Archive

Posts Tagged ‘HUD’

Now You Will Hear — the Rest of the Story

November 21st, 2017 No comments

JamesJimRAyotteCAEExecDirectorFloridaManufacturedHousingAssociationLogoIndustryVoicesBlogManufacturedHomeIndustryProfessionalNewsMHProNewsI have been a vocal critic of HUD’s Alternative Construction (AC) approval for carport-ready homes.  I don’t believe an AC approval for homes built with a host beam is warranted or that the AC approval process is the proper regulatory procedure.

I communicated my concerns to Pamela Danner, Administrator of the federal manufactured housing program in a face-to-face meeting.  I pointed out that there is no basis for requiring AC approval for homes designed carport-ready because HUD’s own Hurricane assessment data showed that no post-1994 constructed homes experienced more than exterior finish damage.  HUD’s assessment was consistent with the findings of the Florida Department of Highway Safety and Motor Vehicles (DMV) after four 2004 hurricanes (Charley, Frances, Ivan and Jeanne) and Hurricane Wilma in 2005.  The DMV evaluated 52,233 mobile and manufactured homes and concluded no post-1994 homes experienced significant damage.

I also discussed the negative economic impact that HUD’s new policy would have on the manufactured housing industry.  In Florida, carports are a big deal.  Most land-lease communities require carports and an estimated 4,500 new carports will be installed this year. The cost of HUD’s new carport inspection requirement will be significant – in excess of $2 million a year in Florida alone, not counting the additional costs that will be incurred by home producers for obtaining design approval and conducting pre-onsite inspections. This cost will be borne by the homeowner who is installing the carport and those home owners will receive little or no benefit.

While I was disappointed that the hurricane assessment data that I presented to Ms. Danner did not result in the withdrawal of the AC approval requirement for carport-ready homes, the story doesn’t end there.

Florida is different than most states in that carports are regulated by the Florida Building Commission.  A building permit is required to install a carport and 100 percent of carports are inspected by a local building inspector to ensure that they comply with the Florida Building Code.  After not being able to convince HUD to rescind its carport AC approval requirement, I raised the possibility of combining the HUD on-site inspection requirement with the local building permit process to achieve a more efficient and cost effective process for satisfying  HUD’s requirements.  Pamela Danner was receptive to exploring this option and she proactively reached out to the Florida SAA and the Florida Building Commission for additional information.  Over the past few months I have been working with HUD, the Florida SAA, and Florida building officials to address some technical and logistical concerns.  Progress is being made.

AsAssocExecutiveMyJobAssessSituationSeekBestPossibleOutcomeBasedOnFactsAsIKnowThem-ManufacturedHousingIndustryVoicesDailyBusinessNewsMHProNews

This graphic highlighting a quote by Jim Ayotte was created by MHProNews, and was not part of Ayotte’s submission. As an FYI, in journalism, spotlighting a quotation, and headlines, are often done by the editor or publisher.

While the solution I am working on is not the one I wanted, I learned a long time ago that regulators have broad discretionary authority to impose certain regulatory requirements. As an association executive, my job is to assess the situation and seek the best possible outcome based on the facts as I know them.  Eliminating duplicative onsite inspections for carports will save Florida manufactured home buyers over $2 million a year in unnecessary regulatory costs.   This will make manufactured housing more affordable and that cost savings may be the difference between purchasing a new manufactured home or not.

While I disagree with HUD’s policy on carport-ready home designs, I will continue to collaborate with Ms. Danner and HUD to achieve the best results for our members and the industry at large.

So, in the infamous words of Paul Harvey, “And now you know — the rest of the story.” ##

(Editor’s Notes: while not stated in Ayotte’s request to publish this op-ed, industry readers may note that this column pertains to an issue raised by another award-winning state association executive, Andy Gallagher.  Gallagher recently pointed to the research that Jim Ayotte did about HUD and items related to this column by FMHA’s executive.  More on how Gallagher is related to this issue raised by Ayotte, are linked here and here. For an exclusive on the Trump Administration’s reported plan for HUD’s Pam Danner, click here. The headline was requested by Ayotte, and the graphic above that highlights a quote, was created by MHProNews. We Provide, You Decide.”©)

JamesJimRAyotteCAEExecDirectorFloridaManufacturedHousingAssociationLogoIndustryVoicesBlogManufacturedHomeIndustryProfessionalNewsMHProNewsJames R. Ayotte, CAE
Executive Director
Florida Manufactured Housing Association
1284 Timberlane Road
Tallahassee, FL  32312

Who Represents Manufactured Housing?

November 11th, 2014 No comments

Call me a geezer from the distant past? It’s true. My MH career started and ended back in the days when our industry was a scattered flock, competing madly for market share with little concern for industry strategy, making profits hand over fist.

manufactured-housing-mobile-home-shipments-graph-chart-calculatedrisk-posted-masthead-blog-mhpronews-com-

That ebullient era came to a crashing halt with the Seventies’ problem. Faced with the industry’s first real crunch (shipments cut in half, dropping to five times what they are today), combined with ongoing regulatory pressure, we united under HUD’s banner. We changed our product’s name to “manufactured housing” (whatever that means) and went on to further difficulties. That gut-wrenching and controversial change solved no problems and made no one happy. The glory days were over and survival days ensued.

