The James E Forrestal Building, Washington, D.C. offices for the U.S. Department of Energy.
Legal action aimed at the U.S. Department of Energy in regard to new standards the department set in motion for the energy efficiency of manufactured homes has advanced in the courts but not before a section of the claim had been dismissed.
The Manufactured Housing Institute and the Texas Manufactured Housing Association filed the suit in February. Earlier this month, the Federal Court for the Western District of Texas considered a DOE motion to dismiss but allowed a majority of the claim while dismissing a portion of the filing that asserts DOE had failed to properly consider enforcement rules for any would-be violations.
“Part of our initial case was that the DOE failed to have a testing, compliance and enforcement regulation to complement the building standards,” MHI CEO Lesli Gooch said. “DOE realized that this was a problem, so it is now trying to finalize a rule it proposed late last year, after suspending the compliance date on its standards so that a testing, compliance, and enforcement rule could be formulated.
“MHI told the court that we would probably challenge those rules once they became final as finality is a necessary prerequisite to a challenge,” she said. “Of course we can’t know what the ultimate rule will be so we can’t say what our challenge would be.”
MHI and TMHA can amend their complaint after the DOE has completed its enforcement rule making process.
Remaining assertions in the filing, including that DOE had overstepped its regulatory boundaries by failing to consult with the U.S. Department of Housing and Urban Development — the industry’s primary regulator.
The court neglected DOE’s position that a ruling should wait until the the department has finished its enforcement rulemaking process, stating that “waiting until a new compliance date to bring this suit constitutes a sufficient hardship for the manufactured housing industry.”
CoverTree, an insurtech company in the manufactured housing industry, has gained $13 million in funding round with large investments from Portage, AV8 Ventures, Distributed Ventures, Detroit Venture Partners, Ludlow Ventures, and Annox Capital.
CoverTree plans to use the new capital to expand operations in multiple states in the sun belt and upper midwest.
Co-Founder and CEO Adarsh Rachmale is enthusiastic about the growing manufactured housing industry, stating that the investment validates CoverTree’s efforts to redefine the insurance experience.
“The funds will be used to innovate and expand the company’s reach, aiming to provide reliable and precise home insurance solutions,” Rachmale said.
CoverTree will introduce new products such as Maple, a software for managing resident insurance, Bonsai, a platform for binding and underwriting, and Sequoia, a system for automated underwriting and quoting.
Portage Co-Founder and CEO Adam Felesky has joined the company’s board of directors. This strategic move underscores Portage’s commitment to CoverTree’s success and brings valuable industry expertise to help guide the company’s strategic direction. By partnering with yet another organization, Markel, CoverTree seeks to transform the market segment through advanced coverage options, sophisticated pricing, and cutting-edge technology.
This strategic move underscores Portage’s commitment to CoverTree’s success and brings valuable industry expertise to help guide the company’s strategic direction.
“With the continually changing homeownership industry, we are excited to continue expanding our services to the growing manufactured housing industry… we believe this is the future of how all Americans will live,” Rachmale said. “This investment is a testament to the value we bring to homeowners by redefining the insurance experience.”
The new Encore home from Clayton at the Berkshire Hathaway Shareholders Meeting in Omaha, Neb.
Tennessee-based Company Aims to Provide Manufactured Home Collection with High-End Design, Energy Efficiency
Clayton, one of the nation’s largest factory homebuilders and a WarrenBuffett-held company, debuted its new Encore series homes at the annual Berkshire Hathaway Shareholders Meeting in Omaha, Neb., earlier this month.
Encore is billed as “the most elevated line of modern manufactured homes offered by Clayton” and features valuable options for the homebuyer including a variety of regional design aesthetics, the company stated.
Notable Enhanced Features from Encore
French doors
Glass cabinets
Pendant lighting
Quartz countertops
Tile backsplash
Free standing tub
Full glass and tile showers
“Encore blends expert craftsmanship and design personalization with energy-efficient features that can save homeowners money over the lifespan of their home,” Clayton’s National Production Manager Mike Comparato said. We are excited to offer a home line to our customers that integrates the latest high-end trends in interior design while continuing to deliver on our promise of energy-efficient, attainable homeownership.”
