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“Warren Buffet’s Exploitative Mobile Home Investment” Kori Hale in Forbes Rips Clayton Homes, Berkshire Hathaway’s Predatory Manufactured Home Practices

April 18th, 2019 Comments off

 

WarrenBuffettsExplotativeMobileHomeInvestmentKoriHaleInForbesRipsClaytonHoemsBerkshireHthawayredatorManufacturedHomePracticesMHProNews

Starting with the featured image, which may have been provided by a Forbes staffer, and moving on to terminology errors, it must be noted that Kori Hale’s allegations against Warren Buffett led Berkshire Hathaway’s Clayton Homes and related lending units includes inaccuracies.  But that doesn’t mitigate the fact that the thrust of Hale’s comments are devastating, especially coming from the black-female CEO of CultureBanx.

 

Here is the link to her column on Forbes, entitled Warren Buffet’s Exploitative Mobile Home Investment, which is being reproduced below under fair use guidelines for commentary and analysis.

 

Warren Buffett’s Exploitative Mobile Home Investment

Kori Hale Forbes Contributor – I’m the CEO of CultureBanx, redefining business news for minorities.

 

TWEET THIS

Warren Buffett’s company Clayton Homes, the biggest mobile home manufacturer in the U.S. has continued to profit from high interest rate loans. The Oracle of Omaha has sold low-income Americans the dream of ownership for nearly 20 years, and his investment company Berkshire Hathaway makes money on the loans, since they own the company that Clayton urges its buyers to go through. Many of the people buying these homes are minorities and have helped to fuel Clayton’s $13.7 billion mortgage portfolio.

 

The Breakdown You Need to Know

Clayton operates the two biggest mobile home lenders, 21st Mortgage Corporation along with Vanderbilt Mortgage. Clayton finances more mobile home loans than any other lender by a factor of more than seven. CultureBanx noted that in 2105, 72% of black borrowers got their loans from Clayton’s Vanderbilt Mortgage and 21st Mortgage, according to FFEI federal data.

They have outsized dominance in the manufactured home market with a 49% share, and where profit margins are greater. Buffet’s Clayton company brought in $765 million in revenue, in 2017.

Mobile home loans are similar to car loans because they’re typically classified as personal property, instead of real estate. Interest rates can be as high as 13.5% or more, and like a vehicle, lose as much as half its value in three years. These rates make it hard for mobile-home owners to leverage equity from their purchase in order to buy a traditional home.

Capitalizing on Trailer Debt

Families who are able to get a loan for their mobile homes generally lease the land on which it sits, a common practice in this industry that can trap people in a cycle of debt. The national monthly average to rent a space in a trailer park is around $250 and can be as high as $600. Trailer parks tend to be built in warmer climates, with Mississippi and Alabama having some of the highest rates of mobile homeownership.

If you’re thinking mobile homes are perhaps only for an older demographic you would be wrong. The majority of mobile-home residents, 23% are between the ages of 18 to 29 and have an average household income of $28,400. If that’s not alarming enough, in 2015, the average sales price for a new manufactured double-wide home was around $110,000.

There are some mobile home communities attempting to rezone trailer parks, to prevent owners from selling the land to developers that may raise the rent even higher. If residents are able to pool their resources together and buy the park, it would give them the opportunity to run it as a co-op.

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Once more, the point of sharing this Forbes column to MHProNews readers isn’t to confirm, challenge, or corroborate this or that claim made by Hale’s, the author of the above published Op-Ed this morning.  Rather, it is to raise the related point that is often at the core of the industry’s image challenges.

The bad news that often harms the industry’s image routinely comes from Manufactured Housing Institute (MHI) connected firms, the largest of which is Clayton Homes, and their Berkshire Hathaway related lending and other brands.  consider this Google search screen capture, done this morning.

 

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See the related reports to learn more, found further below the byline, offers, and notices. That’s another episode of manufactured housing “Industry News, Tips, and Views Pros Can Use© where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

 

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Forbes Focus on Manufactured Home Communities, Spotlights Sam Zell’s Equity LifeStyle Properties (ELS), MHC Investing

December 31st, 2018 Comments off

 

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The writer of the Forbes column cited and linked below is a manufactured home community owner named Brad Johnson.  Johnson, not unlike RV Horizon’s Frank Rolfe, misuses the terminology, perhaps for SEO or other reasons.

 

Johnson in Forbes cites Sam Zell’s Equity LifeStyle Properties or ELS.  It’s Zell who made it a repeated public point to poo-pooh the ‘t-word.’

 

PencilHeadItsNotATrailerParkSamZellPhotoEquityLifstylePropertiesLogoELSLogoMHProNews

Collage by MHProNews. ELS photo and community photos are provided under fair use guidelines. Photo of Sam Zell, by MHProNews.

 

By contrast, former modest community owner and blogger George F. Allen, in his trade-mark inconsistencies, wags a finger at those who don’t say “land lease communities,” yet recently added the term “mobile home” to his blog’s header. Don’t try to figure retired Marine G.F. Allen (GFA) out. He’s arguably only consistent when it comes to what he thinks are his own interests, say former clients of his. The rest, per sources and experience with GFA, are details and commentary.