True, there were some product improvements, but they piggybacked on some decades of learning curve product improvements and efficiency gains. Our product delivered pretty darned good value for the bucks as early as the Fifties, and never stopped getting better. Consumer Reports did an analysis and could find no watershed product improvements that accompanied the name change or the advent of HUD.

The products of the leading companies, pre and post-Seventies, were rather boring and undifferentiated, as happens in leaderless, price driven industries. Manufactured homes and the mobile homes preceding them were startlingly different from “real houses” but looked as alike as peas in a pod—or a row of cheap tract houses.

Any manufacture that attempted to break the mold was crushed by industry reliance on a narrow range of specialty building materials from large suppliers who dominated the industry and played a key role in making our low priced homes economically viable. Our industry’s lack of vision and strategy earned us a lousy image. I shoulder part of the blame. I was there and should have done better. Shame on us all.

6212511464_728d80b453_m-chess-flickrcreativecommons-posted-industry-voices-mhpronews-com0

Image credit – FlickrCreativeCommons.

Ah well, that’s ancient history I mention here because it resulted from a lack of industry strategy, which in turn, sprung from a distressing lack of leadership. There were good companies with good leaders at the helm, but no one—company or person—could be said to be the industry leader. The largest producer commanded something like a ten percent market share. The elephants were small, and marched with trunks locked to tails.

Leap forward a few decades to today. We find:

  • A continuation of steady product improvement
  • A growing production cost advantage over stick builders
  • A little more differentiation in product variety and appearance
  • Ever increasing regulatory dissatisfaction
  • Ever diminishing financing options
  • Ever more restrictive zoning
  • A market one tenth its peak size in units
  • Three profitable manufacturers dominating the industry

Whoa! Look at that last item! Which of those or any other companies can be said to be the industry’s leader? Each appears to continue marching behind the other, just as those smaller elephants did back in my day. The industry remains, as far as I can see, leaderless.

Back in the Seventies, lacking industry leadership, the Mobile Home Manufacturers Association stepped in to assemble such industry strategy as could be found and put it forward to HUD or whoever. Today we don’t even have that. Our shrunken industry is represented by dueling associations without consensus.

Tony and others have suggested retired veterans like me should speak up—show some spunk. Help set some direction for the industry. Provide the benefit of our experience. I suppose there are plenty of us willing to do what we can. But this poster came from Tony, too:

doing-things-same-way- charles-kettering-light-bulb-poster-mhpronews-com-

This struggling industry faces problems that no one should expect to be solved by hewing to voices from the past alone.

That’s why, when I wrote the next to last draft of my recent book, I omitted strategy proposals, even though strategic planning was once my career. My old (older even than me!) boss said, “You can’t stop there! You’ve got to tell ’em how to dig themselves out of the hole they’re in.”

Fair point, and I do love such challenges.

But it was wasted effort. I can’t solve today’s problems. The hole we find ourselves in has gotten awfully deep.

It’s time for a leader to step forward, cut through the chatter and unite this industry behind a viable strategy. It ain’t going to be any of the associations that purport to represent the industry. And it ain’t going to be me.

Any candidates out there?

Yoo hoo!

Yoo hoo.

Yoo who? ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-By Bob Vahsholtz, author of… 

CFPB Report on Manufactured Housing Signals Areas of Future Concern

October 6th, 2014 No comments

On Tuesday, the Consumer Financial Protection Bureau (“CFPB”) released a white paper summarizing their research on the manufactured housing industry. The Bureau relied upon information compiled by various surveys, data available pursuant to the Home Mortgage Disclosure Act (“HMDA”), and voluntary submissions of information by institutions in the manufactured housing industry. Although the CFPB acknowledges that they are still seeking additional information on the industry, the report, among other things, provides a detailed description of the manufactured housing market, the demographics of consumers who reside in manufactured homes, and the impact of the current regulatory climate on the industry.

The CFPB also developed seven “key findings” from this research, many of which likely will come as no surprise to those actively involved in the manufactured housing industry. For example, the Bureau explains that manufactured homes are more likely to be located in non-metropolitan areas than site-built homes, and that manufactured homes typically cost less than site-built homes. These types of findings lead the Bureau to conclude that the industry is “an important source of affordable housing, in particular for rural and low-income consumers.” On the other hand, however, they believe that “these same groups include consumers that may be considered more financially vulnerable and, thus, may particularly stand to benefit from strong consumer protections.”

