In Oregon, we are battling a wave of activity by various cities to enact their own ordinances relating to manufactured home community closures.  The City of Wilsonville, Oregon (as suburb of Portland) was the first to pass an ordinance on closures, requiring the community owner to pay for the cost of moving each home or buy the home from the resident outright.  Additional requirements include locating spaces for the homes to be moved and providing a variety of other types of assistance.  In one regard there is no question that MH community closures are a serious issue and pose a potential threat to the industry.  However, city and county governments should not place unreasonable restrictions on a specific classification of residential land use or ownership, or burden a small group of landowners with unreasonable costs and responsibilities.  This phenomenon is taking place in Oregon and Washington, but also in Arizona, Nevada, Indiana, Florida, Utah and many other states.
 
Given the chance, the industry will respond to this issue and develop a well thought out solution that takes into consideration the needs of homeowners, landowners, lien holders and governmental agencies.  Other states have dealt successfully with manufactured home community closures and both Oregon and Washington are capable of working out statewide solutions that address fairly and evenly all aspects of community closures.  But we must remember that this is a land use issue.  The focus must shift from just the plight of manufactured home residents (which is significant) to the issue of the shortage of land available for development, and the reasons why home builders are targeting manufactured home communities as a source of developable land.  THAT is the real issue --- the rest is fallout from this practice.
 
In this highly charged political arena fighting for your rights costs money.  Both community owner state associations, Manufactured Housing Communities of Oregon and Manufactured Housing Communities of Washington can use your help.  One way to help is to support their PAC Funds with a contribution.  In Oregon contributions of $100 per couple filing jointly or $50 per filer is a TAX CREDIT, right off the top of your tax bill.  Political Action Committees are powerful and essential tools that benefit the industry and all of its participants.
 
Everywhere you turn we are noticing more changes in our industry.  Fleetwood Homes retail sales centers are now Freedom Homes (a division of Clayton Homes), Karsten Homes, once an independent “boutique” manufacturer is now also a division of Clayton, Kit Homes in Caldwell, Idaho is evolving as a strong and creative independent manufacturer as new ownership begins to hit its stride, Fleetwood Homes has re-restructured itself to look much like the old, and more profitable, Fleetwood of the past.  Some companies forge ahead into the expansion of the modular business while many embrace the HUD-code business, and most are cautiously optimistic about 2006.  Want to find out more?  Come and join us at the 5th annual Commonwealth Manufactured Housing Industry Summit 2006 --- Wednesday, January 18, 2006, 8:00 am to Noon, Jantzen Beach Red Lion Hotel – Portland.  Visit www.cwres.com for more information.
 
Insuring manufactured homes at a reasonable price in some parts of the United States is becoming more difficult.  After two record-making hurricane seasons in Florida and much of the Southeast more and more manufactured home owners are being forced to turn to the pricier state run agencies for coverage.  Assurant Inc. and The Midland Co. (American Modern) continue to offer insurance in the hurricane ravaged states, as does Palm Harbor Home Inc.’s insurance subsidiary Standard Casualty.  However, Nationwide Mutual Insurance Co. stopped writing MH policies in Florida in August.  American Land Lease Inc. is developing a program in response to possible limits on new policies.  In Florida, the state-run insurer, Citizens Property Insurance Corporation is experiencing strong growth in manufactured home policies.  Citizens only insures policyholders that cannot find insurance in the private sector and it has seen purchases of its policies increase more than 100% over the past year.
 
It is reported that Champion Homes, Palm Harbor Homes and Clayton Homes will use modular homes as an even more significant part of their growth strategies next year.  Champion would like to lead this business and their acquisition of modular builder New Era Building Systems was a big step in that direction.  Champion currently builds modular homes for Army military housing in Fort Lewis, Washington and will be building modular buildings for the Army base at Fort Bragg, North Carolina.  Palm Harbor reports that modular represents 21% of their total revenue, and Clayton now builds approximately 1,000 modular homes per year.  For those of you that thought modular was just a fad, well….
 
Where are we headed?  Our business is now at 8% or less of total housing starts (down from over 20% a decade ago).  We are making it tough to re-fill land-lease and rental communities when site builders are buying them for the land and evicting the manufactured home residents.  Chattel loan interest rates have come down but they’re still high as compared to site-built rates, and while lenders can easily explain the needs for these rates (it’s a risk thing) consumers are turned off by the rate or payment.  Land prices are high and getting higher, making the affordable housing business less affordable all the time.   Fannie Mae and Freddie Mac still require underwriting for manufactured homes on land that is more difficult and restrictive than site-built home mortgages.  Many of us feel the site-built housing bubble will burst and their loose loan underwriting will come home to roost, but so far, that has not materialized.  These are complicated questions with no easy answers.  The good news is ---- our industry leaders DO recognize these challenges.  In my opinion, we are not “ignoring the elephant in the living room,” we are just struggling to find a reasonable solution and sort out the opportunities that lie within the challenges.  Want to find out more?   Click here for a list of industry gatherings coming soon.
 

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