 

2018-12-30_1317GeorgeAllenBlogHeaderManufacturedHousingIndustryDailyBusinessNewsMHProNews

 

But the point is that there’s plenty of variables in the manufactured home community world on the use of correct or incorrect terminology. Some insist on it, others could care less, and some are blatant hypocrites.

Before pressing ahead, the reason we at MHProNews and MHLivingNews believe proper terminology matters is ironically alluded to indirectly by the Forbes writer, Johnson.

Mobile home parks’ are arguably better appreciated today than in some years gone by, for reasons cited in Johnson’s generally useful column.  But despite consistent returns, and their ability to weather recessions, etc. what’s more properly known as a manufactured home community (MHC) are nevertheless not seen as ‘sexy’ investments.

‘Trailer parks’ are understandably even less appealing to the general public.

The answer isn’t to go with the flow on terminology or industry challenges. Dead fish go with the flow.  But to effect lasting image change belongs to those who make it happen in their own local market(s). Anecdotal evidence suggests that residents’ value – and that of the industry – is being denigrated by the ‘t’ word, and is diluted by saying “mobile home,” if in fact someone is describing a HUD Code manufactured home.

 

TrailerHouseMobileHomeManufacturedHomeFactoryBuiltHousingEvolution101MHProNews-MHLivingNews

You must meet people where they are. Terminology must be taught and caught. Make a habit of using the correct terminology.

Unless the units were built before June 15, 1976 – then ‘mobile home’ is simply not the correct terminology, period.  Steve Duke, JD, in his pithy quote for MHLivingNews below underscored that point.

 

TerminologyMattersBecausetheTerminologyDescribestheConstructionStandardsHomeBuiltToSteveDukeLMHAaMHLivingNewsMHProNewsBiggerPocketsSunshineHomesRedBayAL

The terminology matters because
the terminology determines the
construction standards a home was
built to,” Steve Duke, LMHA.

 

That said, one of the fascinating points obliquely made by Johnson is an oblique slam at the Manufactured Housing Institute (MHI) and their National Communities Council (NCC) for a ‘lack of sound data.’

ELS is used by Johnson as a publicly available standard for good metrics. Quoting:

“…Sam Zell’s Equity LifeStyle (ELS), the largest company in the mobile home park space (and our best proxy for industry data, which is nonexistent).”

MHProNews has for years similarly cited Sun, ELS, and/or UMH Properties for their published data.

Why?

Because accurate information is otherwise largely lacking. Shame on the industry’s post-production association – MHI – for not curing those data deficits. Instead, MHI has arguably have made it worse to the degree that they weaponize favored firms claims vs less favored ones, even if the favored firms information is incorrect. Case in point.  Each of the three current/former MHI/NCC member firms noted in the related report found in the linked-textbox below have different data points on manufactured home communities. MHI took the lowest total, from MHVillage – though sources at MHVillage have privately admitted that their MH Community count is too low.

 

Frank Rolfe, Dave Reynolds, George Allen, Manufactured Home Community Controversy Continues

 

One of several problems not mentioned by Johnson in the Forbes column further below is that the MH Communities sector is actually shrinking.

That may drive up demand short-to-mid term, as Johnson notes. Contrary to what Johnson suggested, there are some new communities being added, as the graphic below indicates.  Some manufactured home communities are also expanding the number of existing sites, on adjacent previously-vacant land.

DataCompMHVillageNewManufacturedHomeCommunityOpeningsNotMobileHomeParksManufacturedHomeIndustryResearchDataReportsMHProNews

But despite a modest number of new opening MHCs, the overall trend for the number of communities in manufactured housing is down, due to community closures.

An analyst or investor can slide-rule that vexing trend in various ways.

But who do you know in the Investment World that argues that multifamily housing apartments are struggling because so many are being built every year? Think about that.

Manufactured housing in general – or even the demonstrably more stable manufactured home communities – are arguably underperforming. That means that a savvy investor enjoys good potential upside. Among the headwinds? Regulatory and stigma. The later is again why proper terminology should be consistently used.  Capital has returned to the U.S. and to this sector of the industry, as MHProNews has reported, and both of those are a plus.

Let’s see how the Florida Manufactured Housing Association (FMHA) framed their battle against stigma for the public in a video supplied by their “Hand Built Homes” campaign, as shared 11 months ago to MHLivingNews.

 

 

With that introduction and analysis, let’s look at what Johnson wrote in Forbes, found at this link here, or from the in depth quotes below his headline and featured image.

 

2018-12-30_1335ForbesShouldYouInvestInMobileHomeParksOnlyifYouWantConsistentReturnsDailyBusinessNewsMHProNews600

Mobile home park investing is not an exciting cryptocurrency, a high-flying tech startup or a trophy office tower you brag about owning. A mobile home park is just a parking lot filled with single- or double-wides that kicks off a lot of cash flow.

I co-own a portfolio of 23 mobile home parks and help real estate investors grow their portfolios with mobile home park investments. There are a lot of unique aspects to the industry that make mobile home parks compelling investments. But, for some strange reason people do not gather around me at parties to learn about the intricacies of them. So, to keep your attention, let’s focus on just one strength most parks share: consistency.

