The Manufactured Housing Institute (MHI) published their latest Economic Flash Report on June 5th and the shipment numbers continue to surprise us.  Through April (the latest statistics available) 7,944 new HUD-Code homes were shipped, down 20.9 percent from April 2006.  Year to date, shipments are down 32.9 percent as compared to 2006.  In April, shipments were up in 7 states, down in 37 states and flat in 5 states, compared to April 2006. Shipments were up in Iowa (27.3 percent), Oklahoma (26.5 percent), South Dakota (21.4 percent), Minnesota (13 percent), West Virginia (7.8 percent), South Carolina (6.5 percent), and New Mexico (5.6 percent). Shipments were flat in Alaska, Wyoming, North Carolina, Montana, and Nebraska.

Shipments were down in Rhode Island (-75 percent), Nevada (-49.4 percent), Vermont (-48 percent), Florida (-47.7 percent), Indiana (-44.4 percent), Maine (-43.1 percent), California (-39.3 percent), Arizona (-39 percent), New Hampshire (-37 percent), Michigan (-36.4 percent), Ohio (-35.5 percent), Missouri (-31.8 percent), Oregon (-31.5 percent), Kansas (-28.6 percent), Colorado (-27.6 percent), Washington (-26.2 percent), Massachusetts (-26.1 percent), Delaware (-24.4 percent), Illinois (-24.3 percent), New Jersey (-23.4 percent), Wisconsin (-22 percent), Alabama (-21.5 percent), North Dakota (-21.4 percent), Georgia (-18.4 percent), Idaho (-17.9 percent), Connecticut (-16.1 percent), Pennsylvania (-15.5 percent), Mississippi (-15.4 percent), Virginia (-14.9 percent), Louisiana (-14.6 percent), Maryland (-14.5 percent), Texas (-13.8 percent), Arkansas (-12.3 percent), Kentucky (-12.2 percent), Utah (-8.8 percent), Tennessee (-7.9 percent) and New York (-4.3 percent).

Modular Home sales performed about the same.  Modular home shipments totaled 7,400 for the first quarter of 2007, down 20.4 percent from the first quarter of 2006 according to the National Modular Housing Council. In the first quarter, shipments were up in five states, down in twenty-two states and flat in two states in year-over-year.  States experiencing year-over-year shipments growth in the first quarter were Delaware, Georgia, Tennessee, West Virginia, and Vermont. First quarter shipments were down in Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and Wisconsin. Shipments in Rhode Island and Missouri were essentially unchanged.

Some experts are using the nationwide slowdown in site built housing starts as a way to explain factory built housing declines --- drawing a parallel between demand for the two types of housing and tying sub-prime mortgage shake-ups to both sectors.  Of course most of us know this is baloney.  Our numbers were declining when site built was booming and financing was ridiculously plentiful so our challenges are in many ways completely independent from site built.  Our challenges (and opportunities), which are being addressed both regionally and nationally run much deeper than cyclical market trends.  Frankly, our business should be on the upswing as buyers look for affordable alternatives to site built when shopping for a new home.  Factory built housing is clearly the energy efficient and price sensitive solution to entry level and retirement age housing needs.  Nevertheless we are headed toward 90,000 shipments in 2007 and those numbers are just plain awful. 

There are many pockets around the country where the manufactured housing business is quite good.  Parts of the Northeast and Northwest are brisk as are some Southern states and a few Central and North Central states. However, when you find these “hot spots” you often simultaneously find an aggressive retailer or developer who refuses to fail and knows how to provide the right product at the right price to a well defined buyer.  Case in point are certain age 55+ approved communities where they have not lost sight of the near-retirees need for high quality housing with the services, activities and amenities that buyers demand.  Those communities continue to buck the trend and fill quickly.  So do communities that satisfy a price point just above apartment renting and well below site built home buying.  There are exceptions to this of course, like parts of Michigan where the economy is so bad mere survival is a lofty goal.  But aside from those pockets we in the community business seem to be doing better than the independent retailers, who statistically aren’t selling many more than 1.25 homes per month on an average, and we know they’re not breaking even at that rate. 

In Washington State one multi-location manufactured home retailer, in business nearly 15 years is having his best year ever in 2007.  How are they doing it?  Their sales staff is completely focused on the land-lease or “park” business and they are employing veteran salespeople who made a good living back when the chattel business represented the lions share of manufactured home sales.  They have gone back to the basics, hunting for vacant  “spaces”, putting model homes in land-lease communities and steering customers towards that lifestyle.  Will they still do a land-home sale?  Of course --- but instead of letting the customer who can’t qualify for a land-home purchase or does not have the land walk away they are suggesting land-lease as a logical alternative and it is working.  And they said it couldn’t be done---

If you want to network with the most successful manufactured home community owners and operators in America you can do so in Portland, Oregon on September 12-14, 2007 when George Allen brings his 16th Annual International Networking Roundtable for Manufactured Home Community Owners and Operators to the Red Lion Hotel on the River.  In our business this is a gathering of the “who’s who” in our industry unselfishly sharing priceless ideas and experiences for the good of the entire group.  For more information contact:

GEORGE ALLEN, MHM/CPM, Author, Chapbook of Business & Mgmt. Wisdom (2nd edition), plus three real estate investment texts. Speaker, Investor, Publisher, Entrepreneur. Information Products & Consulting Services for General Business Management, Commercial Real Estate & Factory - built Housing!

PO Box#47024, Indianapolis, IN. 46247-0024 USA
Telephone (317)888-7156 & FAX 346-7158.

http://www.communityinvestor.net/
GAllen@manufactured-housing.net

Greg Harmon - President
Commonwealth Real Estate Services
E-mail: greg@cwres.com
Telephone 503.244.2300 Ext. 101