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Clayton Homes’ “Robots” – Automation’s Role in Warren Buffett’s Berkshire Hathaway’s “Durable Competitive Advantage” in Manufactured Housing

April 24th, 2018 No comments

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The opportunity to change our industry’s image is tremendous today.  There’s never been a better time to change it,” says Keith Holdbrooks, President of Clayton Building Group, in a carefully crafted video, posted further below.

 

Robotics and automation are playing a role in that image and the Clayton reality, as will be revealed in this report.

In a release to the Daily Business News, Clayton identified themselves as “a national home builder and Manufactured Housing Institute’s 2017 Manufacturer of the Year…”

Besides changing the “industry’s image,” what Clayton is striving to do is carefully advancing their own image too.

As MHProNews has previously reported, Warren Buffett’s “the Moat” strategy promote the concept of a “durable competitive advantage.”  Readers can finish this column, and later circle back to the in-depth look at Buffett’s thoughts on the issue linked below, or in the Related Reports at the end. Those reveal what Kevin Clayton, the CEO of Berkshire Hathaway owned Clayton Homes, has said for years about how to get and keep a durable competitive advantage by using and expanding Buffett’s principle of “the Moat.”

Best Warren Buffett, Kevin Clayton, Clayton Homes, Berkshire Hathaway Annual Meeting, Competition, and “the Moat” Video Collection

 

Robots and Automation

The soft musical undertones in the video are part of that image crafting, for which Clayton has hired a branding team.  Clayton previously told the Daily Business News via a release that “Clayton Homes has selected Made Movement (Made) to handle strategy, digital experience design and advertising for the brand.” The “Have it Made” campaign, some observers say, promotes the Made agency, as well as Clayton.

Clayton’s recent acquisition of yet another site builder – Brohn Homes of Austin, one of Texas’ largest privately-owned homebuilders – are all part of their drive to “world domination,” as Builder put it, in two different articles.

The key to Clayton’s tech, robotics and automation-fueled offsite-site build business-model bid for world domination of lower-priced new homes,” said Builder, a statement that Clayton’s social media page endorsed by posting it.

 

“World Domination”

About five years ago, leadership called on us to do what it took to make [Berkshire Hathaway unit] Clayton a world class company,” says Rick Boyd, director of operations, working out of the enterprise’s Maryville, Tenn.-based headquarters. “We didn’t know what that was. So we had to define what that meant, and that process gave us three pillars of priority: team member experience, customer experience, and leadership.”

It is interesting to note that in their release, Clayton cited Starbucks and Google as their examples of companies to study and emulate.

Google is drawing fire for being monopolistic, if they’re not already an outright monopoly. Those are the positions governmental actions in Europe and the U.S., as well as civil litigation, are underscoring.  And although Starbuck’s has a history promoting inclusiveness, their president recently publicly apologized for racially insensitive actions at one of his stores. Sound familiar?

Starbucks, Google and Berkshire’s Clayton each arguably have their own moats, in their respective spaces.

ClaytonHomesAutomoationRoboticsLogosManufacturedHousingIndustryDailyBusinesNewsMHProNews

 

Velvet Monopoly?

While the have it made people are crafting one image, another is emerging too, across the left-right media and political divide.

That image is of Warren Buffett being portrayed by some as the creator of a new forms of ‘company stores’ and ‘company towns.’  In those Buffett towns, Berkshire is:

  • earning a few cents a day per households from the sale of Heinz ketchup – with millions of families using their products daily,
  • earns a thousand (+/-) dollars or more annually from millions of GEICO policy holders,
  • wants you to stop at Dairy Queen for Fan Food ®,
  • buy your sweet heart some See’s Candies,
  • and hopes to sell you a home – either through their real estate division, or from their growing footprint of conventional or factory-built homes.

Beneath that velvet glove image they are grooming at Clayton, is another story.  It is told by retailers like “Kevin Carroll, former owner of a Clayton-affiliated dealership in Indiana, as saying that if he steered customers to a Clayton lender, he got “a kickback” in the form of a discount on his business loans. Carroll later went out of business and sued Clayton for fraud, but the case was dismissed,” per Omaha, a Berkshire owned business.

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Warren Buffett, say critics, is building a new type of “company town.” Like the proverbial slow boiling of the frog in a pot of water, the placid pace nevertheless has an impact over time. Clayton has gone from an large also ran in 2002, prior to Buffett’s takeover in 2003, to some 50 percent of the industry by 2018. Monopoly?

It was part of a response to the controversial Seattle Times reports about Clayton, which opponents of the Clayton/Berkshire/MHI backed Preserving Access to Manufactured Housing Act used to give a black eye to the essentially the entire industry.

A competitor – a non-MHARR member, that is a MHI member builder – tells MHProNews that Clayton is poised to do even more with robotics.

Because of the new tax law, that senior executive says, Berkshire can pump more money into Clayton.   Indeed, “The Tax Cuts and Jobs Act recently signed into law by the President includes multiple provisions increasing depreciation,’ says KTLIP. And if that HUD Code builder executive is correct, putting more into automation and robotics could more rapidly be expensed.

The result?

A new kind of durable “moat” competitive advantage will be gained by Clayton over their competitors over time.  Velvet gloves, tossing sharks into the moat’s water, that’s the image that Buffett himself has arguably painted, in his own words.

 

 

Will Trump Administration Reforms Fuel More Completion?

But the new tax law and regulatory roll back will work in more than one way.

PresidentDonaldTrumpHUDSecretaryBenCarsonManufacturedHousingINdustryDailyBusinessNewsMHProNewsNew HUD Code builders are entering the manufactured housing (MH) industry in 2018, as a report from Tunica and one in April 2018 underscored.  It must be noted that in a different tax and regulatory environment, these new competitors to Buffett’s/Berkshire’s/Clayton’s dream of ‘world domination’ may not have come into existence before 2017.

