Last week I attended George Allen’s 14th Annual International Networking Roundtable for Land Lease Communities near Jacksonville, Florida.  Other than dodging the affects of Hurricane Ophelia (which kept us in the conference center working and off the golf course) it was a tremendously productive and informative conference.  Here are the highlights:
 
1.  Most of the industry’s largest MH companies believe there will only be two kinds of land lease communities in the future.  The “highly amenitized” and the low cost, value model.  Currently there are almost no new manufactured home communities being built nationally, but we all agreed the aging baby boomers want amenities and are willing to pay for them, and that goes beyond a clubhouse and shuffleboard court.
 
2.  The first is likely to be 55+ communities only not like today’s 55+ “park”.  These communities will offer lots of amenities and they will charge for it.  Aging baby-boomers will pay for the lifestyle but they want the “stuff”.  Rec. centers equipped with exercise equipment, libraries and business centers (computers, fax, copier, and scanner).  Social coordinators on staff that organizes and supervises outings and events for the active senior.  Walking trails, golf courses, shopping, transportation services and RV storage.
 
3.  The second model is true affordable housing for blue collar America.  Single and double wide homes, no amenities, small lots, well kept and well managed, clean, safe and affordable low cost housing.  But residents will no longer be satisfied with sub-standard management or ownership, and neither will chattel lenders. 
 
4.  Both types of communities will be required to offer long-term leases in order for the lenders to finance the homes.  The lenders may no longer finance homes in month to month rental communities without some guarantees that the community can’t be easily closed and the residents easily evicted.  Or, lenders will require community owners to participate in the maintenance, marketing and resale of their foreclosures.  An active resale program in a community is very attractive to chattel lenders.
 
5.  Freddie Mac and Fannie Mae low interest rate financing may become more plentiful but they will require permanent foundations on all homes.  I have seen this coming for some time and it’s one of the reasons I’m so involved with FoundationWorks.  If you’re not looking at a better way to permanently install manufactured homes you’re not seeing the future.  We need to be placing manufactured homes on a safe and stable foundation system.
 
6.  More communities will close and the states will step in to protect the residents.  Look for legislation in some states that will require the industry to help residents pay the cost of moving their home.  AND it could get to the point where the community owner will have to justify the community closing by proving there are enough replacement spaces for the displaced residents within a certain radius of the closing community.  If there are insufficient replacement spaces available, the closure could be denied (this is already happening in some states).  One way to deny the closure it to make the re-development permits and zoning subject to the availability of spaces for the displaced MH owners. 
 
6.5  If you are in the community closing business you will be required to do many things, including conducting a housing fair for the displaced residents, providing financial assistance, arranging for the move of the home and provide temporary housing during the move.
 
7.  Sub-metering legislation will eventually be passed by the US Congress but right now it’s back to the drawing board with all new hearings.  The previous judge, after hearing all the testimony earlier this year withdrew himself from the hearing, so they have to start over with a new judge.  More progressive legislation that allows community owners to sub-meter utilities to the residents is good for everyone, especially those concerned with conserving our natural resources.
 
8.  Park models are becoming a huge business with many manufacturers selling out their production months in advance.  In other parts of the country where they have been readily accessible for some time, older parks with smaller spaces are filling up with park models.  Now that they can be put in our communities permanently I expect us to see many more park models (a park model is a maximum 400 s/f MH built to the RV code with lots of amenities).  Skyline Homes and Fleetwood Homes, among others have started building park models in the Pacific Northwest.  Look for a park model on display at our 2006 Industry Summit, Wednesday January 18, 2006 (register at www.cwres.com).  
 
9.  Chattel lenders, many of whom where there, said that without community owners commitment and involvement they are not interested in making more chattel loans into land-lease or month-to-month communities.  In addition to all of the things they’re asking for regarding repo remarketing cooperation and rent abatement, they want leases, community owners help with ALL resale’s and industry support for bigger down payments and shorter loan terms to give buyers a better chance at building equity, which would improve resale values.  Peter Scherer, President of Origen Financial and Don Glisson, President of Triad Financial Services spoke about chattel lending and gave a very educational presentation on why manufactured home interest rates continue to hover in the 7-10% interest rate (it’s all about risk and losses, folks). 
 
10.  MHI representatives and Daniel Rinzema from national appraisal firm DATACOMP talked about the Community Attributes System (CAS).  Read MHI’s press release below, which explains this valuable new program and how it will assist lenders in financing more homes in land-lease communities: 
 
11.  SMART HOMELEASE, a new and compelling way to fill home sites was showcased by Brenda Fenderson MHM, a Texas land-lease community owner operator.  This creative new program where community owners would lease, not rent, homes to residents who need temporary, affordable housing is quite creative.  If you would like a copy of the SMART HOMELEASE program email me and I will fax you a copy.
 
12.  FHA community enhancement financing, where the community is refinanced with additional money to upgrade the community, thus making FHA financing available to the home owners is being promoted by many mortgage brokers.  Several at the Roundtable talked about plentiful financing for community owners who have the equity but not the cash to upgrade and expand their land-lease community.
 
In other news, shipments of new manufactured homes to the Pacific Northwest continue to puzzle us.  Through May shipments show Oregon -3%, Washington +7% and Idaho +26%.  We have seen a noticeable increase in homes, new and pre-owned, moving into our communities.  I’m not sure if this is a trend (we can’t wait to see the summer numbers) but we are cautiously optimistic that our prediction for a slight improvement in 2005 over 2004 is materializing.  Keep your finger’s crossed!

MHI Board approves Community Attributes System (CAS)
 

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