ of inquirers to visitors to homebuyers and or lessees of rental homesites or homes.

• Professional property management and successful home sales depends almost entirely on, not just the product, place, price and promotion, but PEOPLE as well! Are they properly screened, hired, trained, rewarded, and supervised? On-site managers should be trained and certified as Manufactured Housing Managers (‘MHM’); regional and executive real estate managers trained and designated Certified Property Manager (‘CPM’) members of the Institute of Real Estate Management (‘IREM’). Better yet, more (Certainly more than the two designees now) land lease community portfolio firms need to earn IREM’s prestigious AMO (Accredited Management Organization) designation.

• Here too, it is important to integrate all ‘Six Right Ps of Marketing’ to support one another in PROCESS. Ensure the overall process dovetails well with the manufactured housing emphasis points.

These have been the Six Right Ps of Marketing: Product, Place, Price, Promotion, People, & Process. Get used to applying them to everything you do relative to housing and community marketing and operations!

So, where do we go from here? What are the challenges that must be faced if land lease communities are to be part of the solution solving our nation’s (lack of) affordable housing?

Well, for starters, we need more land lease communities! How to do that? Take the ‘affordable housing & land lease community message’ to land planners and local zoning officials nationwide!

Again, engage in professional property management at all levels, from on-site to corporate. Of all types commercial real estate, land lease communities have been the least interested in and served by the tenets of professional real estate management. There continues to be a dire need for sales and leasing training and certification nationwide, with results ensured by performance observation, key data reporting, and use of mystery shopping services – a routine practice borrowed from the apartment management playbook.

Rein in rental homesite rents approaching a 2:1 Ratio (Compared to apartment unit rents in the same local housing market, e.g. $900/mnth for a 3BR2B apartment X .50 = $450/month site rent), and commit to effecting the more desirable and affordable 3:1 Ratio cited earlier. Why? For every $100.00 increase in homesite rent, new home buying power of prospective homebuyers is decreased by 18 – 20 percent, depending on whether calculating PITI & site rent on an ‘affordable’ (18%) or ‘risky’ (20%) basis.*8 Bottom line? The value proposition, comprised of home value and rental homesite rates, can be precarious. Only if we protect this value proposition between homeowners/site lessees, and property owners/operators, will we be able, let alone worthy, to be the realty asset class portion of the Solution to Our Nation’s (Lack of) Affordable housing Crisis.

Lest we forget how important reasonable access to chattel capital is for new and resale home sales in land lease communities, it is indeed one of the wildcards deserving continuing attention and action by everyone involved in manufactured housing and land lease community ownership and management. Unfortunately, as an industry and realty asset class we have little to no control over that aspect of our business model. The best we can do is lobby and encourage the Federal Housing Finance Agency (‘FHFA’), and GSEs (Fannie Mae & Freddie Mac) to meet Congress’ challenge to effect Duty to Serve (‘DS’) pilot programs in the manufactured housing industry!



NOW is the time to enlarge the heretofore niche role (i.e. estimated 10 percent+/- of national market share of new single family residences) manufactured housing has been serving the American homebuying public. ALSO time for land lease community owners/operators, large and small, nationwide, to extol the affordability, desirability, sustainability of the homeownership/site lessee lifestyle they offer. In BOTH cases, no longer will we ‘Wait for the customer’; but rather, take our combined housing and lifestyle message to them every way possible. Needed result? ‘The Solving of Our Nation’s (Lack of) Affordable Housing Crisis with Factory-built Housing & Land Lease Communities!’

Are YOU on board? We surely hope so!*9

End Notes.

1. Adapted from a definition put forth in the June 2011 issue of Multihousing Professional magazine, and edited on page 37 of the Book of Formulae, Rules of Thumb, & Helpful Measures…George Allen, COBA7, Indianapolis, IN., 2012.

2. Ibid., p.38

3. Originally identified in Automated Builder Magazine, California

4. Per 2015 data published by the Manufactured Housing Institute, $47.55/sq.ft. (all sizes HUD-Code homes) – or $50.00/sq.ft. when including foundation, compares with $100.65/ssq.ft. for site-built homes. Quoted from Swan Song, George Allen’s History of Manufactured Housing & Land Lease Communities, 1970 – present day’, COBA7, Indianapolis, IN. 2017, page # 113. Limited number of copies available, for $49.95 (postpaid) via Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

5. Using methodology described within the ‘Ah Ha! & Uh Oh! Worksheet, COBA7, Indianapolis, IN., 20008 & revised 2016. See Figure # 1

6. Ibid., Reverse side of Figure # 1.

7. Why land lease community? Unlike the manufactured housing-related income-producing properties circa 1950 thru 1990s, where only pre-HUD-Code ‘mobile homes’ were sited in ‘mobile home parks’; then post-HUD-Code ‘manufactured homes (& pre-HUD-Code ‘mobile homes) were sited in manufactured home communities; today’s land lease community features not only these two types of factory-built housing, but modular homes, ‘park model RVs’, ‘RVs for a season’, and site-built homes constructed on-site in land lease communities to imitate HUD-Code homes (only in FL following major hurricanes).

8. Using 1) ‘risky’ & 2) ‘affordable’ price point calculations perspectives at $51,229 AGI/AMI, with site rent increased from $333/month to $433/month, final ‘max house purchases’ are 1) $90,867 (down $22,233 from the $113,000 ‘risky’ perspective), or 20 percent; and, 2) $75,000 (down $15,687 from the $90,867 ‘affordable’ perspective, or 18 percent! Think how much ‘less house’ will be able to be purchased, using $36,000 AGI/AMI and higher site rent at $433/month!

9. Want more information on this timely and important subject and challenge to the manufactured housing industry and land lease communities? Phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also reach COBA7 and the author of this challenge via


1. ‘Ah Ha! & Uh Oh! Worksheet, COBA7, Indianapolis, IN., 2008 & revised 2016.


George Allen, CPM & MHM
COBA7, a division of GFA Management, Inc., dba PMN Publishing
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

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