A portfolio of mobile home parks purchased at the right price is a remarkably bankable investment. Mobile home parks deliver profits year in and year out, whereas their cousins (apartment buildings) are often far more erratic. Why?

Compared to apartment buildings, mobile home parks tend to:

  • Have dramatically lower turnover: Only about 2% of the homes leave our parks per year, versus the average apartment tenant yearly turnover, which was 53% in 2015.
  • Have lower operating and capital expenses due to fewer maintenance costs and amenities: We rent land, which is pretty cheap to maintain.
  • Have less volatile rents due to reduced competition. There is essentially no new supplyof mobile home parks. Strict zoning laws make them nearly impossible to build. Compare that to apartments buildings, of which more than 350,000 new unitswere built last year. That’s a never-ending supply of new competition for existing apartments. That sounds horrible. Who wants to go out in the cold and slay a new dragon every year? I’d rather be back at the castle by the fireplace counting land rent.

All these differences translate to consistent profits. Consider the profit track record of Sam Zell’s Equity LifeStyle (ELS), the largest company in the mobile home park space (and our best proxy for industry data, which is nonexistent). ELS has achieved positive profit growth in every quarter since 1998. That’s impressive: America suffered a huge housing crisis in 2007, but ELS grew profits anyway. This isn’t a fluke or something unique to ELS. This consistency is structural to the industry.

Comparison To Other Commercial Property Types

To fully understand the lower capital advantage mobile home parks have over other non-multifamily real estate assets, here are the remaining major commercial asset types and their roadblocks to consistent cash flow performance.

  • Office properties:Occupancy is highly susceptible to recessions and requires huge ongoing capital expenditures relating to building systems and staffing. Office landlords must spend hundreds of thousands and often millions on new tenant improvements and broker leasing commissions. These costs are paid upfront. If the tenant goes bankrupt on day one of the lease, the landlord cries.
  • Retail properties:These are highly susceptible to recessions, and many are currently being methodically crushed by online retailers.
  • Hotel properties:These come with high fixed expenses — and you can’t fire the staff if occupancy is low one night.
  • Industrial properties:Though industrial properties tend to have the lowest ongoing capital needs next to mobile home parks, tenant concentration can be an issue. If your largest tenant defaults, you’re in trouble.

In contrast, mobile home parks are virtually recession-resistant, with low fixed costs and minimal capital needs. They have lower turnover rates, don’t require much staffing and have highly diversified tenant bases. In other words, they are consistent.

How To Make Your First Mobile Home Park Investment

If you’re a passive investor interested in co-owning parks, there are quality sponsors out there that you can invest with. If you would rather roll up your sleeves and do the work yourself, here are a few suggestions:

  • Don’t start small:Counterintuitively, you don’t want to crawl before you walk in mobile home park investing. Buy a park large enough (~50 spaces) to provide tenant diversity and support an on-site (or nearby) property manager. If you go small, you’ll become the de facto property manager and will need to personally collect rents and enforce the rules.
  • Narrow your search:You’re going to have a hard time competing against larger, more established players on brokered deals. Don’t plan on finding a great deal online. It took me years and a lot of cold calling to develop consistent deal flow. If it’s your first deal, your best strategy is to focus on a couple of markets and deal directly with the owners.
  • Stay away from private utilities: If at all possible, stay far, far away from private utilities. The costs to replace private electrical, gas, water or sewer systems are often six figures and sometimes seven figures depending on the size and type of system. Do you want 100 families calling you in the middle of the night to report a gas leak? Unless you’re very lonely or very bored, probably not.
  • Secure long-term debt:When mobile home parks fail, it’s often because a short-term loan came due and the owner couldn’t refinance.
  • Make sure you have time to oversee the asset: Mobile home parks do not run themselves. You need the right team, software and systems to manage them for you. Or you need to do it all yourself. If you’re looking for mailbox money, look elsewhere.

Conclusion

Consistency can be boring, but it’s critical for long-term investment success. You can’t increase cash flow if you have to keep reinvesting in the property just to keep things afloat. If you can’t grow profits, you’ll be far too dependent on market timing and interest rates to achieve compelling returns.

The mobile home park industry has been reliably profitable due to its structural advantages that keeps mobile home park supply, tenant turnover, ongoing capital and recurring expenses low. This enables investors to compound capital as revenue growth flows to the bottom line and is not diluted by surprise capital expenses. ##

2018Top50ManufacturedHomeCommunitiesListNotMObileHomeParksNCCNationalCommunitiesCouncilManufacturedHousingInsttitueDailyBusinessNewsMHProNEws

The above was not part of Johnson’s column.  In fairness to the NCC, they have produced this listing of the top 50 MHC operations, which has some value. But more detailed data on communities is inconsistent and contradictory, as Johnson writing in Forbes, and the graphics below from MHI members, all reflect.  MHI’s data is arguably an embarrassment to the industry, Johnson is not alone in slamming it,  and it clearly needs to be corrected. We alone in MH trade publishing have called MHI to account for this #nettlesome problem. 