With respect to the specific protections that may be necessary, the CFPB declines to make any conclusions and, in fact, leaves certain questions open for further research. For example, the white paper describes how consumers in the manufactured housing industry can either utilize real-property financing or chattel financing, and explains some of the short-term and long-term trade-offs that exist between the two options. However, it appears that the Bureau is concerned with, and wants more information on, “[t]he extent to which consumers are aware of these trade-offs and how consumers weigh them.” This information indicates that the CFPB will pay particular attention to whether or not borrowers are adequately informed about the trade-offs associated with pursuing chattel financing instead of real-property financing.

The report does acknowledge that some of the title XIV Dodd-Frank Act amendments, including those made to the Home Ownership and Equity Protection Act (“HOEPA”) and the Truth in Lending Act (“TILA”), expand protections for consumers in the manufactured housing market. They also briefly describe the actual and theoretical impacts of these laws and the underlying regulations. For example, they admit the possibility that additional disclosure requirements and other burdens could increase the cost of extending credit to consumers seeking financing for a manufactured home. Prior to the rules being finalized, the CFPB received comments expressing concern that the proposed HOEPA high-cost thresholds would disproportionately impact small-balance loans that are often used to purchase manufactured housing. Many in the industry believe that these standards, which have been in effect since January 2014, are in fact reducing the availability of credit in the manufactured housing market because these loans are now classified as high-cost.

Similarly, the new Loan Originator Compensation (“LO Comp”) rules in TILA may also be increasing the consumer’s cost of obtaining credit for a manufactured home. Unlike realtors, manufactured housing retailers are not exempt from the LO Comp rules. In order to avoid being considered a loan originator, and to avoid having to go through an expensive licensing process, manufactured housing retailers are often not referring potential borrowers to specific creditors that they know are willing to extend financing for a manufactured home. This has resulted in consumers being left unaware of which creditors are willing to extend credit and the requirements each creditor has for approving a loan. Consumers, therefore, are submitting more applications and, because of the lack of important information, are more frequently being needlessly denied.

Despite acknowledging that the manufactured housing industry still has concerns about the impact of the CFPB’s new rules, the Bureau declines to accept that the rules have adversely impacted the market. Instead, they “will continue to monitor the effect of [their] rules on the manufactured housing industry and on consumers who purchase or seek to purchase manufactured homes.” In the meantime, the Preserving Access to Manufactured Housing Act, which would address at least some of these concerns, remains in Congress.

If nothing else, this white paper should serve as a warning that the CFPB has taken an interest in the manufactured housing industry. The Bureau is continuing to monitor the impacts of the new mortgage rules on the manufactured housing market, which could signal that the Bureau may be open to making adjustments to the rules that would reduce burdens on creditors and lower the cost of credit for consumers. However, they have also tipped their hand to at least one area of ongoing concern. Creditors originating chattel mortgages should pay particular attention to the amount, and types, of information that is being provided to borrowers and should ensure that they are fully informed of their financing options and the costs and benefits associated with each.

##

Republished with permission. This article first appeared in Financial Services Litigation & Regulatory Compliance Alert, a publication of Bradley Arant Boult Cummings LLP.

About the Authors:

Jonathan_R_Kolodziej-jd-bradley-arant-boult-cummings-llp-posted-industry-in-focus-mhpronews-com-75x75-Jonathan R. Kolodziej, JD, is an associate in the Birmingham office where he is a member of the firm’s Financial Services Litigation and Compliance Team. His regulatory compliance practice involves assisting some of the nation’s largest financial institutions and mortgage companies as they implement, and demonstrate compliance with, various obligations imposed on them by the Consumer Financial Protection Bureau (CFPB) and state banking regulators.

bill-matchneer-jd-formerly-hud-cfpb-now=bradley-arant-boult-cummings-llp-posted-industry-in-focus-mhpronews-com-75x75-

William “Bill” W. Matchneer, JD, recently joined the Washington DC office as senior counsel. He retired from the CFPB in February, where he had been one of the team leads for the regulations implementing the Dodd-Frank mortgage requirements. He previously spent ten years at HUD as manager of the Office of Regulatory Affairs and Manufactured Housing and Senior Counsel for Regulatory Enforcement.

 

Related Links:

1) – MHI's Response to CFPB's Report  (Editor's Note, the MHI link includes the full CFPB report as a free download)

2) – MHARR's Response to RV legislation and CFPB's Report on Manufactured Housing

3) – CFED's Doug Ryan sounds off on Consumer Financial Protection Bureau (CFPB) Report on Manufactured Housing and MH Financing

4) – Manufactured Housing Institute Responds to Doug Ryan-CFED commentary on CFPB report on Manufactured Housing Finance

(Editor's Note:  The views expressed by Messrs. Kolodziej and Matchneer are their own and/or those of the organization they work for, and should not be construed to be the views of MHProNews or our sponsors. Other viewpoints on this or other industry topics are encouraged.

MHProNews plans an Industry in Focus Report using extensive comments from a range of industry professionals on this topic. Watch for it mid-week at the news/reports module link above.)