If there is a change in the makeup of the House and/or Senate after the 2018 midterms, will Democrat Buffett benefit anew?  Will his hand-picked politicos once again promote heavier regulations?

As MHProNews has reported, a long time MHI member told the Daily Business News that Clayton and the other big companies have ‘figured out how to get smaller companies to pay for what they want, using the Manufactured Housing Institute.’

That too fits the use of non-profits by Berkshire and Clayton.

Berkshire’s Clayton benefits during heavy or lighter regulations.  Are they lifting the industry, as Clayton and their incentivized apologists and paid promoters say?  Or are they slowly killing off competitors, via their slow-motion, sharks-in-their-moat strategy dictates?

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Warren Buffett has said he won’t attack the president. But Buffett has surrogates. Buffett’s son has sought to undermine President Trump, as have others in the Berkshire orbit. Clayton issued a recent press release that claims to support the president’s agenda. But are Kevin, Keith, Tim Williams/21st Mortgage, or Eric Hamilton at VMF – all Berkshire brands – going to go against Buffett’s public positions?

These are questions that Trump Administration officials will have to answer as they examine concerns over monopoly that are being raised about Berkshire’s manufactured housing (MH) brands, with concerns from voices inside and outside of the MH Industry.

Independent producers, retailers, communities, lenders and others in the factory-built home industry will have to answer these questions about the growing Clayton/Berkshire moat too.

What is certain is that Clayton’s market share has been growing.  Yet, per prior reporting, their own percentage of growth in sales year over year is at a slower pace than the industry at large. Is that a kind of indirect proof that their marketing isn’t working quite as planned?  Are they a beatable monopoly?

l_a_tony_kovach__mhlivingnews__creditThere is evidence that suggests that the HUD Code manufactured home industry needs more than great videos, pretty websites, advertorials, and overly-crafted messages,” says award winning industry veteran, L.A. “Tony” Kovach. “Clayton’s videos collectively have millions of views, and they have millions of visits to their website, per sources.  Yet, the Berkshire annual letter says they only sold some 49,000 homes in 2017? There’s a clear disconnect, and that’s one more data point that the MH industry needs to sit up and take notice about.”

Kovach says the need is to get to the root issues that keep the industry from advancing. While MHI promotes Berkshire’s desires, are they ignoring – or undermining – the kind of work that has proven effective in local markets?

Are They Among the Best Advocates for Manufactured Housing and Manufactured Home Living?

As the affordable housing crisis rages, manufactured housing may top 100,000 new home shipments in 2018. When 8.3 million housing units are needed now, isn’t 100,000 homes a big yawn?  “We Provide, You Decide.” © ## (News, analysis, and commentary.)

(Third party images are provided under fair use guidelines.)

Related Reports:

Manufactured Housing – Regulatory, Other Roadblocks and Potential Solutions, Up for Growth Research, plus Urban Institute Report Revisited

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Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

 

“Ignorance” at Work, Proposed Code Change Would Impact Thousands

April 23rd, 2018 No comments

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There is “ignorance” – or prejudice – arguably at work in the Texas city moving to limit manufactured homes in their jurisdiction.  By their own estimates, thousands will be impacted.

 

The City of Kilgore, Texas Planning and Zoning Board approved changes “unanimously recommended,” per the Longview News Journal.

Manufactured housing lots are scattered throughout the Kilgore City Limits – there’s space for, potentially, more than 7,000 mobile homes [sic],” said the Kilgore News Herald, adding, “A proposed change to the city’s codes would limit such structures (mobile or manufactured) to designated areas moving forward.

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Recommended changes won’t necessarily affect residents of existing manufactured homes, city leaders said. Existing homes also can be replaced one time, but only if the home is the same size or larger than the existing residence and is no older than 5 years old,” according to Jimmy Daniell Isaac for the Longview News Journal.

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Collage by MHProNews, uses original Kilgore proposal text.

What’s there is there and you can replace it,” once, Kilgore Planning & Zoning Director Carol Windham said, per the Kilgore News Herald. “We’re not going to take that away.” If approved, ‘Single Family Manufactured Housing’ will be eliminated outside specific spots: “We’re not allowing any more unless you put it in a licensed mobile home park. That’s pretty much the gist of it.”

But the Longview report suggests the quote above from Kilgore’s paper isn’t quite accurate.  If a home is lost in a fire, for example, and must be replaced with one that’s 5 years old or newer, that may cause some property owners to de facto have their rights limited or taken, depending upon their economic circumstances.

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This is what all of the surrounding communities have done,” commissioner Terry Thrower said in Isaac’s report. “City Council members will consider final approval of the ordinance changes in May, City Planner Carol Windham said. If approved, it would end nearly a year of subcommittee and workshop discussions about regulating manufactured housing in Kilgore.”

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This particular listing has two homes, plus a garage and out buildings, for about the same price as the median conventional house. The main home is a manufactured home, the photos did not show the second home, but it too is likely a HUD Code manufactured home. Two homes, plus an acreage, for the price of one.

 

Costly NIMBY At Work?

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L. A. “Tony’ Kovach., publisher, MHProNews.com MHLivingNews.com

In a posted comment on both news sites, “It seems like some civic leaders in Kilgore are not aware of the “Manufactured Housing Improvement Act of 2000.” That federal law gives “enhanced preemption” to federally regulated manufactured housing,” wrote L. A. “Tony” Kovach, publisher of MHLivingNews and MHProNews.

At the very time that millions across the nation – including in Texas – are struggling with housing that costs too much, why in the world would Kilgore make it more difficult to buy the most affordable kind of permeant housing available?” – Kovach rhetorically asked.

The likely answer is ignorance, which means, lack of knowledge,” Kovach said, “University level studies demonstrate that manufactured homes properly installed appreciate side by side with conventional housing. A study done by Chang Tai Hsieh of the University of Chicago, and Encirco Moretti said that cutting off affordable housing cost the American economy some $2 trillion dollars annually.”