TopManufacturedHomeCommunitiesSkylineChampionIRDailyBusinessNewsMHProNews

This graphic from Sun Communities (SUI) uses what appears to be MHVillage/DataComp figures. Insiders there have told MHProNews that they know their count is off (under) by thousands, yet this is the count that MHI has used more recently. One of several problems with a false community count is this –> if the total number of guesstimated sites are anywhere near accurate, then more communities means fewer average sites per community. See the below, all from MHI or MHI members, and the numbers are all over on the community count.

ManufacturedHousingIndustry50000CommunitiesCavcoManufacturedHousingInstituteMHIDailyBusinessNewsManufacturedHousingIndustryFactCheckMHProNews

This claim by CAVCO is arguably dated and in error. Frank Rolfe with RV Horizons argues for 44,000, based upon what he said was a ‘hand count’ done over a two year period of time. Rolfe admits that it may be as high as 45,000, but those would be tiny communities of say 2 or 3 spaces, he said to MHProNews.

ManufacturedHomesMadeInAmericaDataInfographicManufacturedHousingInstituteLogoMHILogoMHProNewsFactCheck

ManufacturedHomeCommunitiesGraphicManufacturedHousingInstituteNationalCommunityCouncilDailyBusinessNewsMHProNews-768x388

For our original report, using MHI’s graphic, and citing Rolfe’s, Allen’s and MHI’s data in the text by the arrow. http://www.MHProNews.com/blogs/daily-business-news/manufactured-housing-institute-outgoing-chair-tim-williams-remarks-vs-mhi-ceo-richard-dick-jennison-comments-fact-checks/

 

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All image credits are as shown, and images or third party documents that may be attached are provided under fair use guidelines. 

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Graphic, data, per Sun Communities (SUI).

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Graphic, data, per Sun Communities (SUI).

 

Grab your coffee or energy drink. This is your latest wake up call.

Opportunities knock, but they come dressed in overalls.

Johnson made several valid points in Forbes, but some needed adjusting or were exaggerated, etc. as noted above.  Johnson who is clearly pro-industry, nevertheless had issues in his report.  This article in Forbes is but one of many possible examples of why a report in the mainstream should not be merely forwarded, without a sound commentary and analysis. Otherwise, misinformation mixed with accurate information only spreads.

 

PublishingHandPickedInformationCanBeWorsefortheImpressionItMakesOnManufacturedHomesandOurIndustryThanStatingEntirelyFalseInfo-BradLovinNCMHA

There are internal industry challenges that must be overcome. To better understand the issues, see the related report, below the notices and byline that follow, for more insights and details. “We Provide, You Decide.” © ## (News , analysis, and commentary.)

 

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SoheylaKovachDailyBusinessNewsMHProNewsMHLivingNewsSubmitted 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.

 

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John Wake, FSBOs, Forbes, Real Estate Decoded, Mobile Homes or Manufactured Housing Resales

July 19th, 2018 Comments off
JohnWakeFSBOsRealEstateDecodedForbesMObileHOmesorManufacturtedHousingResalesDailyBusinessnewsMHProNews

The home above was shown as a manufactured home being sold by owner in a Google search on this date.  For those who aren’t familiar with the higher roof pitches found on some manufactured homes, click here to see other surprising examples of today’s manufactured homes.

The National Association of Realtors is usually a good source of statistics but they’ve gone off the rails with this factoid,” says John Wake in a new column on Forbes.  Wake’s column should get manufactured housing industry professionals and investors thinking.

 

Wake was looking at a tweet by the National Association of Realtors ™ (NAR), that he questioned (see below). He pointed to research done in the Madison, WI market that reflected an independent study of the relative performance between

  • selling a home via a real estate agent that uses the MLS (Multiple Listing Service),
  • vs. those on a “For Sale By Owner” (FSBO, pronounced “fizbo”) website.
RealEstateTweetAnalyzedByJohnWakeForbesManufacturedHousingIndustryDailyBusinessNewsMHPronews

Let’s note that the data may be true, for reasons that Wake cites. Is it an example of how information can be used for good or ill?  Is it just ‘marketing?’ 

Wake saves readers time by getting to a bottom line of that Madison study that is meaningful to the manufactured housing industry, investors, researchers, and others.

It’s not that homeowners who sell their homes themselves sell them for less money, it’s that homeowners who sell less expensive homes (mobile homes, manufactured homes, condos and single-family homes in rural areas) are more likely to choose to sell their homes themselves, “For Sale By Owner.” – said Wake.

If you’re selling a mobile home that costs as much as a used car, for example, you’re very likely to sell it the way you would sell a used car, directly from you to the buyer with no broker in between,” stated Wake. “Mobile and manufactured homes are six times more common among FSBO home sales than among agent-assisted home sales.”

TerminologyMattersBecausetheTerminologyDescribestheConstructionStandardsHomeBuiltToSteveDukeLMHAaMHLivingNewsMHProNewsBiggerPocketsSunshineHomesRedBayAL

Scholastica “Gay”  Cororaton, CBE in “The Market for Manufactured Homes” for Realtor University ®, and John Wake both made clear efforts to get the terminology right, and should be commended for doing so.  The graphic above is for first-time visitors that may not realize that there is a difference between a mobile home – the home above – and a manufactured home, second home, below.

