Archive for January, 2021

Community Owner’s Lament Grows….

Friday, January 29th, 2021

Blog Posting # 623 @ 29 January 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!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lese communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Part I revisits the ‘hot topic’ of last week’s blog: rampant house price increases and delivery backlogs. Part II gauges the multifamily infill market for apartments and land lease communities during 2021. And Part III, if you’re a lender or loan broker, announces a unique opportunity to market your services!

I.

Community Owner’s Lament Grows….

“Delaying delivery and jacking the sale price (of new HUD-Code manufactured homes) are counterproductive for all three parties.” HOW? “Bad will towards the manufacturer, consumer remorse on the part of the homebuyer/site lessee, and problems for the community owner/operator.” This is what we ‘splained’ in last week’s blog posting (#622). THIS WEEK? Here’s how at least one HUD-Code housing manufacturer justifies an increase in base price these days.

Lumber mill production continues to be below capacity, in part, as COVID-19 affects workforce

Lumber product demand continues to be high, particularly in the housing sector

New home sales, according to NAHB statistics, are 21 percent higher YTD; single family housing starts up 27 percent YTD.

Lumber prices have increased 34 percent during the three week period between mid-December and early January; doubling between November and now

Cost of oriented strand board (‘OSB’) now exceeds its’ earlier price peak this past fall

Cold-rolled steel has risen in price by 61 percent since June, with most of the increase occurring during the past 60 days

Shower doors, metal exterior accessories and other metal fixtures have increased in price between 23 and 34 percent.

Other components increasing in cost include copper wiring, resin-based materials, wood cabinets, etc…

Now, ‘here’s another rub’. At least one manufacturer, in an effort to provide some measure of wholesale price stability to land lease community owners/operators buying new HUD-Code homes to sell on-site, offers a form of price protection, i.e. ‘pay extra, above the base price, to ensure the new home won’t experience even further price increase’. Here’s how one veteran land lease community portfolio owner/operator responded to such a plan offered by one of his/her housing manufacturers:

“So, they’d charge $3,500 on a $50,000 new manufactured home, to guarantee the price won’t go up between the time we ‘agree’ on a sales price (i.e. base price) and the time the home is delivered in three to five months’ time? What a deal. NOT!!! What happens when raw material and building product costs go down?”

All the while, we continue to wonder why monthly new HUD-Code housing shipment volume lags behind 2019 levels, and well behind those of year 2018. Specifically, “Institute for Building Technology & Safety (‘IBTS’) reports 7,996 HUD-Code homes shipped (November 2020), compared to November 2019 @ 7,972homes, and 9,035 new homes shipped (the month before) during October 2020.” This quoted from the ‘MHShipment Volume & Stock Market Report’ published each month (i.e. January 2021) by EducateMHC in The Allen Confidential business newsletter. If you’re not already reading this key strategic information each month, visit www.educatemhc to subscribe!

II.

Just Saying…

Do you read MULTIFAMILY EXECUTIVE magazine? Well, if you did, you’d already know

“Multifamily real estate (investment) remains a solid investment for the long term.” P.11

“There is a significant amount of pent-up demand for quality multifamily product in quality locations.” P.25

“Until the pandemic is resolved, hotel is uninvestable, office is not for the faint of heart, and retail is dead.” P.23

To me, this says, mid to large-sized land lease communities nationwide, as a whole, will continue to be highly attractive to investors within and outside the manufactured housing industry. And among property portfolio ‘players’, consolidation will continue at its’ feverish pace, compressing capitalization rates along the way. The downside? As we already know, the ongoing, albeit increasing, threat of landlord-tenant legislation will have to be faced throughout year 2021.

III.
Calling All Lenders!

Whether you originate real estate-secured mortgages on land lease communities, or personal property loans (chattel capital) for home-only loans, I need to hear from you ASAP!

During January, EducateMHC will be compiling the 23rd annual ‘National Registry of ALL Lenders Serving the Manufactured Housing Industry and Land Lease Community Real Estate Asset Class’. Next to the annual ALLEN REPORT, which was distributed this month as an addendum to The Allen Confidential business newsletter, this is the second most popular, of 12 Resource Documents researched and updated each year. Are you receiving these RDs? You should be! Visit www.educatemhc.com for more information.