Kudos for Ron D’Ambra’s thoughtful article on the HUD Code and Manufactured Housing Affordability

September 5th, 2014 No comments

As a former manager of the HUD Manufactured Housing Program, I was gratified to read Ron D'Ambra’s recent piece titled “Are HUD Practices Making Manufactured Homes Less Affordable?”   While there are always some costs associated with any form of government regulation, Ron clearly appreciates the long term benefits that HUD has brought to an industry that was previously known for building low quality firetraps. 

Though a small clan within the industry reflexively condemns just about everything HUD has done over the years, I’d recommend Ron’s review of HUD’s history and various functions to anyone who wants to understand the enormous strides in quality and safety the industry has made since HUD first set up its program shop back in 1976.

Rather than repeat Ron’s points, let me add one of my own.

When the Act was passed in 1974, its title referred to the products as “Mobile Homes” and the language of the Act often referred to the products as “vehicles”. It has always seemed to me that Congress was thinking of the industry’s products as more like automobiles than houses for regulatory purposes.Thus the “Notification and correction of defects by manufacturer” requirements in 42 U.S.C. 5414 which are implemented in Subpart I of HUD’s regulations.

Compliance with these requirements represents most of the real HUD compliance burden, which requires remedies much like automobile recalls for the life of the home.

Given that the quality and safety of manufactured homes now equals or exceeds that of site built homes in most respects, perhaps the time has come to ask Congress to reconsider replacing the current requirements of 42 U.S.C. 5414 with some sort of warranty.For all I know, this idea has already been discussed, but I left HUD in 2010 and may have missed it.

Anyway, on behalf of the hundreds of people who have staffed the HUD program, served as HUD IPIAs and DAPIAs, as HUD contractors and Consensus Committee Members, thanks very much Ron for your thoughtful piece.##

bill-matchneer-formerly-with-hud-and-cfpb-posted-industry-voices-mhpronews-com-aBill Matchneer, JD, recently retired from 23 years of federal government service. Most recently he supervised the Dodd-Frank appraisal rules at CFPB, but is better known to our readers for his ten years as manager of the manufactured housing construction and safety standards program at HUD. Bill can be reached at (703) 973-4366 and at bill.matchneer@comcast.net

(Editor's Notes: A recent interview with Bill Matchneer is found linked here.

As a matter of MHProNews policy, we routinely encourage a variety of viewpoints, which may or may not reflect those of the publisher or our sponsors. You can submit a Letter to the Editor or OpEd to: latonyk@gmail.com or tony@mhmsm.com).

“What’s Happened to the HUD Code Manufactured Home Industry?”

July 9th, 2014 No comments

Many years ago, a famous Movie Cowboy, Mayor of Beverly Hills, Editor of the Saturday Evening Post and Entertainer, Will Rodgers said, “If Stupidity got us into this mess, then why can't it get us out?”

Manufactured housing has seen its media image perpetuated and the public perception remains consistently tarnished for quite some time. The HUD Code manufactured home (MH) appears too often to be viewed by government, Realtors  ® and the public as not being desirable. The MH Industry has seen its home production decline and new MH Communities (MHCs) have declined as well. Many of these existing communities are tired with no “Innovation” or “Cool” factor for prospects.

On this date in 2014, along comes the “Tiny House,” a version of the factories “RV Park model.”

The “Tiny House” is less than 400 square feet. It sits on a trailer frame; it has wheels and a hitch. It appears to be of the same type of construction as a RV Park Model or a small HUD Code manufactured home. Media professionals like “Tiny Houses” for stories and about those who live in them. See example below.

tiny-houses-steven-lefer-industry-voices-posted-mhpronews-com

Wow, the media’s attention is so positive to the “Tiny House” that it far exceeds that of the old and tired HUD Trailer/Mobile Home industry. TV shows with Bob Vila endorse it and A+E TV Network will begin showing “Tiny House Nation” July 9, 2014 at 10 ET/11PT on their home product.

The articles point to how “Cute” and functional this small single wide home is; and how they even have a “Cool,” “Hip” factor with “NO” negative publicity. It's astonishing. These homeowners and their tiny houses brag about the size and in some cases folks live in 120 square feet, which is no bigger than a backyard shed. A woman in the article below left a MHPark to live one, ouch!