 

Who is John Wake?

Hey, I’m John Wake, founder of Real Estate Decoded. I use my unique (weird) combination of 7 years as an economist and 14 years as a real estate agent to help home buyers and house sellers learn how real estate really works.” – states the About Us page of his website.

JohnWakeRealEstateDecodedManufacturedHousingIndustryDailyBusinessNewsMHproNews

John Wake, Real Estate Decoded, Forbes Contributor.

The Wisconsin study found a 0% price difference between homes sold directly from sellers to buyers without real estate agents (FSBOs), and homes sold with the help of real estate agents,” said Wake, who linked to the Madison study, which is found at this link here.

 

Wake’s Takeaway

I agree the vast majority of people are far better off using a real estate agent to help them sell their homes,” said Wake, who concludes his Forbes column by saying the following.

But real estate agents should be able to convince home sellers of all the advantages without resorting to scare tactics like in the tweet.”  The tweet he referenced was the one shown above from the NAR.

 

The Manufactured Housing Industry Professional’s Takeaway? #1

Kevin, it seems to me that the problem of your industry is resale.” said Warren Buffett, according to Kevin Clayton in the video posted below.

 

 

Before one embraces or rejects that statement by Buffett based solely on who said it, consider this.

The challenge for us all is that bias enters into what we read, watch, say, think, and do.

That reality about bias is why publisher, consultant, and industry expert L. A. “Tony’ Kovach advocates a “wheat and chaff” approach in reading and analyzing objectively, based upon evidence. In brief, the wheat and chaff principle encourages accepting good information, regardless of the source, while rejecting or culling out whatever is problematic.  That’s what farmers at harvest time did for centuries, separated good grain from the inedible-by-humans chaff.

On the resale point, Tony has long argued that Buffett is correct, based upon the evidence.

Wheat, Chaff, and the Monday Morning Manufactured Housing Sales, Marketing Meeting

Editorially, we concur with Wake that the vast majority of what the NAR ™ publishes does seem to be accurate.

But as the Daily Business News noted yesterday, their recent report on manufactured housing – as overall sound as it is – did have some factual errors, but fewer than say some Manufactured Housing Institute data can be.  Analytically speaking, there were also some points beyond the scope of Scholastica “Gay”  Cororaton’s “The Market for Manufactured Homes” otherwise fine research published in Realtor University’s Journal of the Center for Real Estate Studies that needs to be considered if one is to have a more complete picture of manufactured housing today. Among those are points are ones like the one that Wake raised. Cororaton‘s important research is posted at the link below.

 

“Market for Manufactured Homes,” Scholastica “Gay” Cororaton, for Realtor University, Analysis and the Manufactured Housing Institute (MHI)

 

Wake is correct in saying that manufactured housing is often not sold by real estate agents.

Those in the real estate field that learn how to market and sell manufactured homes (MH), often embrace manufactured housing (MH) as a quality housing option. The video interview below of real estate agent Linda Hazelhoff, who’s husband is a custom builder, is an example that realtors who take the time to learn the industry, are often impressed.  Those that decide to really understand the nuances of the manufactured housing business, profit from it.

 

 

Realtors and Builders Warm Up to the Wonders of Manufactured Housing

Millions, including some within the ranks of manufactured housing, do not question “why” something is as it is.

Susan Brenton, with the Manufactured Housing Communities of AZ association, was understandably excited when about the possibilities of working with real estate agents in her state.  See Brenton’s insights on that later in the linked post, below.

 

Law Allows Real Estate Personnel to Sell Homes in Your Manufactured Home Community

 

Equal access to:

these are all among the debatable reasons why manufactured homes are only a fraction of the total sales they once were or could be.

Whether you think you can or whether you think you can’t, you’re right.” – Henry Ford, reads a quote under Tony Kovach’s contact information in his emails.

Understanding the realities of the industry, and helping others to see those realities, are critical for manufactured home sales to achieve a potential of 500,000 to 1,000,0000 plus new home sales annually.

LowerMonthlyPercentCostManufacturedHomesConventinoalHouseRentalHousing2016narRealtorUDaiyBusinessNewsMHproNews

The bulk of Scholastica “Gay” Cororaton’s research appears to be accurate, and is insightful for serious researchers. See the report, linked here.

Rollohome demonstrated that a factory builder can go from a start up to 60,000 new homes produced in just two year.

Rollohome, Creating 60,000 Factory-Built Homes in 2 Years

New factories are opening.

Companies like Legacy Housing or Sunshine Homes have demonstrated the independents can compete, despite the challenges caused by Warren Buffett’s strategic “Moat.”

John Wake and Scholastica “Gay” Cororaton have each in their own way done an important service to manufactured housing. How well and with what speed will the industry’s professionals and investors embrace the lessons and opportunities? “We Provide, You Decide.” © ## (News, analysis, and commentary.)

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

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What local officials may or may not realize, is that there is more than a legal cost to their town for discrimination against affordable manufactured homes. There is an economic and development cost too. The report below reflects an academic view that it can costs even modest sized cities millions, and the nation some $2 trillion a year, because of discriminatory land use that harms affordable housing such as manufactured homes. Read the report and downloads from the article below for more details.