Encore homes are built to the US Department of Energy Zero Energy Ready Home™ specifications — called eBuilt by Clayton — estimated to save homeowners up to 50 percent in annual energy costs compared to other manufactured homes. This allows homeowners the potential to save thousands of dollars throughout the homeownership journey. eBuilt homes are optimized with energy-efficient features, including a Rheem® hybrid water heater, Lux® low-E windows with argon gas, ENERGY STAR® certified appliances, LED lighting throughout, an ecobee® smart thermostat, and additional insulation.
Clayton CEO Kevin Clayton said homes like Encore provide added attainability for potential homebuyers with high-end features that help perpetuate the value of the home.
“We are excited to offer these benefits because the important decision to buy a home depends on more than just the sales price – it’s about considering those long-term costs of homeownership,” Clayton said.
Like other manufactured homes, Encore floor plans are constructed in an indoor facility. By leveraging the off-site home building process, Clayton can achieve efficiencies in production that are passed down to customers in the form of cost savings.
Homebuyers are prioritizing affordability while also considering factors related to style and comfort, such as living spaces in and around their home, the company stated. By choosing Encore, homeowners can experience the beauty of attainable luxury in a way that “accommodates their budget and reflects unique tastes and styles”.
Jerome Powell makes post-FOMC meeting comments on May 1.
The Federal Reserve continues to monitor the economy, from inflation to jobs, production and wages, and in the FOMC’s recent May meeting opted again to hold rates in lieu of more information.
The committee’s ultimate goal is to reduce inflation from its current rate above 3 percent to 2 percent without pulling the economy into recession, something it’s been able to do to this point.
“In support of its goals, the committee decided to maintain the target range for the federal funds rate at 5.25 to 5.5 percent. In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
Inflation at its highest in the recent economic cycle was above 9 percent. The committee will meet again June 11-12.
Along with interest rates, the Fed uses a less blunt tool — its balance sheet — to influence the growth or cooling of the economy. On the heels of the COVID pandemic, the Fed increased activity in the bond market to help boost the economy, and now says it will ease what many economists call “quantitative easing.” Rather than cap purchases at $60 billion per month as it has been, the Fed will begin to cap at $25 billion in June.
What Factors Does the Fed Consider?
Though growth in gross domestic product has moderated from 3.4 at the end of 2023 to 1.6 percent during the first three months of 2024, the Fed continues to dive deeper in assessing private domestic final purchases that exclude inventory investment, government spending, and net exports. The committee has expressed that it feels closer-to-home-measure is a better indicator of cost pressure. That measure came in at 3.1 in the first quarter, unchanged from mid 2023.
Production
“Consumer spending has been robust over the past several quarters, even as high interest rates have weighed on housing and equipment investment,” Fed Chair Jerome Powell said in his post meeting comments. “Improving supply conditions have supported resilient demand and the strong performance of the U.S. economy over the past year.”
Powell said, given the conditions, it is unlikely to raise rates again and likely will begin to cut mid-year if the indicators remain stable.
The ISM Non-Manufacturing (services-focused) Index dropped to 49.9 in April, when analysts expected it would land at 52. A drop below 50 means a contraction in business. The ISM Manufacturing Index also showed contraction, dropping from above 50 for one month back down to 42.9 in April.
Labor
The jobs market continues to be stable, if waning, which is what the Fed wants to see; just more of it. Non-farm payrolls came in with an increase of 175,000 in April against the consensus expectation of 240,000 jobs, no small difference. Unemployment ticked up a 10th to 3.9 percent year-over-year. Regular take-home pay rose 0.2 percent and is up 3.9 percent in 12 months.
Home Sales
New single-family homes sales rose 8.8 percent in March, beating the consensus, and was up 8.3 year-over year.
The median price of new homes sold was $430,700 in March, down 1.9 percent from a year ago, First Trust Chief Economist Brian Wesbury stated in a newsletter to subscribers. The average price of new homes sold was $524,800, up 1 percent compared with last year.
