News
Update - August 27, 2002 Positive Changes Difficult to Quantify in Today's Market
As of today, it is difficult to quantify any changes for the
positive in the manufactured home business here in the Pacific
Northwest. Yes, we continue to see a steady flow of new applications
from residents moving into our communities, but the amount
of repossessions and abandonments being processed is still
substantial, and the sales of either new or existing homes
are slow.
We have no intention of pushing any panic buttons, especially
since most communities remain relatively stable and only a
few suffer from substantial vacancies, but it is hard to ignore
the possible consequences of a continued drought in the availability
of affordable financing for manufactured home buyers. What
happens if people just can't sell their homes because there
is little or no financing left in our industry for buyers?
Is it ridiculous to think that someday there won't be any
lenders left who like to finance manufactured homes on rented
or leased home sites? Probably, but who predicted our current
state of affairs? No one, not even the leadership at the highest
levels of the biggest companies in this industry predicted
anything like what we're going through right now. So, let's
not panic, but let's be prepared.
The old adage "follow the money" is very appropriate
in this case. There is nothing more important than finding
more capital for our industry. Manufactured homes have never
been a better buy than they are today. New homes are built
more efficiently and affordably than ever, and pre-owned homes
are selling at rock bottom prices. It is up to all of us and
our onsite managers to spread the news that it is a buyers
market and people who purchase a manufactured home today will
likely be thrilled with the investment down the road. Don't
lose track of the fact that we are, after all, in the affordable
housing business. Even recent retirees are watching their
nickels and dimes more closely than before, so being price
conscious is important. But when you offer low cost living
that is truly a superior value it's hard for customers to
say no in any economic environment.
To that end, we continue to work hard with both the Washington
and Oregon industry associations in streamlining the process
necessary for communities and homebuyers to have easy access
to the Freddie Mac conforming home loan program for homes
purchased on rented or leased land. It is complicated, but
not as complicated as first thought, and many leaders in Washington
State have been particularly successful in pushing this program
along. I am told that a few Freddie Mac approved lenders are
now taking loan applications for processing and hopefully
we will see some loans fund shortly. Many landlords are resistant
to the 35 year lease being required by Freddie Mac, but many
are not, and it's not something that everyone has to agree
on. If the program is made available for those who wish to
take part, and the results are increased manufactured home
sales in certain areas, then we all benefit. After all, activity
breeds activity, so if we can keep predatory lending practices
and other abuses from hurting the program before it gets off
the ground, it could be a terrific shot in the arm for our
business.
While meeting in Seattle with several people from Washington
Mutual last week it was good to hear that they are still committed
to the industry, they will still make manufactured home loans
to qualified customers, and their repossession problem is
getting better, not worse. They have been great to work with
through this business cycle and we are constantly encouraging
them to stick with our industry for the long-term, as the
product is still great collateral for their bank and many
thousands of Washington Mutual customers live in manufactured
home communities. I suggested (and they agreed) that they
should soften their criteria for qualifying for a manufactured
home loan. From what I'm told, their credit criteria is so
rigid it's easier to qualify for a zero-down loan to build
a Casino in Provo, Utah than it is to borrow $10,000 for a
single-wide in Tacoma with 20% down.
The parent company of industry lender Conseco Finance continues
to teeter on the verge of bankruptcy and the industry's largest
homebuilder, Champion Enterprises clearly is in deep financial
trouble. While there is little we can do about these companies'
destinies, we will continue to keep a close eye on all industry
developments and communicate quickly with our clients so that
you can make informed business decisions with accurate, real-time
information.
Greg Harmon - President
Commonwealth Real Estate Services
E-mail: greg@cwres.com
Telephone 503.244.2300 Ext. 101