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

 

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SoheylaKovachDailyBusinessNewsMHProNewsMHLivingNewsSubmitted 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.

NAR’s Lawrence Yun Raises Alarm for New Housing Crisis, MH Import?

May 30th, 2018 Comments off

LawrenceYunMay2018InventoryHousingOnMarketManufacturedHousingDailyBuisnessNewsMHproNews

The housing industry today is facing a different kind of crisis:
not enough homes for sale
.”
– Lawrence Yun, Forbes Contributor.

 

A decade ago, the housing sector was in a mess. The mistakes of easy subprime lending resulted ultimately in the catastrophic collapse of the housing sector. Home values collapsed by a third nationwide, and the inventory of unsold homes spiked to unprecedented heights. Miami, for example, at one point was said to have 30 years of housing inventory.” – said Lawrence Yun, Forbes contributor and chief economist for the National Association for Realtors (NAR).

GoodEconomyJobAdditions90StraightMonthsUnemployment3.9PercentHighStockMarketHighNetWorthWagesRisingYunNARMay2018ManufacturedHousingMHProNEws600

Fortunately, after many years of sobering up, with proper lending and consistent job creations in the economy, the housing market has regained some health, with higher home sales and a very low foreclosure rate. However, the industry today is facing a different kind of crisis: not enough homes for sale,” Yun wrote just days ago.

5PointsToBoostHousingYunNARMay2018ManufacturedHousingIndustryDailyBusinessNEwsMHproNews

The inventory of homes on the market last year in 2017 was one of the tightest ever. In early 2018, it is even worse. In the first quarter, the number of homes on the market averaged 1.59 million, which is down 8.4% from the same period one year ago,” Yun stated. “Strictly focusing on single-family home listings, this is the lowest inventory since the tracking of the data from the early 1980s.”

GoodEconomyJobUnempoyemntHighStockHighNetWorthWagesRisingYunNARDailyBusinessNewsMHproNews600

This acute housing inventory shortage has fired up home prices. The median home price has risen by 40% in the past five years and is still rising strongly, with a 6% annualized gain in March. Such a rapid gain in home values at a time when wages are rising by only 2% to 3% a year is measurably cutting into affordability. With the Federal Reserve set to raise its short-term interest rates several more rounds over the next two years and unwind some of its prior asset purchases, longer-term interest rates, including that of mortgages, will surely rise and hence further hamper affordability,” the NAR economist stated.

HomePriceExpectationYunNARMay2018ManufactuerdHousingIndustryDailyBusnessNewsMHProNews600

Interestingly, though, home-buying demand remains super-robust. The steady build-up in household formations following the recession continues. Many of the new households have not purchased a home, as evidenced by the still historically low homeownership rate,” Yun explained, adding, “Pent-up housing demand, therefore, is large.”

LawrenceYunNARShort8.3MillionHousingUnitsRisingRentsHousingPricesCuredOnlyByMoreBuilding

Not New, but Important to MHVille

The Daily Business News has reported on Yun’s keen real estate and housing insights for years.

His previously published statements include the quote below, where he says that builders must get busy to get beyond the current housing crunch.

This ought to be a no-brainer for factory-built housing professionals.  But due to years of several different internal industry issues, coupled with regulatory challenges, and public perceptions, manufactured housing has been kept at historically low ebb.

Now, emerging technology could be poised to supplant modular and some of the potential output of manufactured housing industry professionals (see related reports, further below.)

MostMenAppearnNeverConsideredWhatHouseIsNeedlesslyPoorAllTheirLivesHenryDavidThoreauManufacturedHomeLivingNews

For newcomers to the website not familiar with modern manufactured homes, learn more by clicking the image above or the link here.

The realities undercut some of the logic that the Manufactured Housing Institute (MHI) Ducker Worldwide concepts have called for, and their so-called “new class” of manufactured homes.

The image issues from an ongoing series of largely unrebutted industry issues rounds out the problems faced by manufactured housing.

Part of the opportunity-in-disguise must be the investment by industry pros at the location level of the time, talent, and treasure to tap the opportunities provided by an 8.3 million affordable housing units needed.

Another element of the solution ought to be the establishment of new, post-production representation of the independent companies of the industry.

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

What arguably won’t work is more of the same.  The status quo on a range of issues has led the industry’s homes to the status of 3rd, 4th or 5th choice housing for millions.  When the industry’s quality is better than its ever been, it is incongruous.

Yun’s recent presentation of 2018 housing data, from which the slides above are taken, is found at the download linked here. “We Provide, You Decide.” © ## (News, analysis, and expert commentary.)

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

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To report a news tip, click the image above or send an email to iReportMHNewsTips@mhmsm.com – To help us spot your message in our volume of email, please put the words NEWS TIP in the subject line.

1) To sign up in seconds for our MH Industry leading emailed news updates, click here.EmailedMHProNewsHeadlineNewsDailyBusinessNews

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

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.

 

Tax Facts 2016-2017, Business, Jobs and You

April 17th, 2017 Comments off

(Image credit: Shutterstock, provided under fair use guidelines.)