Just because other locales have done something, doesn’t mean that Kilgore should follow suit. More study is warranted, because violating federal law and costing your economy makes no sense,” Kovach’s remarks concluded.

YIMBY vs. NIMBY, Obama Admin Concept Could Unlock $1.95 Trillion Annually, HUD & MH Impact

In a report entitled “Local Star Chambers Wage War on Affordable Housing,” Texas retailer Gary Adamek, Fayette Country Homes said that zoning related issues were more harmful to the industry than Dodd-Frank ever was.

JD Harper of the Arkansas Manufactured Housing Association (AMHA) referred to similar placement and zoning issues in his state as “economic racism,” and praised the Rev. Donald Tye Jr. call for HUD to step up and enforce enhanced preemption.

 

At the very time that HUD Secretary Ben Carson has called modern manufactured homes “amazing,” and the Trump Administration is striving to create more economic opportunities for Americans, why would Kilgore – or any other town – choke off economic options, by limiting affordable housing?

 

TimeToEnforceLawOnFederalPreemptionMHARRDailyBuisnessNewsMHProNews

http://www.mhpronews.com/industry-news/mharr-news/time-to-enforce-the-law-on-federal-preemption

The Manufactured Housing Association for Regulatory Reform (MHARR) has sounded of for years on the need to enforce enhanced preemption, the most recent example is in the report linked above. This is one of several issues that based upon trends and if left unchecked, will continue to limit manufactured housing’s growth potential.  It would harm the nation, because it will negatively impact those seeking affordable, quality homes, argues Kovach and others. ## (News, analysis, and commentary.)  (Third party images are provided under fair use guidelines.)

Related Report:

Manufactured Housing – Regulatory, Other Roadblocks and Potential Solutions, Up for Growth Research, plus Urban Institute Report Revisited

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Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

Emerging Trends, Opportunities, Reflected in Interview with America’s First Black Billionaire, Robert Johnson

April 16th, 2018 No comments
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Credit, CNBC.

Industries, companies and professionals ignore or overlook emerging trends to their own peril.

 

Significant trends are emerging in the black community, that bear close attention, as a recent interview with America’s first black billionaire, Robert Johnson indicates.

 

Background

Nationally, under 9 percent of manufactured home residents are blacks or African Americans, per the research done by the Consumer Financial Protection Bureau (CFPB) for their 2014 white paper on manufactured housing.

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In places like the Chicago metro, there are some land lease communities that have sizable black populations.  In various parts of the country, the black population presents a well-established customer base for manufactured housing sales.

But more is possible, and needed.

As HUD Secretary Ben Carson, M.D., noted last year, home ownership is statistically one of the keys to wealth building. Carson said that the typical renter has a net worth of about $5000, while the typical home owners net worth is about $200,000.

ManufacturedHousingShareofOccupiedHousingUnitsByStateCFPB2014MHIndustryDailyBusinessNewsMHProNews793

In that observation, Carson echoes research produced by CFED (rebranded as Prosperity Now), or commentary by manufactured home advocate, the Rev. Donald Tye, Jr.

The ideal outcome for the vast majority of Americans is to see more home ownership, and a decreasing need for subsidized housing.

In that regard, reams of research reflects the fact that manufactured housing is the all-star solution for largely unsubsidized homes that are affordable to the vast majority of the population. This is true in part because of its superior affordability – and as Carson noted – the surprising quality of modern manufactured homes.  See the related reports for more insights, linked at the end of this article.

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Tye explained that in his experience, subsidized public housing – an entitlement – often yields addiction and other problems. Ownership vs. renting or living in “projects” leads to integrity, a view he likens to those of Dr. Martin Luther King, Jr.

Home sales – conventional and manufactured – often track with employment data. As employment rises, and incomes grow, so too does housing sales.

 

Johnson’s Interview in that Context

In that context, the comments of BET founder Robert Johnson’s interview with CNBC are noteworthy for social, economic, political and opportunities to increase home ownership to a population that lags behind other racial groups.

RobertLJohnsonBETFounderRLJCompaniesFounderWikipediaDailyBusinessNewsMHproNEwsPut differently, the improvements in black employment and earnings, combined with relatively low levels of home ownership are strong potential target markets for manufactured housing companies.

Some of the bullets by CNBC in the video interview with Johnson include:

  • The growing U.S. economy and improving business environment bringing black workers back into the labor force, BET founder Robert Johnson told CNBC.
  • When you look at that, you have to say something is going right,” Johnson says.

 

Highlights from Johnson’s Video Interview

In January, the Labor Department reported the unemployment rate among black workers was at its lowest since at least the early 1970s, when the government began tracking the data.  The unemployment rate for African Americans was unchanged in March at 6.9 percent.

When you look at that [January report], you have to say something is going right,” said Johnson, whom CNBC describes as a Democrat and founder BET and chairman of The RLJ Companies.

You have to take encouragement from what’s happening in the labor force and the job market,” Johnson said “When you look at African-American unemployment, … you’ve never had African-American unemployment this low and the spread between African-Americans and whites narrowing.”

Johnson said that means the jobs market is “soliciting employees who have been out of the labor force, some of it based on discrimination, some of it based on changes in education, access and technology changes.”

Johnson noted several positive initiatives undertaken by the Trump Administration. “I believe if you take into account the Trump tax cut, you take into account the drop in unemployment, … and you take into account that interest rates are fairly stable,” he said.

I believe the economy is on a strong growth path,” Johnson added. He said he didn’t think economic growth would hit 5 percent, which his friend and long-time CNBC contributor, Larry Kudlow, says could happen.  Kudlow recently joined the Oval Office’s economic advisory team.

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Working with POTUS Trump?