I understand “Four Lights Tiny House Company” will be attempting to build a “Village” for people to live in a community of them. What? How? Is this not an RV Community? If you are part of the HUD Code Manufactured Home Industry, I am sure you are not aware of this image change nor have the leaders of the industry addressed or invited these competing folks to their convention. Are they part of the HUD Industry or do they prefer NOT to be? It sure makes me wonder?

credit-tiny-house-nation-series-graphic-Wednesday-july-9-10et-11pt-

Image credit FYI.TV

Here are three links for you to ponder!

http://www.deadline.com/2014/02/ae-lifestyle-network-fyi-sets-first-slate-launch-date/

http://www.sanluisobispo.com/2013/12/31/2857011/bette-presley-arroyo-grande-house.html

http://www.bobvila.com/articles/tiny-house-village/

Where and what happened to the HUD Code Manufactured Home Industry? ##

steve-leflervicepresident-modular-lifestyles-industry-voices-mhpronews-com75x75-Steven Lefler
Vice President
Modular Lifestyles, Inc.
(888) 437-4587
Dual DRE and HCD Salesperson
Advanced Green Building Professional
CEC Solar Wind Retailer/Installer

http://www.modularlifestyles.com

(First image supplied by Steve Lefler)

(Editor's Note: MHProNews strongly believes that accurate terminology matters, and as was noted with Ken Haynes' Industry Voices guest column today, the thoughts and statements made above are solely those of the writer.

Further, there are points in this commentary that are broad statements that could be construed as technically inaccurate, was used as hyperbole and thus depending on the context, should not be taken literally. Steve Lefler well knows about the recent positive press from CBS News or the Boston Globe, among others, touting the value of today's manufactured home.

Those who know Lefler's noteworthy work in net-zero and near-off-the-grid factory built homes makes him a pioneer, and that has lead him to a level of what might politely be described as frustration with the industry-at-large and its leaders for not promoting our factory-built home product, as his column above suggests.

As a recent Masthead blog post – Manufactured Housing's Declaration of Independence – underscored, market facts tell us our industry ought to be booming.

As on any issue of industry relevance, MHProNews accepts submissions of articles that may represent similar or other viewpoints. Subject line, “Letter to the Editor” or “OpEd for Industry Voices blog” can be sent to latonyk@gmail.com.

The Value of IMAGE, The Image of VALUE

July 9th, 2014 No comments

There is much talk of the need to “do something” about our industry’s image. Wow, that’s some understatement!

But what? And how? And who will pay for the refurbishment?

It’s a deep problem. It’s hard to refurbish an image that was never really “furbished” in the first place! The MH industry has a lot of growing up to do, and it’s quite a challenge.

Tony Kovach recently published the following graph.

manufactured-housing-mobile-home-shipments-graph-chart-calculatedrisk-posted-masthead-blog-mhpronews-com-

Our eyes jump to the trend of the past decade, which emphasizes the need to “do something.” I invite you to study the other end of that graph. The sixties.

In that decade, as today, the rule of thumb for a stick builder was to dedicate about half of construction cost to materials. That didn’t work for those building homes in factories. They had to build a product sturdy enough to ship a thousand miles on its own wheels, and if material content dropped below 60 percent—lock the factory doors. No reputable dealer would buy. In those days, despite buying all that material factory-direct and very efficient labor, the MH cost was far higher per square foot than a house (excluding land).

By the end of that decade, the rule of thumb—the MH optimum for sales maximization—was 70 percent material, 10 percent labor, 10 percent overhead and 10 percent pretax profit. In good years, that worked and profits rolled in. In bad years, you got hammered.

Sounds like a loser business?

Not if you knew your stuff. If you managed 30-plus inventory turns, collected cash on delivery of the homes, operated in a pole-barn factory and had nominal investment, you could operate on your supplier’s 30-days-same-as cash payment plan. Banks released floor-plan cash upon delivery of the home. 100 percent return on equity was not out of the question. But everything had to work.

Look again at Tony’s graph. Everything did work during that decade for those who managed well. A year of no sales increase was considered a recession.

Manufacturers had to master that formula or get out of the race. Competition was brutal, but everyone understood that no one could do it alone. Manufacturers, suppliers, dealers, developers and banks. All were highly profitable when they got their sums and strategies right.

The quality of manufactured homes soared and the cost of producing them plunged. Such was the magnitude of opportunity in the sleepy housing industry.

It was Skyline, Fleetwood and the like who got the publicity—biggest MH manufacturers, most profitable companies in the stock market and all that. Surely they should have stepped up to the plate and “done something” about the industry’s image?

Well, they did what they could, but their hands were tied. Every nickel of such a manufacturer’s profit would have funded just one percent of industry sales for an image-building program. And what, one might ask, could a manufacturer have done for its image more useful than investing in product improvement? That’s what the critics and customers requested, and rightly so.

The largest manufacturers each held less than 10 percent market share and had plenty of competition snapping at their britches. Which of those “leaders” should have stepped up to the plate and invested significant funds in the industry’s image? Sure the profits were good, but they didn’t stay that way.

Look again at Tony’s graph, and what happened when things stopped going well for the industry in the early seventies. That’s why there was so much resistance to the HUD standard, and still is. That’s why it has always been hard to get those “big manufacturers” to spend “just a little bit more” on the want-of-the-week. If the competition doesn’t do the same, you’re toast. Real competition is not for the faint of heart, but it works wonders for customers.

Competitive product improvement, step by step. Learning curve. That’s how the MH industry cut the cost of building homes in half. Focused, efficient, production in a housing market where nobody was in charge, regulation was rampant and good times were rolling. Don’t hold your breath waiting for a repeat of that kind of housing opportunity.