Thousands of manufactured housing professionals – along with several million manufactured home owners – join with citizens from coast-to-coast in the final mad dash to complete and file their 2016 income tax returns by the midnight, April 18, 2017 deadline.

Thus MHProNews is hereby providing key facts from a variety of sources about the income tax that will prove eye-opening and useful, as tax policy will soon take center stage in Washington, D.C.

How High Are Current Federal Tax Collections?

MHProNews has learned from CNSNews that, according to the federal government’s Monthly Treasury Statement, the government collected record amounts of individual and payroll taxes in the first six months of the fiscal year (Oct. 1, 2016 thru March 31, 2017), raking in $695,291,000,000 in individual income taxes.  That’s $7,387,280,000 more than the $688,003,720,000 in individual income taxes that the federal government collected in the first six months of fiscal 2016. (All figures herein are using constant 2017 dollars.)

(Image credit: CNSNews)

Social Security and other payroll taxes collected by the IRS for the first six months of the fiscal year (FY) amounted to $547,591,000,000, about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes that the government collected in the first six months of fiscal 2016.

However, compared to the first six months of FY 2016, total tax collections dropped from $1,513,124,070,000 in total to $1,473,137,000,000, a decline of $39,987,070,000, largely due to a drop in corporate income tax collections. Corporate receipts fell from $124,954,730,000 in the first six months of FY 2016 to $100,234,000,000 (in constant 2017 dollars) for the same period of FY 2017, a drop of $24,720,730,000.

Additionally, customs duties collections also fell $1,179,869,000 in the first six months of FY 2017 over the same period of 2016; and excise tax collections dropped as well, falling $2,745,320,000 for that same period, all in constant 2017 dollars.

(Image credit: CNSNews)

This results in the federal government running a $526,855,000,000 deficit through the first six months of this fiscal year, because while the Treasury was collecting $1,473,137,000,000 in total taxes, it spent $1,999,991,000,000.

Based on the 153,000,000 people working in the U. S., the Bureau of Labor Statistics reports the $1,473,137,000,000 collected in total taxes collected equates to $9,628 for each working person. The $526,855,000,000 deficit equals about $3,443 for every person with a job.

How Much Time is Being Spent on Income Tax Related Items?

As Forbes informs MHProNews, Americans will spend over 8.9 billion hours complying with IRS requirements for tax year 2016, amounting to 225,500,000 work weeks, based on a 40 hour week. According to The Tax Foundation, compliance will cost $409 billion for the year.

Why so expensive? Why so long?

The Tax Code has grown from 409,000 words in 1955 to 2.4 million words today, adding the equivalent of 89 words per day, with more to come despite Congress being in session only 111 days in 2016.

That doesn’t include Tax Regulations (the official interpretation of the Tax Code), which alone amounts to 7.7 million words, plus Proposed Regulations which are still waiting comments and testimony. There are also some 60,000 pages of related tax-related case law. All that time and complexity is good for tax lawyers, but reduces productivity and are barriers that discourage small business creation and expansion. So simplifying the code would create jobs and more news businesses, per the experts.

Snapshots of Income Tax History

(Chart credit: Americans for Tax Reform)

This chart at the left documents the growth of the income tax since its enactment 104 years ago. As Grover Norquist, president of Americans for Tax Reform, said: “The American Income Tax is perhaps the most dramatic example of how government grows at the expense of liberty. Slowly. Constantly, Inexorably.”

Bottom Lines

An upcoming, follow up report will spotlight opportunities that the federal government has to save on expenditures, and thus cut the ballooning federal deficit. Armed with these facts, professionals are in a better position to discern truth from fiction as the debate over federal tax policy will soon be raging. ##

(Image credits are as shown.)

Submitted by Matthew J. Silver to the Daily Business News for MHProNews.

Revolution Pre-Crafted Properties launched Classy Modular Homes for Masses

July 12th, 2016 Comments off

RobbieAntonioModularHome_forbes-postedDailyBusinessNews-MHProNewsFilipino real estate developer “Robbie Antonio defines the art of living by living with art,” writes Keren Blankfeld in Forbes. Antonio launched Revolution Pre-crafted Properties with the aim of offering designer class to his nation’s middle class.

I want the homes to be perceived as art pieces,” Antonio says of the typical 1000 square foot homes that sell for about $300,000. He has partnerships with such notables as Donald Trump, Paris Hilton and Forbes.

His firm has global ambitions, with buyers from diverse locations such as Russia and Central America. He contracts the building to various production centers. Some of the production facilities are using advanced robotics.

U.S. factory builders…are you watching developments like this? ##

(Photo credit, Forbes)

l_a_tony_kovach__mhlivingnews__creditArticle submitted by L. A. ‘Tony’ Kovach.

Existing Home Sales hit Nine-year High

January 23rd, 2016 Comments off

sold home mattheafeyIn the largest monthly increase the National Association of Realtors (NAR) has ever experienced, sales of existing homes spiked 14.7 percent in Dec., putting a shining finish on the end of the year with 5.26 million previously-owned homes sold in 2015, the best year since 6.48 million homes were sold in 2006.