Johnson spoke about a job offer he received from Trump during the transition. He said he didn’t take the unnamed position because he didn’t want a government role, not because of any disagreement with the president or his policies.

No matter what the president would do,” Democrats and other political opponents would slam the president, Johnson said. He spoke about concerns over the “deep state.” But he stressed that “Something is going right,” for blacks and the nation as a whole.

 

Rhetoric and Charlottesville

Johnson told the president-elect during the transition, “Do not say, ‘what do you have to lose.’” Rather, he encouraged the president to talk about what they have to gain from a Trump Administration.

Those gains are now being felt.

Johnson said he’s met with the president since the transition. He spoke about his “access” to Steve Mnuchin, the Labor Department, and GOP leaders like Senator Tim Scott (R-SC).  Johnson said he’s working on issues related to “leakage” in “small dollar 401K accounts,” which if changed, would help blacks and others.

He also spoke about serving black banks, among numerous other issues raised.

 

Pressed by CNBC panelists on Charlottesville, the president’s rhetoric, and Donald Trump’s alleged racial bias from some quarters, Johnson said, “I don’t think he’s racist.”

 

RLJ Companies Insights

From third party sources, and from a listing on their website, the influence that Johnson has in the black community is apparent.  A few pull quotes from their website:

  • Johnson was named by USA Today as one of “The 25 Most Influential Business Leaders of the Past 25 Years.”
  • In 2014, three of Johnson’s holding companies were featured on the Black Enterprise 100s list: RML Automotive, LLC ranked 1st in a category of 60 in the auto dealership rankings; RLJ Equity Partners, LLC and RLJ Credit Management, LLC ranked 12th and 14th respectively on the private equity firms list.
  • Currently, Mr. Johnson serves on the following boards: RLJ Lodging Trust; RLJ Entertainment, Inc.; KB Home; Lowe’s Companies, Inc.; Retirement Clearinghouse; Elevate Credit, Inc.; The Business Council; and Smithsonian Institution’s National Museum of African American History and Culture. Mr. Johnson holds a Master’s degree in international affairs from the Woodrow Wilson School of Public and International Affairs at Princeton University and a Bachelor of Arts degree in social studies from the University of Illinois.

 

The Bottom Lines?

Johnson is a highly educated, successful, and a very well-connected professional.  He clearly sees value to the Trump agenda for African Americans, but also for the nation at large.

As Johnson noted, the facts about rising employment, opportunities, and income for blacks are all good signs.

He’s met with the president on a number of occasions.  Johnson seems to believe that the president isn’t the racist that some of his opponents would have people believe. He clearly stated that the agenda is a good one for blacks and for the country.

Black Americans lag behind other ethnic groups in housing ownership.  The comments by Johnso – combined with insights from HUD Secretary Carson about the amazing” quality found in today’s manufactured homes – all point to potential opportunities for more industry professionals to better serve the needs of the black community.

HUD Secretary Ben Carson and Senator Thom Tillis Discuss Affordable Housing and Manufactured Homes, Video

Carson noted several times last year that home ownership is important for wealth building, a point that manufactured home advocate the Rev. Donald Tye, Jr. has also stressed. ## (News, analysis, and commentary.)

(Third party images are provided under fair use guidelines.)

Related Reports:

Trump Administration and the Manufactured Housing Industry

The Ultimate Manufactured Home Industry Fact$, Data, and Insights – Bullets plus at-a-Glance Infographic

Affordable Housing, and Today’s Manufactured Homes, Yesteryear’s Mobile Homes

“Move, Open, Live” De Rose Industries & Senator Thom Tillis’ Mobile Home Comments

YIMBY vs. NIMBY, Obama Admin Concept Could Unlock $1.95 Trillion Annually, HUD & MH Impact

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SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.

Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

City Considers Manufactured Homes on Scattered Lots for More Affordable Housing

April 12th, 2018 No comments

AndyTaubanKiiiTVCorpusChristiDailyBusinessNewsMHProNews

It’s grand to see local media using the proper terminology, and a city considering the use of manufactured homes as an option in an area where conventional builders haven’t been prepared to build any longer.

So on vacant “buildable” lots, Andy Taubman’s local manufactured home operation has offered to develop these sites in the city of Corpus Christi, Texas.

Where this proposal goes is not yet determined. But it’s Texas, currently the number one manufactured home producing and sales state in the nation. What is certain is that the research that HUD’s previously commissioned would suggest that property values will rise uniformly for both the conventional and manufactured home.

MHProNews plans to monitor this effort. ## (News, analysis, and commentary.)

(Third party images are provided under fair use guidelines.) 

Related Reports:

Two Great Laws Already on the Books NOW,  Can Unlock Billion$ Annually for Manufactured Housing Industry Businesse$, Investor$

Multi-Billion Dollar Bombshell @ HUD! Affordable Housing Solution Ignored

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Triad Financial Service’s Parent Company, ECN Capital – First Data Report

April 10th, 2018 No comments

TriadFinancialServicesUpdateECNCapitalDailyBusinessNewsMHproNews

ECN Capital, the new parent company for Triad Financial Services, has reported year-over-year growth of 14.4 percent in 2017, vs. 2016.

 

That translates into some $466 million in loans.

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Triad formally closed their deal with ECN on December 29, 2017.

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The significance for manufactured housing is this. Unlike some lenders that are focused on ‘buying deep’ – meaning making loans on lower FICO scores – Triad has historically been an “A” paper lender. The profile of the Triad buyer is more like the credit profile of a conventional site-built home.

ECN CapitalConsolidatedBalanceSheetQ42017DaiyBusinessNewsMHProNews

Per ECN’s investor Relations website.