“New home sales came in stronger than expected in March, driven by broad-based gains as more inventories give buyers a greater number of options to choose from. Notably, the 8.8 percent gain in March was the largest in more than a year,” Wesbury stated. “It looks like the upward trend in new home sales that began in 2022 as the economy reopened is still intact, though volatility in interest rates continues to play an outsized role.”
Likewise, the Manufactured Housing Institute this month reported an uptick in home shipments from March. The industry shipped 8,464 new homes in March, up 1.1 percent from the previous month and up 10.5 percent in 12 months.
21st Mortgage earned two Lender of the Year awards at MHI's Congress and Expo in Vegas.
‘Excellence in Manufactured Housing Awards’ from MGM Grand in Vegas
The Manufactured Housing Institute announced the 2024 Excellence in Manufactured Housing Award recipients during its Congress and Expo event at the MGM Grand in Las Vegas. The annual awards program honors MHI members in the manufactured and modular home building who provide outstanding products, customer service, creative solutions, and state-of-the-art homes.
This year the organization considered more than 80 submissions in 18 categories. The winners were chosen by peers and an independent panel of experts for their leadership and dedication to the manufactured housing industry during the last year.
The 2024 Excellence in Manufactured Housing Award winners, listed by category, are:
Manufacturer of the Year Awards
• Manufacturer of the Year (Three plants or fewer): Oak Creek Homes
• Volume Manufacturer of the Year: Clayton Home Building Group
Retail Sales Center of the Year Awards
• Retail Sales Center of the Year – East: Clayton Homes – Cookeville, Tenn.
• Retail Sales Center of the Year – West: Homes Direct of Oregon, LLC
Land-Lease Community Awards
Equity Lifestyle Properties earned a pair of community awards at the recent gathering in Vegas.
• Manufactured Home Community Operator of the Year: UMH Properties, Inc.
“UMH is proud to receive this award for a fourth time,” UMH Properties President and CEO Sam Landy said. “We have built an operating platform that delivers exceptional results year after year. We continue to acquire, improve, and expand our communities, which increases access to quality affordable housing in each market that we serve. I would like to thank our managers, maintenance staff, regional managers, vice presidents, directors and officers and all other staff members for our outstanding achievements.”
• Land-Lease Community of the Year – East: Equity LifeStyle Properties – Village Green
“Village Green’s essence lies in the serene atmosphere, stunning scenery, and abundant activities and events that foster the community feel among our residents, providing something for everyone,” remarked Jonathan Merkle, vice president of operations. “The acknowledgment from the Manufactured Housing Institute fills our entire team with pride. This award truly highlights the consistent efforts of our staff to ensure Village Green remains an extraordinary community for our residents.”
• Land-Lease Community of the Year – West: Equity LifeStyle Properties – Monte Vista Village
“Monte Vista truly offers something for everyone, but mostly it’s the friendly culture, the convenient location, and the many clubs and events that bring our residents and community together,” said Ryan Coslett, vice president of operations. “Being honored by the Manufactured Housing Institute makes our whole team very proud. This award recognizes the consistent efforts of our Monte Vista staff to provide and prioritize an exceptional experience for our residents.”
Supplier of the Year Award
• Supplier of the Year: Style Crest Inc
Lender of the Year Awards
• Lender of the Year (Floor plan): 21st Mortgage Corporation
• Volume Lender of the Year: 21st Mortgage Corporation
• Manufactured Home Community Lender/Broker of the Year: Yale Realty & Capital Advisors
Design Awards
• Manufactured Home Design (Multi-Section): Oak Creek Homes with The Swan
• Manufactured Home Design (Single Section): Oak Creek Homes with The Crane
• Modular Housing Design Award: Champion Homes with the Atlantic
• Manufactured Home Design (CrossMod®): Champion Homes with The Westridge
Industry Leadership Awards
• Leadership in Sustainability: Clayton Home Building Group
• Community Impact Project of the Year: Monmouth Mobile Home Park
“Our dedicated staff has worked hard to develop programs and work collaboratively with community partners to offer services and programs aimed at enriching people’s lives and providing assistance in various ways,” Monmouth Mobile Park Manager Dan Mandell said. “With a rich history dating back to the 1950s, MMHP has consistently demonstrated a commitment to giving back to the community and has, in recent years, spearheaded programs focused on resident education, alleviating food insecurity, and bolstering local community events.”
