Financing for manufactured homes in land-lease communities continues to be a bit of a challenge and all indications are that will not change much in the near future. At the Urban Land Institute (ULI) meeting last week, the ULI Manufactured Housing Council spent hours discussing the various types of chattel financing being used and all in attendance agreed that sellers will continue to finance a large number of manufactured homes sold until the financial markets increase their appetite for chattel-backed paper. This was confirmed by large chattel lenders in attendance. Many large REIT’s or portfolio owners have established lending divisions, attracting the necessary capital, and in some instances using the services of an established chattel lender to qualify applicants and provide closing documents. It was also the consensus of the group that Fannie Mae will not be buying chattel loans for at least another 5-7 years so the hope that Fannie Mae’s deep pockets will somehow provide additional sums of affordable financing for manufactured homes in land-lease communities will not materialize anytime soon. Other land-lease community operators across the country have established relationships with local banks, savings and loans, and credit unions to provide affordable financing backed by assurances and guarantees from the community owner/operator. This can work particularly well in small to medium sized markets, when close supervision by the operator controls and minimizes foreclosures and the lender provides risk-based pricing to buyers.
The most exciting part of the ULI conference was watching the thousands of attendee’s tour a Champion 2-story modular home on display. At one time nearly 150 people stood in line to tour this home while developers, planners, dignitaries and academics from around the globe marveled at the construction, features and low price. Approximately 7000 people attended the conference representing a reported 40 countries. In other parts of the world homes built in factories are considered “superior” to homes built in the elements. Factory building is labeled as “a modern building method” in Europe and the trend is heading west. After all, aren’t most products considered better when built in a factory?
The Manufactured Housing Institute (MHI) also met last week for its annual meeting and the focus remains on reversing the public’s perception of manufactured homes. MHI recognizes the need for a public outreach campaign and volunteers appointed to various committees agree that the mission should be to educate consumers that manufactured homes are a good investment, do not depreciate, are not second-class housing and should not be thought of as a bad buying decision. We need to use positive statements to promote our product, including adapting new terminology and promoting a better image. Undoubtedly part of the commitment will be that retailers and manufacturers must adopt a best practices program and commitment to a cultural shift within their operations that will embrace and promote meaningful change.
At the National Community Management and Operations Forum held April 22, 2008 in conjunction with MHI”s Congress and Expo for Manufactured and Modular Housing the program in 2008 with feature two parallel tracks. One will focus on community operations while the other will focus on ownership/management. This program offers a unique opportunity for owners and operators, investors and managers to come together at the beginning and end of the day as a group, but choose an educational track best suited to their needs during the heart of the day. Look for more information and online registration at www.manufacturedhousing.org
While many people remain concerned about the future of our industry, and rightly so, the ULI meeting was a real eye opener in the sense that the rest of the world loves what we do. Builders and developers marveled at the simplicity and affordability of installing a home on site that was built in a weather tight environment. Local, regional, national and international builders believe factory built homes are the future. Traditional home building methods have not changed much in the last century but you can feel meaningful change beginning now. Is it possible that we are at the threshold of a true renaissance in our industry, and after all the turmoil we have been through we might end up being the leader in home building technology?
Have a wonderful week.
Greg
Harmon - President
Commonwealth Real Estate Services
E-mail: greg@cwres.com
Telephone 503.244.2300 Ext. 101