KEY HIGHLIGHTS Q4-2017 FINANCIAL RESULTS

  • Triad acquisition closed on December 29, 2017
  • Manufactured Housing (“MH”) industry experiencing increasing orders as consumers recognize the affordable alternative versus site-built
  • Origination projections reflect continued organic growth pace
  • Successfully launched on balance sheet floorplan program in January
  • 19 manufacturers/dealers quickly on board with applications following
  • 2018 guidance for on-balance sheet floorplan funding expected to meet or exceed
  • Actively engaged to implement additional plans to enhance growth
  • Growing servicing penetration
  • Tuck-in MH portfolio opportunities building ($10 mln portfolio purchase in process)
  • Offering complimentary financing products through existing dealer network (i.e. insurance)

The full ECN report is linked here as a download.   ## (News, analysis and commentary.)

(Third party images are provided under fair use guidelines.)

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‘You Are Either Clayton Homes, or You’re Not’ – Monday Morning MH Sales Meeting

April 9th, 2018 Comments off

ClaytonHomesBerkshireHathawayLogosSWOTAnalysisMOndayMorningSalesMeetingDailyBusinessNewsMHProNews

You may know the axiom, “If you keep doing the same things, the same way, expect the same results.”

 

What does that mean for anyone selling in the manufactured home (MH) industry today?  Several things. The independents in the MH industry, sources say, lacks enough strategists.

For example, not many are getting an honest SWOT assessment. This article won’t focus on those points, but it will on this related one.

You are either Clayton Homes, or you are not.” Burn that phrase into your mind.

Make “You are either Clayton Homes, or you are not.” part of every MHVille planning session. That doesn’t mean you have to bring it up in every sales meeting. But what it does mean is that as an owner or manager, you have to navigate the elephant in the room.

And no one less notable than Warren Buffett has de facto declared war against those who are ‘not Clayton.’ That may sound negative, but isn’t it reality?  Listen or read what the man said…

There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Warren Buffett, per Goodreads.

If you don’t take seriously what the man has said and done – including in manufactured housing – then by definition, you are ignoring reality – and the valuable lessons necessary for a business to survive, and thrive.

Consider this quote from Warren Buffett’s recent annual letter, citing Kipling…

If you can keep your head when all about you are losing theirs . . .

If you can wait and not be tired by waiting . . .

If you can think ‘ and not make thoughts your aim . . .

If you can trust yourself when all men doubt you . . .

Yours is the Earth and everything that’s in it.’

 

Yours is the earth, and everything in it. Aren’t those the words of a true monopolist? But there’s more…

 

 

As an award-winning manufactured home retailer told MHProNews recently, ‘While most in manufactured housing are busy working on selling their next home, others are busy planning on how to put you out of business.’

Don’t ignore the elephant in the room.  Especially, if the elephant is hunting you.

To survive, to thrive, you must have a reality-based strategy. That’s just a basic premise of SWOT – Strengths, Weaknesses, Opportunities and Threats.

ClaytonHomesRetailCenterKnoxvilleNewsBuffettPraisesClaytonEarningsDailyBusinessNewsMHProNews

 

Not Clayton, Not Berkshire Hathaway?

What if you aren’t selling a manufactured home? What if you are selling some product or service entirely different, but are still very much related to the manufactured home industry?

For example, if you are an MH Community loan broker, should you be nervous about Vanderbilt Mortgage entering the community lending space? Or if you are a community broker, what should your position, interests, or concerns be?  Let’s allow Warren Buffett answer that with the following example.

Quoting from Buffett’s most recent annual letter to Berkshire Hathaway (BH) shareholders,

I have told you several times about HomeServices, our growing real estate brokerage operation.  Berkshire backed into this business in 2000…But, year-by-year, the company added brokers and, by the end of 2016… HomeServices was the second-largest brokerage operation in the country…Despite its recent acquisitions, HomeServices is on track to do only about 3% of the country’s home-brokerage business in 2018. That leaves 97% to go. Given sensible prices, we will keep adding brokers in this most fundamental of businesses.”

3 percent in hand, 97 percent to go. Take the man at his word.  Think trends, history and trajectory.  Think SWOT.

Kevin Clayton said in a video interview in 2011 that they had 25 percent of the manufactured housing industry production then. Last year, they finished at about 50 percent. That’s the trend line. That’s what an independent told the Daily Business News is “the obvious trajectory of the industry.”

ManufacturedHomesMarketShareMHIMembersClaytonCavcoChampionDaiyBusinessNewsMHProNews

Since this graphic was produced, new data has arisen. Clayton-Cavco-Champion (given the Skyline merger) will yield either 75 percent or 80 percent of the industry’s total production, per Cavco or other MHI member produced data.

A lender in manufactured housing that’s not a BH lender – but is an MHI member – said that there is no doubt that the association tilts towards Clayton, 21st and Berkshire Hathaway. That lender  is aware of reality, yet optimistic, but that is his nature. Sometimes people do not see their own tendencies, just as some don’t strategize based upon the tendencies of their competitors.

What do you do if you are not Clayton, and not Berkshire Hathaway owned?

First, pray. Seriously, pray every day.

Next, plan. They have their own strengths, and weaknesses, but you must be able to spot them and plan around them. They have their own opportunities and threats. That is the nature of SWOT.  Logically, your SWOT must operate with their SWOT in mind.

Buffett’s strength’s are many, but consider these that anyone can grasp.  Think long term.  Learn all you can about the reality of your industry, and its place in the broader market.  Keep learning. Buffett says he reads 5 to 6 hours a day.  Can you manage 30 minutes or more?

You need a SWOT. You should count on the fact that your opposition does.  At Berkshire and Clayton, they call their plan “the Moat.” You can call these concerns, allegations, fantasies…or a reality check.

WarrenBuffettTheMoatQuoteMemeManufacturedHousingIndustryDailyBusinessNEwsMHProNEws

Readers must recall that the moat isn’t just defensive. Watch the Kevin Clayton video, read Buffett’s words, and the statement emerges that they want to continually expand their moat. Reality, check it out for yourself.