Country Living Pointe, A Flagship community near Sherman, Ky.
Expands Footprint Into Nashville, Enters Eighth State
Flagship Communities is set to acquire seven manufactured home communities with 1,253 homesites for a price of about $93 million. The deal is expected to close in mid May.
The purchase price, along with about $10 million in upfront capital expenditures, will be funded with the net proceeds from the REIT’s $60 million offering and the remainder funded with new debt financing.
“These acquisitions are the largest in the REIT’s history to date and represent a milestone for our business as we continue to execute on our stated growth strategy,” said Kurt Keeney, president and CEO of Flagship. “This is a generational opportunity to strategically expand our footprint into the adjacent Nashville market, as well as establish a presence in West Virginia, both markets that enable us to maximize existing synergies and leverage economies of scale.”
The Purchase Price represents a capitalization rate of 5.6 percent on year-one forecasted net operating income, and is expected to be accretive to the REIT’s adjusted funds from operations per unit diluted on a leverage neutral and stabilized basis.
Flagship stated that the transaction will increase its holdings to 82 communities with more than 15,000 homesites. It also strengthen the REIT’s presence in Tennessee while entering the core Nashville market, which is one of the fastest growing markets in the U.S. The Acquisitions also expand the REIT’s operations into West Virginia, which represents the REIT’s eighth contiguous U.S. state, and provides “significant growth opportunities to become a market leading owner.”
“We are excited to have sourced more off-market acquisitions through our long-standing industry relationships, providing the ability to establish a presence in Nashville, as well as West Virginia,” said Nathan Smith, Flagship’s chief investment officer. “The Acquisitions are comprised of high-quality properties that adhere to our acquisition criteria and also provide the opportunity to expand our presence along the I-40 and I-65 Interstate corridors, within easy driving distance to employment opportunities, hospitals, schools, shopping and recreational facilities.”
The West Virginia communities are located in Beckley, Milton, and Morgantown.
General Manager Darren Felder Joins MHInsider on Home Sales
MHInsider asked a Clayton retailer to participate in a question and answer session on how homes are selling, how higher interest rates are being managed, and what customer are asking for in a new home. Here are the responses…
How long have you been operating?
I’ve been in the industry for 26 years. Originally, I worked for an independent retailer that was bought by Fleetwood Homes in 2005.
Is the average home you sell increasing in size, getting smaller, or staying about the same?
The average home size has remained about the same for many years. For the past 20 years or so, the average multi-section home we sell has been around 1,500 square feet and 1,200 square feet for single-section homes.
How many homes do you sell annually?
We sell 90 homes per year on average, and this has remained the same over the past several years.
What is your average time from the order of the home to set up?
We keep our best selling home models in stock. We currently have around 30 homes ready to order, and a lot of those are available at our store. For homes that we do not have available, the delivery of the home to the site varies depending on if the home building facility has received other orders ahead of the homebuyer’s order. Other factors like where the building facility is located and time of year can also affect the delivery time.
What is the most common add-on feature in your market?
One add-on feature that we tend to see is switching floor vents to ceiling vents. However, customers typically do not request any add-ons beyond site improvements.
How have you seen your business evolve over the last few years?
We’ve seen a lot more interest from customers in our affordable home options thanks to improvements in the home building process. The least expensive home is built using the same construction process as the most expensive home we offer. We also offer much more energy-efficient homes than we did years before.
Energy-efficient home packages have always been an attractive option to our customers and with eBuilt homes now being built in all Clayton home building facilities, we can help homeowners save up to 50 percent on utility costs annually.