In the meantime, however, if you are either (or both) a lender or broker, please send an email to gfa7156@aol.com with this information:

Name of the lender and or broker and indicate whether ‘lender’ and or ‘broker’ focus for firm

Indicate whether this information is for land lease community mortgages or home loans

Total loan origination volume for all of year 2020

Names and phone numbers of three contact individuals at your firm

Here’s a major reason for you to want to be included in the 23rd annual ‘National Registry of ALL Lenders’. Being so-listed is the least expensive, most effective marketing media you will encounter this year! How so? This unique Resource Document is requested frequently by investors acquiring and refinancing land lease communities, as well as independent (street) MHRetailers and land lease community owners/operators seller-financing new HUD-Code homes being sold on-site at their properties!

Questions? Reach me via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Bruce Allen Savage (1950-2021)

Friday, January 22nd, 2021

Blog Posting # 622 @ 22 January 2021; Copyright 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!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: I’ll let this blog posting speak for itself, other than to simply say:

This obituary of a ‘friend in the manufactured housing business’ prompts me to pen I hope we never see something similar for our industry! But the way things are going (i.e. ‘nowhere to date’), this could happen if we don’t hit on a solution to our MH shipment malaise. To that end, be sure to read the final short paragraph of Part II here following. GFA

I.

Bruce Allen Savage (1950-2021)

While he’s been gone from MHI for more than a decade (He was VP of Communications), many old timers in manufactured housing, will likely remember Bruce Savage with some degree of affection. He was non-threatening in his demeanor, always helpful in the time of need, and a bona fide supporter of our industry and realty asset class.

Bruce authored The First 20 Years, a retrospect book describing the birth and first two decades of growth of MHI’s National Communities Council (‘NCC’) division. The book continues to be available for purchase via www.educatemhc.com

A more detailed description of Bruce’s life and passing will be featured in the February issue of The Allen Confidential newsletter, also available via www.educatemhc.com

II.

A Community Owner’s Lament
The first and third following paragraphs are quoted from recent email messages penned by veteran land lease community property portfolio owners/operators. I know, from experience, they parrot many of our peers nationwide, during these trying pandemic times:

“This is really disappointing and very detrimental to the industry – particularly the community segment. Unlike independent (street) MHRetailers, who sell homes onto private property, community owners live, for decades, with those who buy their homes. Time and again, we’ve seen homebuyers/site lessees, who find one thing wrong with their home, go on to find many more items to complain about. Now, delaying delivery of the new homes for six weeks, and increasing the sales price by $4,000 – over the original amount quoted, starts that relationship off on a very bad note! More than likely, it’ll only get worse. I am very concerned this homeowner will find dozens of things to complain about once they move in- causing both our staff and manufacturer’s warranty department, to spend a great deal of time trying to satisfy this customer.” (lightly edited. GFA)

Delaying delivery and jacking the sale price are counterproductive for all three parties: ‘bad will’ towards the manufacturer, anger on the part of the homebuyer/site lessee, and problematic for the community owner/operator. And there’s a significant historical statistical reason why this should not be happening. During year 2009 (Our industry’s nadir year of shipments at 48,789 homes) only 25% of new HUD-Code homes were shipped directly into land lease communities (i.e. 10,000 units). However, with the introduction of Community Series Homes that year, the percentage, by year 2015 had increased to 40%…meaning 28,000 units went directly into communities. So manufacturers know this market is ‘open’ to them, while ‘independent (street) MHRetailers’ continue, for the most part, to be dormant since there is no easy, let alone reasonable, access to chattel capital for home-only loans. So, why purposely shoot oneself in the foot (i.e. manufacturers purposely discouraging community owner purchases) to set themselves us for negative results?

“New homes MHRetailers used to receive in four to six weeks, are now taking four to six months to be delivered. Prices are being increased every two to three months – even while presold homes are on order. Manufacturers are ignoring MHRetailers commitments to home buyers. And homebuyers are blaming MHRetailers. Some are now canceling orders. Manufacturers say they are forced to pass along price increases that have been precipitated by increased cost of raw materials (i.e. lumber) and labor shortages caused by bonus unemployment and stimulus checks discouraging workers from going back to work. The moratorium on tenant evictions keeps getting extended, with no relief for community owner landlords.”