You are either Clayton or Berkshire Hathaway, or you are not.  That’s reality.

Especially those who do business with Berkshire Brand, or is in MHI, need to think matters through.

Need a plan? Call, message or email me. ## (Marketing, sales, management, news, analysis, and commentary.)

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For manufactured home marketing, sales or professional business development – plus other MH expert or consulting services – click here.

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“Trailer House Trauma,” Fresh Look at Manufactured Housing’s Opportunities

April 7th, 2018 Comments off
RedmondNewMoonTrailerHouseMobileHomeLucyDesiLongLongTrailerMovieStillTailreHouseTraumaDailyBusinessNewsManufacturedHousingIndustryRedmondNewMoonTrailerHouseMobileHomeLucyDesiLongLongTrailerMovieStillTailreHouseTraumaDailyBusinessNewsManufacturedHousingIndustryMHProNewsMHProNews

A Redmond New Moon mobile home, which today would be part of Champion Homes. Still from the movie, “The Long, Long Trailer.” see clips of the video, below.

Misunderstood.

 

Perhaps no other industry which has a product that boasts 22 million daily users is as misunderstood as the Manufactured Housing Industry in 21st Century America.

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Darren Krolewski, MHV.

At the Tunica Manufactured Housing Show, Darren Krolewski exemplified the problem, when he told attendees that they can ask some adult about a “manufactured home,” and they often have “no clue what that means.”

Krolewski is not alone in that experience.

Part of that misunderstanding can be captured in the irony – the tragedies – illuminated in the routine misuse by media or others of the words, “trailer house,” and “trailer park.”

For millions, those words are synonymous with “trailer trash.” Not many want to be thought of as trailer trash, one of the last acceptable put-downs of the 21st Century. After interviewing many, often on video, it is clearly an emotional trauma for them.

When tens of millions of potential buyers don’t understand the manufactured home product, of course it’s acceptance as a mainstream form of housing is compromised.

There are opportunities that can arise from that understanding. But to tap them, one must take a fresh look, and begin by clearly grasping the cause before the cure can be understood, or applied.

MHVille’s “Trailer House Trauma” is not the only explanation why so relatively few manufactured homes are being sold today, but it is one of them.

 

Lucy and Desi – Flashback to When a Trailer House Was Classy and Cool

If you’ve ever watched the Lucy and Desi comedy movie, “The Long, Long Trailer” then you realize that when you flashback in time to the early 1950s when that film was produced, it was often upscale people who bought a mobile home or ‘trailer house.’

 

 

The reason it was called a ‘trailer’ is because it could be pulled behind many a car, or pickup, as is often demonstrated in the movie.

Note in the chart below how high the sales levels of mobile homes were in the 1950s through the early 1970s?

Image and understanding aren’t everything, but they are a key part of acceptance.

So, “The Long, Long Trailer movie certainly didn’t hurt the sales of mobile homes.

 

Fast Forward to the 1990s.

Now, hop in your De Lorean, and flash-forward from the 1950s to the 1990s.

The manufactured housing industry was hitting its most recent peak. Several problematic challenges were in motion, including poorly underwritten manufactured home chattel loans. 2 decades later, that’s another problem that still haunts the industry with Fannie Mae, Freddie Mac, and Wall Street.

But why?

There was a bigger bloodbath in conventional housing’s varied meltdowns, the most recent and memorable one being the bubble that burst in 2008. Conventional and other lending came back for mainstream homes, why not for manufactured homes?

Part of the reason the Duty to Serve (DTS) Manufactured Housing, rural, and undeserved markets was passed by Congress in 2008 was precisely the “poor paper” image that manufactured home chattel loans unfairly represented. Some independents in the industry realized that they needed Congress to act, to force federally chartered Government Sponsored Enterprise (GSE) lenders to support America’s most unsubsidized form of affordable home ownership.

After all, isn’t it discriminatory to robustly support mainstream housing, and not give equal opportunity for supporting manufactured homes?

But another issue for manufactured housing in the 1990s was the brewing “image issue.”

It was exacerbated when President Bill Clinton’s advisor James Carville, as a red herring on that administration’s simmering sex scandals, quipped “Drag a $100 bill through a trailer park, you never know what you will find.”

“Drag a hundred-dollar bill through a trailer park, you never know what you’ll find,” James Carville, Clinton Strategist

That comment by Carville went viral.

It’s haunted the industry ever since. In hindsight, one might ask, why didn’t the industry respond?

Carville’s calculated comment was a clearly bigoted, prejudicial statement that targeted the millions of Americans living in pre-HUD Code mobile homes and post-code manufactured homes (MH) — and by extension — the industry that serves them.  Not addressing the slander was arguably a mistake.

In the 1990s, the RV Industry – which began to separate from the MH industry during the mobile home (MH) era – launched and sustained since then their “Go RVing” image campaign. The manufactured housing (MH) tested marketing campaigns at times and regions, like ones done in California, or the Pacific Northwest. But those efforts were not sustained. Nor was there ever a coordinated, national MH campaign in the days when the industry’s producers were flush with cash.

So, the RV production chart reflects the fact that towable and motorized recreational vehicles (RVs) outsell manufactured homes today by more than 5 to 1. Yet RVs cost far more per square foot than even the higher priced manufactured homes. RVs are for most a luxury item, with many RVs not necessarily used for full-time living.  To rephrase, the Go RVing campaign has worked.

But that doesn’t imply that the same would work for manufactured housing.  That said, doing nothing is also not acceptable.

RVIARVBusinessManufacturedHousingIndustryDailyBusinessNewsMHProNews

 

RVs are but one reminder than manufactured housing (MH) is nowhere near its potential.