My enthusiasm for today’s outlook is based on the fact that the leaders have survived and now have commanding market share, while retaining—improving—their production cost advantage over the stick guys. I don’t know what the Big Three’s margins are, but they’re profitable. We’re in a new and potentially better ball game.

The outlook is marred by the yo yo of housing demand, fluctuating with the whims of the economy and regulators. That’s why, when asked to write a book on the potential of manufactured housing, I said, “You’ve got to be kidding!”

It didn’t take much research to change my mind. The survivors seem to have learned to cope with such market volatility and stifling regulation. The production cost advantage is still increasing and the competition continues to doze. Well managed surviving MH producers remain profitable in a scenario that would have crushed any normal manufacturing industry long ago … but woe to the manufacturer who single-handedly takes on the cost of a major industry image upgrade.

It needs to be done, but has to be a team effort, with participation by most members of the industry at large. And there has to be strong leadership so we all head the same direction.

Given the squabbling we all see and regret, is there any hope?

Of course there is! The MH industry has always been a teamwork affair, where even bitter enemies worked together to keep the system functioning, because we all had a vested interest in keeping this marvelous housing system pumping, cranking out houses and profits. That has not changed.

Sure HUD, Dodd-Frank and their ilk are a royal pain in the butt, but they strangle the other guys, too. Despite best efforts of bureaucrats to rule by regulation, economics will win in the end, and we’ve figured out an inherently better way to build houses.

Yes, for a time we fouled our nest. Young industries do that. Yes, the public disdains “trailers.” Tell me what sort of low cost housing they like? Nobody wants low cost housing except those having a nose for value or low income. Those are huge markets that no other product can satisfy that need as well as manufactured housing.

What we lack in image, we more than make up in value.

Let’s build on that. ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-Bob Vasholtz is the author of Dueling Curves. Bob Vahsholtz is the author of DUELING CURVES The Battle for Housing. Bob can be reached at kingmidgetswest@gmail.com. Web: www.kingmidgetswest.com

A prior guest column from Bob – Who's in Charge Here – is linked.

 

(Editor's Note: The chart show above is courtesy of CalculatedRisk and was used in the following article, Manufactured Housing's Declaration of Independence. As with all letters to th editor, articles and guest column, the views represented are those of the writer. Other perspectives are welcome, email latonyk@gmail.com with Letters to the Editor or OpEd in the subject line.)

The Lost Decade Isn’t Over Until We Say it Is

June 19th, 2014 No comments

A decade ago, a shipment slump hit the manufactured housing industry. It actually started earlier in 2000, but by 2004 it was undisputed that shipments had dipped all across the country. The hope was that this decline was no different from those that happened before. Surely, sales would pick up and the good life would return. Now ten years hence, those hopes have been dashed. A new normal has set in. But has it? Recently, I asked industry professionals from all across the country if they were satisfied with an annual shipment level of 60,000 units?

60,000 units is the high point over the past three years. This uptick has again convinced some that the good times are about to roll again. But really? The April shipment numbers show that for the year, 19 states have increasing shipment numbers, four states have no change and 25 states are still declining!

So, in total, a handful of states have sufficient shipment increases to mask the decline in a broader range of states.

Taking the long view, the industry since the dawn of the HUD code produced one million HUD code homes in just its first three years. Over the following years, the next million mark took 4 or 5 years but recently it took a full 12 years to go from 7 million homes to 8 million. At the industry’s current pace, it will take 17 years to reach 9 million total homes.

Production of homes of course is but one industry metric. The number of HUD code plants has declined from 550 to 123.

A move back to the average performance of the industry over the 2000’s (which would mean doubling today’s production levels) could be a starting point for an industry goal. How do we get there? First, we need to recognize that many of today’s challenges existed back then too. Finance obliviously is an even more severe hurdle for customers and the industry. But fundamentally, the industry must strengthen each of its building blocks.

average-shipment-per-decade-manufactured-home-posted-on-mhpronews-com

Customer demand leads to new sales which leads to new orders which leads to filled community sites.

How do we fuel customer demand?

Interestingly, my thought is that we begin with the desired outcome and work backward.

An honest assessment of unfilled sites would say that many are not very attractive. Empty sites often are next to undesirable homes or unkempt spaces. Not places where a customer would want to put their shiny new home. We can do better.

The lack of independent retailers is also a factor. Few points of sale means less industry advertising. Essentially in many markets, the industry has gone dark on TV and other media. Given today’s technology we can reach customers in inexpensive ways. We can do better.

Ozzie and Harriet would love our homes. Too bad, they only represent a very small share of today’s households. The recent MHI design award winners point the way to new ways to think about what customers want. Notice I didn’t say “need” because customer buy based on wants. Only the housing desperate buy based on need.