Here’s how one long-retired MH executive suggests we Save Our Industry! Read carefully: Either ‘Tie the underlying realty into the home loan’, OR, ‘Keep raising the price of homes until manufacturers can afford to give subsidized interest rates – just like auto manufacturers do.’

George Allen, CPM, MHM EducateMHC

“Amen & Awoman”

Friday, January 15th, 2021

Blog Posting # 621 @ 15 January 2021; Copyright 2020: 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!

To input this blog and/or affiliate with EduateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aool.com, & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: You a ‘woke’ citizen? Content in Part I is a leading indicator of one’s wokeness.

Part II? During a time when we should be enjoying record levels of monthly new manufactured housing shipments, we continue to lag at and behind last year’s performance – and I see no encouraging recovery signs on the economic horizon for our industry and realty asset class!

What concerns me the most is the imminent implementation of massive tax increases to pay for the $600 & $2000 stimulus packages ‘enjoyed’ during year 2020 and now, 2021. Parenthetically, I’ve wondered all along why such monies should even be going to folk who’re already receiving social security checks each month, as well as those who are gainfully employed.

I.

“Amen & Awoman”

Given the remote chance you haven’t heard or read, “Amen & Awoman” is how the opening prayer to the new session in Congress was ended last week. But I suppose we should not be surprised, given the rules package for the 117th Congress includes a proposal to use gender-inclusive language and pronouns, eliminating terms such as ‘father, mother, son, daughter’, and much more.

Terms to be excluded include ‘father, mother, son, daughter, brother, sister, uncle, aunt, first cousin, nephew, niece, husband, wife, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, half sister, grandson, granddaughter.’

These terms would be replaced with ‘parent, child, sibling, parent’s sibling, first cousin, sibling’s child, spouse, parent-in-law, child-in-law, sibling-in-law, stepparent, stepchild, stepsibling, half-sibling, and grandchild.’

Sure hope this woke nonsense isn’t a precursor of what to expect during year 2021 and beyond, as more liberal policies and practices almost surely will be implemented.

II.

Here We Go Again – & Again….

MHI, to date, says it best in NEWS & UPDATES correspondence to members, dated January 6, 2021. (I’m expecting far stronger language & pointed criticism from MHARR on this matter!)

In recent correspondence, from MHI to the Federal Housing Finance Agency (‘FHFA’), relative to their ‘2021 Underserved Market Plans for Fannie Mae & Freddie Mac (‘the GSEs’), under the Duty to Serve Program, they had this to say:

“…MHI acknowledge(s) the progress GSEs have made in increasing volume of land-home loans and creating new financing optio0ns for the industry’s new CrossMod™ homes, but call(s) for more progress in the development of a secondary market for chattel lending. MHI also discussed GSEs’ financing for land-lease communities for Duty to Serve (‘DTS’) credit.”

The actual DTS Plans make for interesting – and revealing reading. A few examples:

In the Fannie Mae Plan. “The key characteristics of chattel financing for manufactured housing compared with non-chattel financing include:

• Shorter loan terms (typically 20 years instead of 30)
• Higher interest rates (at least two to five percentage points)
• Fewer rights when in default; and
• A more limited pool of lenders, due to the lack of a secondary mortgage market”

Did you know? “Manufactured housing titled as personal property (chattel) makes up the majority of manufactured housing in the U.S. (but) financing options are limited” due to:

• Lack of overall market transparency (making) it difficult to understand risks which discourages Enterprise, lender and investor participation in the market.
• Market data and information on chattel is largely unavailable
• Lack of understanding on how chattel loans perform.

Read those three bullet points again, and ask yourself: ‘Are today’s independent third party chattel lenders’ of home-only loans, members of the Manufactured Housing Institute?’

Answer? YES. Then, why are those three bullet points still questions in search of answers?
Why the disconnect? Think about it. Might it be the chattel lending (home-only) niche is so profitable for a very few firms, that they’re reluctant to provide statistics and information to the GSEs, which would likely lead to greater competition for them?