 

 

Me Too?” Cures and Opportunities Begin with Understanding

CallKenCorbin10000ManufacturedHomeRetailerDealerDropDailyBuisnessNewsMHProNews

The above is a collage of some images from Ken Corbin’s presentation at the manufactured housing industry’s 5 State Event in Deadwood, SD. There’s been over 10,000 retailers lost since the 1990s, said Corbin. That’s “the 10,000 drop.” Graphic by Corbin used with permission.

Former Clayton manager and retailer, Ken Corbin told MH professionals in Tunica, “don’t be a me too” seller in the manufactured home industry. To be more successful than others, one must stand out from the crowd.

Ken’s correct on not being a “me too” point — if greater success is the goal — then Ken’s point is true.

But more than that, one must first understand the causes of what’s kept manufactured housing rising since 2009, but still at historically low levels. It’s common sense that the cure comes after a proper diagnosis and treatment. 

This article looks at measurable data points and troubling facts that almost no one in the industry today mentions, much less addresses.

The “Trailer House Trauma” is far from the only challenge, but it is a real one.  Those willing to stand out from the pack are those who are willing to do the research or hire the talent needed to gain a similar understanding that successful investors like Warren Buffett have routinely done.

Give the man his due, Buffett does his home work.  He says he reads 5 to 6 hours a day.

What’s Next?

This is part one of a periodic series on the true state of the manufactured housing industry after the first quarter of 2018.

Some related data points and reports are found linked after the Related Reports header, further below.

TrailerHouseMobileHomeManufacturedHomeFactoryBuiltHousingEvolution101MHProNews-MHLivingNews

Trailers could be pulled by a properly equipped car or pickup truck. Mobile homes became heavier, wider, and long enough to require special equipment and a trained driver. Manufactured housing is routinely far heavier still, wider, and moving them properly takes heavy equipment and a skilled driver.

As a closing note for today, while being “misunderstood” and the “Trailer House Trauma” is a problem, but it’s also an opportunity in disguise for potentially hundreds of industry companies of all sizes.

Manufacturers, retailers, communities, lenders, vendors and other service providers are all able to benefit from the proper localized, targeted marketing and customer engagement approaches.  Those methods must be based upon reality, as opposed to wishful thinking.  They must be sustainable, or else they will fail.

Hundreds of thousands of affordable homes are needed every year in the U.S. What other sector of the multi-trillion-dollar housing industry has so much upside potential?  Can you name any?

“Starting” Dip in Home Sales, New Crisis Says Housing Experts

 

RV and National Association of Realtors (NAR) data are clear indicators that with the proper capital, planning, team, motivation, and execution, manufactured housing industry professionals can turn their own image around on a localized basis.  RV dealers and real estate firms invest in their success.  Half a million RVs in 2017, plus over 5 million resale housing units for the NAR in 2017 are proof that it pays off.

 

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Sadly, very few understand the connection between understanding the challenges, which can then lead to profitable solutions.  But that too is an opportunity in disguise, for those who reject being another ‘me too,’ and embrace the notion that success requires thoughtful change.

Case studies our consulting operation has done with those who put in the effort and resources have seen solid, positive results. To learn more, note the second related report, linked below. ## (News, analysis, and commentary.)

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Related Reports:

“Move, Open, Live” De Rose Industries & Senator Thom Tillis’ Mobile Home Comments

Understand, Plan, and Execute – Monday Morning Sales Meeting

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By L.A. “Tony” Kovach to the Daily Business News for MHProNews.com.

Tony is the multiple award-winning managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

Office 863-213-4090 |Connect on LinkedIn:
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Click here to sign up in 5 seconds for the manufactured home industry’s leading – and still growing – emailed headline news updates. You’ll see in the first issue or two why big, medium and ‘mom-and-pop’ professionals are reading these headline news items by the thousands. These are typically delivered twice weekly to your in box.

Manufactured Housing “Top Ten Truths”

April 6th, 2018 Comments off

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Give credit where it is due.

 

CFED/Prosperity Now has done important research for years. In many cases their research promotes manufactured homes as an important part of the solution to the affordable housing crisis.

Granted, CFED – which rebranded as Prosperity Now last year – sticks its finger in the eye of some manufactured home lenders, and some manufactured home community operators. That will be evident in the top ten seen below.

But should the baby be thrown out with the bathwater?  Where is “the industry’s” engagement with Prosperity Now, to come to terms with Prosperity Now on those problematic areas?  That’s another topic, for another time.

On this Flashback Friday report, the graphic shown is a reformatting of their Top Ten Truths about Manufactured Homes.

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One more point that seems to have escaped the notice of too many in manufactured housing, is that CFED led-the-charge over 4 years ago, on the point that manufactured home loans have proven to be sustainable.  In their research, they pointed to a $1.7 billion dollar loan portfolio that they said performed as well or better than conventional home loans.

The Daily Business News plans another look at related topics in the near term. “We Provide, You Decide.” © ## (News, analysis and commentary.)

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Related Reports:

Marketing, Web, Video, Consulting, Recruiting and Training Resources

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Visible Outrage, Passion on Immigration, Manufactured Housing Connections

April 5th, 2018 Comments off
ImmigrationManufacturedHomesAPDailyBusinessNewsMHProNews

Manufactured home visible behind Hispanic near border. The last video posted below is about 45 seconds of gritty, gripping passion on the  issue.

The subject of immigration was in many ways the one that put Donald J. Trump on the path to the Presidency.

 

Immigration is one of the issues that attracted blue collar Democrats to vote in key states, like Wisconsin, Michigan, Ohio, and Pennsylvania.

While many in media appear to try to make the president’s views on immigration to be a minority issue, there’s polling that indicates that the president’s view represents a plurality or majority of voters today.

Even after nearly two years of charges of racism against the 45th president, there are indicators his margin of acceptance with minorities is improving.

Daily Business News readers may recall that left-of-center NBC News was among those in media that reported that Hispanics voted for candidate Trump at a higher percentage rate than voted for GOP candidate Mitt Romney, 4 years earlier.