How do we get to a new brighter future? It all depends on whether you’re satisfied with 60,000 annual shipments. If you are, do nothing. If not, we have work to do. ##

ross-kinzler-wisconsin-housing-alliance-executive-director-posted-industry-voices-manufactured-housing-professional-news-mhpronews-com-75x75Ross Kinzler
Executive Director
Wisconsin Housing Alliance

MHGrassroots: A Call to Action

June 17th, 2014 No comments

As I sit comfortably in a 737 at 30000 feet coming back from a thought provoking meeting at the MHI Expo in Las Vegas I don't have to go in great detail on how the world has changed since 2001.

From how we fly, how we communicate, and even how we conduct business, it has all changed in ways none of us truly imagined then.

Every day I read more about how a government I have grown up loving, is making changes that contradict the core beliefs and attributes it was built upon. With that said, let's look at a few issues that have faced, primarily as it relates to the manufactured home market in the past 15 years.

In Texas we were asleep at the wheel in 2001 when House Bill 1869 took effect. I was but one of the many independent dealers who were wondering how this could have happened. I even looked Gov. Rick Perry in the eye and told him point blank that this bill would cost Texans jobs and would reduce home order sales, which in turn would force the closing of several fine manufacturing plants.

Unfortunately I and those around me were right. Even though the TMHA through a lot of hard work was able to have this poor piece of legislature repealed in 2003, the damage was already done.

I won't go into the specifics of the law itself, but I will say it was a killer from day one. If you have any questions about it, just Google it. I have heard the experts’ state that 85% of the independents who were in the market at that time were wiped out by this law and the recession that hit us in 2008. And guess what. Those folks are gone, probably never to return again.

So let's take a look at where the train came off the tracks.

We were too late to stop one train simply because we weren’t aware it was heading for the station.

If we want to be successful in the legislative arena we have to stop the bills before they get that close to the tracks. We, the industry as a whole, must be vigilant in being aware of any laws, in every city, county, state and federal arena that could negatively impact not only us, but the people around us.

This means we have to know, and have a relationship with, the people in charge. Governor Perry signed that bill even after I told him the truth. Why? Simple, he didn't know me from Adam. No relationship equals no traction. We have to build those relationships in order for our voices to not only be heard but to be accredited.

How was it fixed? A grassroots effort. From the ground up. TMHA called upon every member….who in turn called on every state senator and state representative to repeal a bad piece of legislation. And it worked! Why? Because the industry stood up as a whole, and worked together for the common good of all. I call this a victory for the good guys.

Let's look at another victory.

Last year I received a phone call from a landlord who was my ‘competitor’ in Plainview, Texas. I use that word competitor only because we are after the same pool of customers. I call him a friend.

Basically this city was in the process of creating a city ordinance which would require an inspection on every rental inside the city once it was vacated by a tenant. Never mind the fact that this would be in direct contradiction to the HUD code on a manufactured home. Every house, apartment, and mobile home would have to be brought back to current code if this law passed.

This would mean thousands of dollars spent to update every unit.

One unintended consequence of this law would have forced the citizens to pay rent in excess of three times the current rate.

Another would have riddled the city with homes to be demolished due to the repair cost being more then the value of the home.

Yet another would have been a mass exodus of good paying tenants to the surrounding communities which didn't have this law.

So how did we stop this calamity before it was passed like Texas House Bill 1869?

We showed up in droves. There was standing room only at every hearing. Meetings with every city official we could get and we killed it before it could even be heard by city council. How? It took one phone call from each of us who took the time to make that call. And another victory ensued.

So what does all this mean to you, the reader?

It's time. It is time to make a difference and make a call of your own.

I know you are busy, but don't blow this one off.

Dodd Frank and the SAFE Act are not going away. So what are you going to do? I am calling not only those of us in the industry, but all of us.

The government doesn't need us, but this country does. We are this country's answer to affordable housing. But if the people can't get financing for that home what good are we to them?

If you don't know who to call that's ok. Call your state association. If you are not a member, sign up. If you are a member, get active. Make a difference. You can. ##

shawn-fuller-d-r-housing-new-deal-texas-industry-voices-manufactured-housing-mhpronews-com-75x75-Shawn Fuller
D & R Housing, LLC.
New Deal, TX 79350

Are Frameless HUDs a MOD under state laws? 

June 3rd, 2014 No comments

The question of whether a “frameless” factory built home might be considered a modular home under state law is an interesting question.

To me, if the definition of “manufactured home” is amended to delete the requirement that a manufactured home have a permanent chassis, it wouldn’t matter what state law says.

If a frameless home receives a HUD label, that label is preemptive and the home is a “manufactured home” within the federal meaning of that phrase.

What is more interesting is if the term “manufactured home” is amended to exclude RV trailers larger than 400 square feet so a larger RV trailer could be built, since that unit is not defined in a federally preemptive way, then yes, state law could define that unit as a modular home.