Fannie Mae’s DTS Plan proposal for measurable Action ‘way back in 2018’? Form an advisory council “…to include at least five lenders (as the industry is dominated by a small number of lenders….), one industry trade association, two manufactured housing retailers, one industry data services company, two chattel loan servicers, one consumer advocacy group, and three (housing) manufacturers….” Two quick observations: First, why no inclusion of land lease community owners in this eclectic mix? After all, by year 2015, 40% of all new homes shipped from factories were going directly into this unique, income-producing property type. A grave oversight – in my opinion. And second; it appears ‘so little progress has been made’ in this Action area, relative to aforementioned bullet points; the year 2020 (i.e. 2021 report) lists only two perfunctory measures:

• “Communicate pilot progress and industry updates
• Identify opportunities for research and collaborative engagements to further the future of a sustainable chattel secondary market”

That’s not much in the way of progress after three years of, what now appears to be ‘lip service’ to Duty to Serve, where manufactured housing chattel lending for home-only loans is concerned.
***

George Allen, CPM, MHM
EducateMHC

Being Politically Incorrect According to the Academic World

Friday, January 8th, 2021

Blog Posting # 620 @ 8 January 2021; Copyright 2020: 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!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com, & visit www.eduatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

I.

Being Politically Incorrect According to the Academic World

Every business type, military service branch, and most socio-economic groups have their own lingo, slang, preferred terminology; in other words, correct communication. Well, one institute of higher learning, here in the U.S., has taken it upon themselves to educate their students, employees, vendors, and faculty members not to use what the university deems to be ‘politically incorrect’ words (nearly three dozen) in writing and interpersonal conversations.

So, what are these ‘bad words’? The following tale uses most of them within context of a story. Unfortunately, I’ve had to capitalize ‘the words’ as the blog program does not accept bold or italic print.

He’d been the STRAW MAN for a recent real estate deal. But it turns out; I’d been SOLD DOWN THE RIVER, even GYPPED out of my security deposit. Then and there, I decided to be MASTER of my fate, to CRACK THE WHIP so to speak, to ensure future success!

CRAZY as it sounds, the plan worked! THINKING back over what happened, I can see how the GUYS I now trust, have taken me from being LOW MAN ON THE TOTEM POLE, to being host of a gala BROWN BAG – PICNIC, to celebrate our success.

So, what happened to the UPPITY DUMMY? Well, he’s now BLACKLISTED and OFF THE RESERVATION, until such time as when he might be GRANDFATHERED back into investment circles. In the meantime, I have this NATIVE desire to share this PRIVILEGED ACCOUNT with you; lest you too – like me, become CRIPPLED, DISABLED, and otherwise HANDICAPPED enough to consider a SANITY CHECK.

Where does that leave us today? Depends. If you attend the University of Michigan, its’ ‘Words Matter Task Force’ will be on hand to change your BLACK-AND-WHITE thinking to binary thinking, or ‘all-or-nothing thinking’. You ready for that?

II.

SWOT Analysis…

It seems SWOT Analysis has been around ‘forever’. I’ve used it repeatedly during a 40+ years career in factory-built and manufactured housing, and owning/operating land lease communities. Also found SWOT Analysis to be particularly useful as one several investigative tools I applied, as a freelance management consultant, to various projects.*1

Strengths, Weaknesses, Opportunities, Threats, relative to an organization, whether business or social in nature. Teaching SWOT is one of many mainstays of the popular Manufactured Housing Manager (‘MHM’) professional property management training and certification program. For more information, visit www.educatemhc.com

Briefly put, SWOT is the documentation and analysis of present day, internal Strengths & Weaknesses of, as well as future, external Opportunities & Threats to, said organization, community, or social group.

If unfamiliar with this strategic planning tool, suggest you research it further, before beginning.

For that matter; in my opinion, it’d be a worthy and timely exercise for elected and salaried leaders of the manufactured housing industry and land lease community real estate asset class, as we head into year 2021. Who knows? We might find out what ails us as an industry these days; why we haven’t experienced 100,000+ new HUD-Code housing shipments since 2006 (14 years ago!) when 117,510+/- homes ‘hit the road’.

End Note.
1. Management consulting tools: 5Ms of Management; 6 Right Ps of Marketing; etc.. For complete list, read Chapbook of Business & Management Wisdom, available from EducateMHC.
***

George Allen, CPM, MHM
EducateMHC