President Donald J. Trump also got more of the black vote than Romney, with exit polls showing candidate Trump claimed 8 percent of the vote, to prior Republican nominee Romney’s 6 percent.

As the economy improves overall, there are indicators that POTUS Trump is polling even better now with minorities than he did in 2016.

 

While CNN’s polling is lower, Rasmussen now has the president at 51 percent favorability. That’s better than President Barack Obama at the same time in his presidency.

 

Against that backdrop, issues related to immigration and the video that follows may cause shock, surprise, or cheers from manufactured home industry readers, depending on your political viewpoint.

 

Immigration and Manufactured Housing

Manufactured housing is in several ways caught up in the immigration issue.

Manufactured homes (MH) are sold, and MH communities rent sites or housing to those who may have a TIN, fake IDs, or utilize other problematic means to obtain housing.

Democratic lawmakers didn’t bite on an offer by the Trump Administration to do a deal for DACA in exchange for funding a border wall.

While formally illegal under federal law, states like California or cities and jurisdictions with “sanctuary” policies blur the lines on the issue.

 

 

Thus, both sides are using the issue in fundraising, and it will be a campaign issue in numerous states.

The issue of immigration as it impacts manufactured housing is widespread.

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Job and Career Recruiting, Manufactured Housing and You, Part I

For example, the immigration issue also includes jobs (see linked report, above), fair housing, and other issues related to sale of homes and the leasing of manufactured home community sites. “We Provide, You Decide.” © ## (News, analysis and commentary.)

Related Reports:

Our 50-State Border Crisis: How the Mexican Border Fuels the Drug Epidemic Across America

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“Move, Open, Live” De Rose Industries & Senator Thom Tillis’ Mobile Home Comments

April 4th, 2018 Comments off
MoveOpenLiveThomTillisMobileHomeComments

A Detroiter model mobile home with a “bump out.”

When U.S. Senator Thom Tillis (R-NC) spoke at an oversight hearing with HUD Secretary Ben Carson about a “mobile home” with a “bump out,” likely few understood just how keen an insight that statement was.

 

Back in the pre-HUD Code days of the factory-built home industry – prior to June 15, 1976 – there were mobile home models that had “pull outs,” “expando room” or “bump outs.”  It is likely that Tillis’ personal experience with that which prompted his timely “walk down memory lane.”

Consider those mobile home era “bump outs” as similar to the slide outs found in RVs, only in mobile homes, they were routinely larger.

Bump outs, slide outs, and ”tip outs” existed in the early manufactured home era too.  But they were largely supplanted by the advent of multi-sectional so-called “double-wides” and “triple-wides.”

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The images of classic ads and reports above and below, all found on Pinterest and are sourced as noted.

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These images provide several insights relevant to the manufactured housing industry today. Consider these bullets:

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  • Mobile homes – housing units on frames built prior to June 15, 2976 – were statistically more accepted then than manufactured homes are today. There’s an open question on why, which the Urban Institute, this publication and others have asked (for more on UI, and that question, click the related reports, below.)
  • Mobile homes had greater diversity than there is found in manufactured homes today.
  • Mobile homes had more manufacturers by far than there are found in the manufactured home industry today.
  • Mobile home leaders organized and promoted the creation of the HUD Code, following highly public scandals with substandard homes built by a few producers that quality builders didn’t want to be associated with. The HUD Code grew out of a desire to set construction standards, safety and energy standards for manufactured homes that would give consumers confidence, while avoiding the placement hassles that have sadly become so common today.

The history of the mobile home and manufactured home (MH) industry is fading, and that is problematic.

Because without an accurate industry history, a complete understanding of just how important this type of housing used to be, and how it helped create affordability then – and could again today – holds valuable insights.

Prior to the HUD Code, HUD studied factory home building – “industrialized housing” – with enthusiasm. What happened to that enthusiasm since the creation of the HUD Code?

Will Secretary Carson – who praised HUD Code manufactured homes when Senator Tillis’ question promoted a response – fuel a rebirth of that embrace by HUD of reasonable regulations that help promote practical housing solutions?

How many in government – or industry – today realize that when the industry had a wealth of producers, there were also a far wider variety of styles, types, innovations and models that industry contraction has arguably practically cut off?

More such factory home producers also yielded more acceptance, because each producer were naturally marketing their product, as the story and ads reflect.

 

About De Rose – It’s Worth Noting…

Vic De Rose, an attorney who was jointly recommended by the Manufactured Housing Institute (MHI) and the Manufactured Housing Association for Regulatory Reform (MHARR) is from the family whose name the De Rose Industries of yesteryear recalls.   De Rose has insights on factory-home building that the vast majority of the population – including most regulators – do not have.

The De Rose ad touts the message, “Move. Open. Live.”  It’s quality, affordable housing in a hurry, as popular performer and manufactured home owner Kid Rock observed in an interview last year.

SenatorJoeDonnellySupportVicDeRoseJDManufacturedHouisngIndustryDailyBusinessNewsMHProNewsVictorAnthonyDeRoseDeRoseLawFirmPhotoDailyBusinessNewsManufacturedHousingIndustryMHProNews

HUD has been silent on the subject of who is going to replace Pam Danner.  There is speculation that an announcement could take place later this month. If that’s so, it may be a troubling signal for the industry if it takes place in conjunction with a planned appearance by Secretary Carson with MHI’s Las Vegas event.  “We Provide, You Decide.” © ## (News, analysis and commentary.)

Related Reports:

HUD Secretary Ben Carson and Senator Thom Tillis Discuss Affordable Housing and Manufactured Homes, Video

“Po-Dunk” Performer Kid Rock, Eyes Senate Run, Makes Manufactured Home Living Hip

Documented Results from Manufactured Housing Industry Leadership

(Third party images are provided under fair use guidelines.)

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