What do you think is the greatest challenge facing the industry right now?
One challenge that hinders access to off-site built homes is zoning. Our industry is working closely with municipalities across the country to educate community leaders, zoning officials, and the public to allow off-site built homes in more locations.
Are there specific strategies you’ve identified to keep homes moving?
We monitor the housing market very closely. In the past, our more basic home packages have moved best. Within the last few months, though, we’ve seen more customers looking for higher-end home options. Staying ahead of the curve by understanding what our customers are looking for helps us anticipate what products we need to have available.
What customer trends do you see in terms of use-of-space and/or lifestyle amenities/materials choices?
For the past three years, many customers have been adamant that they do not want carpet in their homes.
Why do you feel it’s important to attend events like Louisville, Biloxi, Congress and Expo and others?
I attend the Biloxi Home Show every year. I believe it’s important to attend events like this to stay up-to-date on new product offerings in the market (like the uptick in energy-efficient features and packages), to make connections with others in the industry and to keep a pulse on where the industry is heading.
What do you think the next year is going to be like for the industry?
Community managers at the recent summit held by Roots Management.
How Roots Management Attains a More Personal Experience for Managers and Residents
Roots Management Group holds itself up as an example of a “best-in-class” offering, but it is not a reputation earned without a significant amount of introspection and institutional change.
“Community managers are the cornerstone of our vision,” Roots Management Group President Tom Stapley said. “We believe that a people-first ethos is a proven path that can help pave the way for a revitalized industry.”
In 2006, the predecessor to Roots, Treehouse Group, was established by Tom Stapley, Marcus Ridgway, and Dallas Tanner.
The business plan was to acquire older manufactured home communities in key locations, initially settling in on 20 properties in the Phoenix area. It was a time of enormous change, transformation, and opportunity across the industry and throughout housing.
By 2008, Stapley, Tanner, and Ridgway had expanded into the single-family rental business, founding Invitation Homes. But Stapley maintained his passion for manufactured housing at Treehouse, and the business continued to grow. In 2020, as the company continued to expand, Stapley recognized that community managers, many of whom were responsible for nearly every aspect of the business in the field, were becoming overwhelmed.
“We really wanted to see what it was like in the field from a fresh perspective. I started managing punch list items from when the company had just started, from when we had just a handful of properties. Still, we wanted to know what the landscape currently looked like from a community manager’s point of view,” Roots Management Group Chief Operating Officer Tauvaga Iii said.
Tom Stapley, president of Roots Management, addresses community managers during a recent company-wide summit.
Boots on the Ground
Treehouse sent a new operations intern, McKay Lyman, a grad school student just dipping his toe in the industry, to Brookhaven Estates in Apache Junction, Ariz., where there had been a significant amount of staff turnover.
McKay Lyman
“I had a lot of work to do, I knew I had to gain the resident’s trust,” Lyman said.
Stapley asked that he go out several times a day on a golf cart to clean up some litter and to “break the ice” with community residents.
“The idea resonated with me, and before long, I felt like I had gained a great deal of trust and appreciation from the residents, and it also allowed me to meet several of them much quicker,” Lyman said. “I encouraged residents to speak freely with me and let me know what was on their minds. Soon I started receiving a lot of baked goods as gifts, and the residents invited me to their community potlucks.”
Most importantly, Lyman said, the experience helped him and senior management understand what needed to be done in the community, and it ultimately provided great leadership insight that could translate across the company’s portfolio.
Tua Iii
“When we looked at McKay’s time logs and noticed that he was being bombarded by corporate requests and getting the same routine questions asked by the residents about where to pay rent and how much they owed, we knew something needed to be done,” Iii said.
Introspective Change, Staff Enablement
The company implemented electronic communications for residents and taught residents how to check balances and make payments. All corporate staff members were asked to prioritize a community manager’s time, to first seek answers from other sources, for instance, to keep time in the field free for managers to work with residents, contractors, and other staff members.