So for the RV industry to produce a non-regulated home at either the federal or state level, they would need to amend federal and all state laws. ##

ross-kinzler-wisconsin-housing-alliance-executive-director-posted-industry-voices-manufactured-housing-professional-news-mhpronews-com-75x75Ross Kinzler
Executive Director
Wisconsin Housing Alliance

 

(Editor's note: an industry savvy attorney, not affiliated with MHARR, who saw MHI's statement on frameless HUDs voiced concerns about the issue. See this article, supplied by MHI for publication.

http://www.mhpronews.com/mhi-news/7691-about-the-rvias-efforts-on-changing-some-language-in-the-hud-code-for-manufactured-housing

Jim Ayotte made this statement on a related issue;

http://www.mhpronews.com/blogs/industryvoices/the-rv-industry-is-attempting-to-amend-the-hud-manufactured-housing-code/

As on any article of topic of industry interest – private or public (ie: for publication) – feedback on this subject is welcomed.)

Who’s in Charge Here?

June 3rd, 2014 No comments

Rick Rand’s excellent proposal for an all-industry conclave at a neutral location is gathering momentum. Such a venue should certainly not screen out the smaller operators who have always been a prime source of innovation, and it is vitally important that the “big guys” also be at the table. Make room for the various associations charged with the thankless task of placating the placating the industry’s many voices.

As a long-retired veteran of manufactured housing, I’m appalled at the conflicts, back-biting and lack of leadership that has always hamstrung our young industry. It was understandable in the early days when the largest manufacturers controlled less than ten percent of shipments and no other industry constituent was in a position make things happen beyond his own company (in those days, the leading players were all men).

Today, though manufactured housing is a shadow of its former self, the product itself is far better, the need for affordable housing is far greater, the leading manufacturers remain profitable, the market for manufactured housing communities is heating up and the stick competition is in disarray. So why are our sales volumes in the dumper?

It is true of course that we, as an industry, have made many mistakes. And we’ll make more.

In a free enterprise system, we learn from our mistakes and keep moving forward. That’s exactly what needs to happen at the kind of meeting Rick has proposed. Pull the tribe together with an agenda focused on the problems we’ve created, the opportunities ahead and agree upon a broad based strategy to deal with today’s challenges. Ideas and innovations are often sparked over a cup of coffee or glass of beer, and contacts have always been the lifeblood of the industry.

But far more is needed than griping about Dodd-Frank and what names we should use for our products. Consider some fundamentals.

Housing is one of America’s least efficient industries. That includes stick builders and us too. Why is that? Well, there’s no serious foreign or domestic competition, no real industry leadership, way too much regulation and negligible innovation. That’s been the case for a hundred years.

Academics and all sorts of advanced thinkers have, for at least that long, looked to industrializing the building process to break out of housing’s quagmire. It has finally happened. The industry we now call manufactured housing has demonstrated the ability to build good housing at roughly half the cost of traditional methods, and we have the black eyes to prove it.

As one result, America’s largest home builder is one of us, and one of the world’s richest men bankrolls MH financing. Something like 20 million Americans live in homes we’ve built and the vast majority of them appreciate the comfort and value those homes provide. There’s ever so much more that could and should be done, but we’ve made a better start than any other tilter at housing’s windmills. Many have tried.

One thing the MH industry agreed upon some 40 years ago was to unite under the HUD banner. That turned out to be a painful process with about as many negative as positive outcomes. We banded together again to reform that process with the Manufactured Housing Improvement Act of 2000 (MHIA 2000), but guess what? Big Brother has its own ideas about “Improvement” which do not include a lot of use for industry committee input.

We’ve got a lot going for us, and yet the squabbles continue. If there’s an industry strategy, it did not emerge from my recent research. What is happening is a plethora of tactics, put forward under various banners, mostly going nowhere.

As an industry professional, you can put forward some ideas for how to deal with these challenges. So can I, and I’ve done so in my recent book, Dueling Curves. It’s not enough.

Maybe at Rick’s gathering of the tribes, some sort of consensus can be reached, on a whole bunch of nifty ideas.

But that’s not enough either.

The single most important objective of such a congress—or whatever it’s to be called—should be to the emergence of industry leadership. Not a task force, committee or agency, but a person of vision who commands the respect of the industry.

A tribal chief who can weave the disparate strengths of the manufacturers, suppliers, financiers, retailers, MH owners and community operators into a strategy we can all salute. Oh well, yes, there will always be a few curmudgeons. No one will be entirely happy with any strategic vision adequate to unite us; not even the leader who ultimately propounds it.

But let me suggest this. Should we fail to unite behind competent leadership, I can suggest who will become take charge of the industry. Well, maybe I shouldn’t name names, but the initials are H.U.D. ##

bob-vahsholtz-author-dueling-curves-battle-for-housing-posted-industry-voices-guest-blog-mhpronews-com-manufatured-housing-professional-news-75x75-Bob Vahsholtz is the author of DUELING CURVES The Battle for Housing Bob can be reached at kingmidgetswest@gmail.com. Web: www.kingmidgetswest.com