According to what forbes tells MHProNews, completed transactions of home sales (condos, single-family homes, townhomes and co-ops) rose to a seasonally-adjusted annual rate (SAAR) of 5.46 million in Dec., an increase from the 4.76 million pace in Nov., 2015. Dec. sales were up by 7.7 percent over Dec. 2014.

The NAR said the new mortgage rules delayed closings of some of Nov. sales until Dec., which caused the Dec. pace to loom large.

Lawrence Yun, NAR’s chief economist, said, “While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015. Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”

The inventory of existing homes for sale tightened at the end of Dec. by 12.3 percent to 1.79 million existing homes, which amounts to a 3.9 month supply at the current sales pace. That marks a significant drop from the 5.1 months in Nov., which is the lowest since Jan. 2005, when the supply was at 3.6 months. Economists consider a six-month supply a healthy market. ##

(Photo credit:mattheafey)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

New Home Sales Drop as other Housing Indices Strengthen

October 27th, 2015 Comments off

pending sale  paul sakuma  AP Photo creditMHPronews has learned from Forbes that new home sales fell 11.5 percent in September to 468,000 units, a drop from the 529,000 units in August, yet two percent higher than home sales in 2014 of 459,000. The median sales price of new homes, however, rose to $296,900 in September, up from $289,100 in August. The average sales price increased to $364,100, up from $343,000 in the prior month.

While new home sales fell, other housing market data has been positive recently: the NAR reports existing home sales rose five percent in Sept., the NAHB’s Housing Market Index gained three points, and the Commerce Dept. reports housing starts increased 6.5 percent in Sept.

The number is to a large extent inexplicable,” says David Berson, chief economist at Nationwide. His theory: New home sales tend to be more volatile than any other component of housing, and housing itself is a volatile economic component. I don’t think this number is telling us that housing is about to go in the tank. I think we’re seeing statistical volatility.

Most economists do not expect a sudden departure from the slowly rebounding housing market, especially given the increasing employment statistics and the low interest rate. However, if the interest rates rise—as the Fed assures us they will–and the unemployment numbers grow, the housing recovery will likely stall. ##

(Photo credit: Associated Press/Paul Sakuma)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Housing Starts, Permits Hit Eight-year High

July 20th, 2015 Comments off

house under const  naked philly  creditIn good news for the housing industry, the U. S. Department of Commerce reports housing starts spiked 26.6 percent in June and housing permits markedly rose 30 percent over a year ago, both notching eight-year highs, largely due to the strength of the multi-housing market..

The seasonally adjusted annual rate (SAAR) for groundbreakings was 1.174 million, 9.8 percent higher than May’s revised estimate of 1.069 million, and noticeably increased from June 2014’s rate of 927,000, according to forbes. However, single-family housing starts fell in June 0.9 percent from May, from 691,000 to 685,000, while starts on residential buildings with five or more units jumped 28.6 percent in June to a SAAR of 476,000.

Housing permits for June hit a SAAR of 1.343 million, 30 percent higher than the 1.033 million a year ago, and the highest level since July 2007, right before the housing bubble when permitting hit 1.361 million. As with starts, the biggest increase was in multi-family permits, which rose 16 percent compared to May, while for single-family homes permits rose only 0.9 percent over May’s numbers to 687,000.

As MHProNews understands, the strength of the multi-family housing market and corresponding fall of the single-family marker coincides with the nation’s 20-year low rate of homeownership at 63.7 percent, due to the thousands of people who lost their homes during the Great Recession and are now renting. Additionally, first-time homebuyers comprise only around 30 percent of the homebuying market, well below the historical 40 percent. ##

(Photo credit: nakedphilly)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Two Financial Titans Have Fingers in the Pie of Manufactured Housing

April 8th, 2015 Comments off

berkshire_hathaway_on_shirt_wikipediaBerkshire Hathaway, parent company of manufactured homes giant Clayton Homes, is purchasing a $560 million stake in Axalta Coating Systems, a subsidiary of private equity giant The Carlyle Group, which also has an interest in manufactured homes.

According to Forbes, Axalta, which provides coatings for automobiles, SUVs and commercial vehicles, was purchased in 2013 by Carlyle from DuPont, which it then took public and tripled its investment. Berkshire paid $28 per share for 20 million shares, gaining it just under a ten percent stake in the company. In October Berkshire acquired national dealership Van Tuyl Automotive, as CEO Warren Buffett targets investments in the reviving automotive industry amid speculation he may acquire the remaining Axalta stock.

MHProNews learned from wsj that in 2013 Carlyle Group acquired two Florida manufactured communities for $30.8 million from Shamrock Holdings LLC of Paradise Valley, AZ. Village of Ponce de Leon in Melbourne Beach and Sun Valley Estates in Tarpon Springs, are both age-restricted communities. At Sun Valley, occupancy is 89% and average rents are $582 a month. Village of Ponce de Leon is 82% full and has average rents of $681

While Carlyle’s investment in manufactured home communities pales in the shadow of its $194 billion in worldwide assets under its management, it is indicative of investors realizing the value of manufactured housing. ##

(Image credit: wikipedia)

matthew-silver-daily-business-news-mhpronews-com  Article submitted by Matthew J. Silver to Daily Business News-MHProNews.