In 2021, the company decided to enhance its portfolio by bringing in additional properties owned and operated by Vineyards Management Group. Two years later, Treehouse Communities and Vineyards Management Group rebranded to Roots Management Group. With the additional staff and merging the two companies, Roots launched a learning and development department that created what is now called Roots University. The team provides educational content for the community managers, and develops the curriculum for Roots University, which is a 30-hour manager certification course covering Roots procedures, financial handling, reporting, and community-focused materials.
Parkhaven, a manufactured home community owned by Roots Management. All photos provided by Roots.
Stapley said the company also revamped its shared services department to further help relieve managers of non-resident-centric work. Shared services now has more than 30 people handling the home ordering, logistics and installation, marketing, and listing of homes for sale or rent.
He said the department has a full-time community success manager.
“Our shared services teams and every employee at Roots Management Group is here to support our front lines, our community managers,” Iii said.
The commitment translates into satisfaction for the community managers. Brooke McAlister is the community manager at Countryside Estates in Hays, Kansas.
“I really value the education and the trust put in us to run the communities as if we are the owners,” McAlister said.
McAlister also participated in a company-wide manager summit, a three-day immersive experience for managers and support staff.
“The Community Manager Summit really helped me learn to take the ownership role, feel secure taking the reins, learn how to maximize the impact of the online tools available to me and participate in peer-to-peer mentor groups,” McAlister said.
The company not only took tasks away from community managers to give them more time to focus on the residents, but they provided the opportunity to rate the staff members who are tasked with supporting community managers.
“We have each manager fill out a Net Promoter Score (NPS) survey each month that rates our company using a score based on how well we are responding to their needs and supporting them as a central services team,” Iii said. “We’ve come a long way since the first round of scoring, which had the corporate team rated by community managers at a negative-14. Today, they are reporting at 66, which is considered ‘Great’, according to the NPS rating system.”
Lyman says although he is no longer working at Brookhaven, he enjoys supporting all the Roots Management Group properties and the community managers.
“My time spent as a community manager was certainly a favorite for me in this company and is foundational to my appreciation for manufactured housing,” he said. “The industry is still growing and evolving, while Roots continues to push forward and transform the industry as a people-first company.”
The year was 1996 when I was able to purchase my very own cellular phone. I remember how excited I was to start using it, and, in my humble opinion, the feeling of having the latest technology. I remember rushing through incoming calls because I didn’t want to be charged after the first free minute. I was just getting started as a home designer and the money was minimal. Fast forward to 2024, and now I can watch TV on my smartphone, surf the internet, and have things shipped to my home the same day.
It’s amazing to see the progress in cell phone technology in almost 30 years since I purchased my first one. The ancient Greek philosopher, Heraclitus, said it best when he said “the only constant in life is change.”
I look at this type of progress as growth. These newer products have brought us so many benefits and made life very interesting, to say the least.
Now think of the growth and progress in our industry over just the last 10 years. The evolution of our product, the power of our finance offerings, the methods used to install homes, each have vastly improved in the last decade alone.
One of the major successes in the manufactured housing industry is the fact that more and more people have considered purchasing a home, buyers who would not have previously considered our product.
We have so much opportunity to increase sales by tapping into the segment of the site-built market that can no longer purchase a site-built home because of pricing and financing.
For all the growth we have seen in our product, financing, construction practices, and potential homebuyers coming into our segment, there is one aspect of our business that could benefit from some focus, and that would be the buying experience we provide our potential clients.
Having spent 14 years in retail sales of manufactured homes as a housing consultant, sales manager, or general manager, I can honestly say that I have yet to see a comprehensive and intentional initiative to improve the home buying experience provided by a sales staff.
OK, before anyone takes my words to the dartboard, let’s make one thing clear. I am a huge proponent of our industry, our product, and what we can do for homebuyers across the country. However, things seem to have been so good over the years that there hasn’t been quite the level of attention focused on sales process improvement and sales training to bring our representatives and consultants up to a new level. We have been good with the “status quo” because that’s how we’ve done it, and it has worked.
