Most manufactured homes sold in the Pacific Northwest and parts of Northern California and Northern Nevada are built in Oregon, where the highest concentrations of manufacturing facilities are located.  One statistic used to help predict those sales is the monthly report from the Oregon Manufactured Housing Association on HUD labels purchased by the manufacturers.  To explain --- each home built to the HUD Code needs a HUD label and the advanced purchase of those labels is a direct and accurate indicator of current home orders and anticipated future need of labels for pending orders.  As of June 30, 2006 HUD label purchases have declined in 2006 by 10% as compared to the same six month period in 2005.  There may be a bright spot in all of this news, however.  If you analyze the numbers even further, a report detailing how much of Oregon’s manufactured home production is sold to dealers in California shows that Oregon factories shipped 22% FEWER homes to California so far in 2006 compared to the same period in 2005.  Therefore, if California shipments from Oregon are down 22% but HUD label purchases are down 10%, perhaps more homes are staying in Oregon and Washington, giving us a slight “net” increase.  How’s that for digging deep to find some positive news!
 
If you talk to manufactured home retailers they are not doing any bragging.  Business is “okay” but not great --- some reporting an increase over last year, some a slight decrease.  The further you get away from the metropolitan areas the better it seems to be.  Parts of Eastern Washington are doing better, parts of Central and Eastern Oregon too.  Idaho is “flat” or up slightly and California is down 6% through April.   From the community prospective, business is good.  Our vacancies are filling up and aggressive incentives are not as widely needed to fill those vacancies as they were a year ago.  This is partly due to the unexpected number of “park closures” taking place in Portland and Bend, Oregon and around the greater-Seattle area.  Many developers are still targeting manufactured home communities as a source of land for future development and as long as that trend continues closures will be a phenomenon we will watch carefully.

Speaking of closures ---- city governments and many politicians are becoming involved in the topic of manufactured home community closures.  Cities are passing closure ordinances that make it very expensive for an owner to close his/her community and politicians are attending town meetings to hear from the residents who are being displaced.  This is a national issue, making the five o’clock news in Phoenix, Las Vegas, Portland, Tampa and Boise.  Park closures are a growing national problem and states have tried a variety of fixes.  Nevada, Florida and Massachusetts require landlords to pay actual relocation costs to displaced tenants. Arizona and Connecticut require between $5,000 and $10,000 in compensation.  New Hampshire set up a statewide loan fund to help tenants buy their own parks. The fund has resulted in 72 tenant park purchases throughout the state, but that’s a solution that is unlikely to pencil out in hyper expensive markets like Portland, Seattle and Bend because tenant rental rates are unlikely to cover the real cost of the land.

The issues are many, including the residents request to be reimbursed for their moving expenses, government’s role in providing “affordable housing” and the land owner protecting the right to use the land for its most profitable or popular purpose.  Nevertheless, cities seem to be jumping to conclusion without asking all the questions or doing all their research and leaving it up to the property owner (s) to challenge these new regulations.  One group of community owners has banded together in Bend, Oregon to file suit against the City of Bend who recently passed an ordinance (similar to the Wilsonville, Oregon ordinance) requiring the community owner to either pay 100% of the residents moving cost and find them a suitable place to move or buy their home at fair market value upon the closure of the community.  We predict one of these court battles will make it all the way to the state Supreme Court.
 
The National Communities Council is working on a 10-year lease for community owners to offer to residents and lenders that may provide those interested in leases with a document that can guarantee some stability to all parties involved.  Many community owners have long objected to leases but offering a lease can ease the minds of those concerned about the stability and value of their purchase and bring back home lenders scared away by the diminishing value of the collateral.  Surprisingly, no major chattel lender currently requires a lease from a community owner. 
 
Speaking of leases --- In Washington State an Appeals Court ruling jeopardized the one-year rental agreement used by most community owners in Washington that allowed for the agreement to revert to a month-to-month tenancy after the initial one -ear term was over.  The court ruled that it is illegal because it converts the one-year tenancy to a month-to-month which technically constitutes a violation of the Manufactured Home Landlord Tenant Act and is an unfair act or practice under the Consumer Protection Act.  Attorney’s for Manufactured Housing Communities of Washington are reviewing the courts decision and MHCW has filed a motion of reconsideration, and plans to file a Petition for Review to the Washington Supreme Court.  The issue is unlikely to be resolved until the end of 2007 at best.
 
I saw a fantastic television commercial in Medford, Oregon on June 26th.  It showed a black screen with wording and an announcers voice saying something like: “NEW HOMES IN PHOENIX ARIZONA - $300,000 TO $500,000” followed by the next screen “NEW HOME PRICES IN SEATTLE $400,000 TO $600,000”, the next screen said “NEW HOME PRICES IN PORTLAND $375,000 TO $500,000”, then "NEW HOME PRICES IN MEDFORD $200,000 - $350,000 AND UP”.  Then the announcer asked the question “Don’t think you can afford a new home in Medford?  Well think again!  Come to Medford Estates!”  The rest of the footage was color pictures of beautiful new manufactured homes installed and landscaped on nice lots in Medford Estates, an all-aged land-lease manufactured home community, with prices from $75,000 to $88,000 for a new 3-bedroom, 2 bath Energy Star manufactured home.  It was a powerful commercial ---- very well produced and straight to the point.  And it made me think.  Why in the world aren’t we bragging about how inexpensive and well-built our homes are?  Do we spread the word to everyone we know?   Our homes have never been a better buy, but does the general population know this?

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