When I say sales training, I am not referring to simply getting people to make more calls, or answer the phones, or place more ads. Making certain our sales consultants are driving traffic to the location is where everything starts. What I am referring to is introducing the same level of respect, pride, and desire to be more that we would see from a sales consultant at an exotic car dealership or high-end retail store. I know there are plenty of sales consultants, managers, and retailers who have shopped at these places for themselves, and know exactly what I am referring to when I say “enhanced” buying experience.
What does that buying experience look like? How would your sales consultants represent themselves, your company, and your product?
Ultimately, how would your clients respond to that type of experience? In today’s world of higher prices and higher rates, our ability to provide that type of buying experience would help offset some of the pushback we get from potential even though they know our product and appreciate that it is more affordable than other housing options..
What we are talking about here is improving our perspective on the business so that we can effect change in the perspective of the homebuyer. We talked earlier about a new segment of the market coming into our industry and our desire to fill this need for housing. Many customers decide to rent because they were left wanting more from the experience they had on the sales lot.
In 2024, homebuyers want more out of the buying experience. And we want even more out of our sales consultants. It’s time we made clear that we are the premier choice for high-quality homes at an affordable price.
Here are a few focus areas I’ve identified that could provide a great positive gain. These also are areas we will be discussing in future editions of MHInsider magazine.
Selling in today’s market to today’s buyer is less transactional
Steps toward creating working relationships with clients that built on trust and empathy
How to establish yourself as a professional sales consultant and NOT the salesperson
Consider the leadership skills to embody no matter your title
A successful career that revolves around solving the needs of others
Two things must happen for us to make a change. First, we must want to improve. Second, we have to care to make it happen.
The manufactured home sales is the disruptive innovation that the housing market needs.
Champion Home Builders’ Doug Tollin in a LinkedIn post asserted that we have held that place for some time, and that many people simply haven’t taken notice. I’m here to tell you that they are watching now. IT’S OUR TIME TO SHINE!
The kitchen and dining space in the new Skyliner II.
Nine percent. That is the magic mark that manufactured housing has contributed to housing starts each year for at least the last decade. Still, the manufactured housing industry may finally be poised to break through that ceiling.
Suzanne Felber, Lifestylist
How? By working together.
There are some new opportunities opening up in our markets that manufacturers and retailers are starting to discover. Identifying these niche markets and learning those that are right for you can be your key to success for 2024 and beyond.
Who is Your Customer?
Doug Tollin, director of customer experience at Skyline Champion, shared some excellent points on identifying your customer.
“Understand that customers have multiple options other than manufactured housing for their housing needs,” he said. “The main competitor to a retail sales center is not the manufactured housing retail sales center down the road but the site-built alternative, apartment living, existing home sales, and living with relatives, for example.
“Each market is different. Understanding who the largest competitor of the home shoppers is will allow the retail centers to know how to develop their unique marketing strategy,” he said.
Knowing that some buyers might not visit a street retailer location, but would be interested in the same house if it was in a community is changing how some retailers sell.
A new Genesis home from Skyline Champion Corporation.
Selling a Total Package
There are several channels by which manufactured homes make it to the customer. For so many years, street retailers sold homes despite the difficulty of having to help customers find land or a community, as well. Likewise, when a customer visits a community they want to know where they can buy a home to go in that vacant homesite. Many retailers sell land-home packages, especially on acreage, and we feel more will come. With site-built sales slowing down, more developers have land that needs to be developed and are having to get creative about how they bring in homes.. They are now starting to discover the factory-built advantage.
Competing with the Build-to-Rent Market
With the rise in interest rates making it harder to get financing, site builders have been turning to building new home communities that are all rentals. Single-family site built rental homes built in 2022 reached over 69,000, with many more townhome and condo communities also being built to take advantage of this demand. Tollin said he feels renters, for the most part, do not care about the method of construction used to complete their living space. This becomes a value-added to the developer or owner of a project. Suppose a “build-to-rent community” can complete its project in 30 percent less time and with 13 percent less cost and keep the community looking as attractive as they had ever imagined. In that case, the developer can generate rent revenue more quickly, reduce costs, and mitigate many risk factors. Many BTR clients are investors, not builders. Offsite construction simplifies the process for those not interested in becoming a builder.
Cavco has also become focused on this market and has started Cavco In-Neighborhood. This new division is dedicated to providing turn-key homes established in select communities and developments. Bryan Rogers is a regional vice president for the effort, and already is causing a stir in the manufactured housing community. The “diffusions of innovation,” Rogers said, is a concept his team is following to help explain how new ideas, products, and technologies are adopted and applied in different ways. By working with developers to create new community type where homes are sited and ready to be occupied in a goal of two weeks, Rogers shared that “We can offer an alternative to site-built housing. If we can capture the interest of those early adopters and gain 16 perenct of the housing market, our world will change.”
People like Bryan and Doug will change the housing world, and being a part of that is exciting.
Is this a possible dream? Of course, it is! Our industry has the resources to build, finance, insure, and sell our homes so we can genuinely offer that turn-key solution.
More on the Turn-key Process
Many consumers are concerned that we are only selling a home, and that they will have to arrange all of the partnerships needed to get the home completed. Most of us in the industry know this isn’t the case, but again, in many cases, we haven’t done a great job telling our story.
In some ways, buying a manufactured home is more straightforward than purchasing a site-built home. If a site builder were to build in the same community that these manufacturers will now be building in, it would take a minimum of 90 days to construct the home and probably 30 days to get the financing secured after the home is purchased, Cavco In-Neighborhood is using a two week sales time to buy and move in for land and homes that are set and move-in ready. This could indeed be the answer to the scarcity of attainable housing, particularly in the middle market. Some of the communities will be a land-lease purchase, and others will be where the land and home are sold together.
Another unique opportunity with these developments is that they are welcoming sales from retailers and Realtors®, which will give our homes renewed visibility they haven’t enjoyed in a long time, maybe ever. Our homes also present Realtors® a path to increased commissions. With the Cavco division, each development will have an onsite sales office, and retailers can bring clients to that sales office. The Cavco representative will handle the rest of that transaction, but the retailer still gets their commission.
If They Won’t Come to Us, We Need To Go To Them
I think manufactured housing is one of the most misunderstood industries in the country. When I talk to site builders and consumers, most guess what we still build are tin roof single wides, which you only find in older parks. Fortunately, that perception is changing, and companies like Cavco and Skyline Champion are doing a great job helping to show how far we have come. Both companies had a pair of homes at the International Builder’s Show and the Kitchen and Bath Industry Show in Las Vegas in February. More than 100,000 builders, developers, manufacturers, and designers attend the show every year, and it is exciting that our industry will have four complete homes for people to tour in the village setting right outside the convention center.
Cavco had a 540 square-foot small footprint home (great name!) And a 400 square-foot ADU model. The Genesis division of Skyline Champion brought a 1,493 square-foot, three-bedroom, two-bath home with a primary bedroom oasis as well as a 1,587 square-foot home with three bedrooms and two baths with a split bedroom design. These homes will feature the latest technology and finishes available in the industry and give our industry a way to show off what we can do. All of these homes are consistently decorated in a way that would compete with any site-built home, yet when a consumer visits some retail centers, they don’t get the same experience.
Do Your Homes Offer a WOW Feature?
Even big box retailers like Walmart and Target realize that consumers now expect to be wowed, no matter what the price point of the item they are selling. If you have gone into a Walmart lately, you will see that they no longer have just racks and shelves with vast amounts of clothing; they now have beautifully designed displays that offer one of each size with back stock hidden away. Likewise, consumers no longer want to buy a home with bare walls and floors in a monochromatic color scheme where they can’t visualize their grandmother’s china cabinet or other belongings; they expect model homes full of ideas like what they see every day on Pinterest or HGTV. Jennifer Jones, a general manager with Clayton Homes of Alexandria., in Louisiana., discovered that when she offered her many homes for sale, the fully furnished and decorated ones sold faster. She didn’t have to worry about moving and storing furniture and accessories when they did sell. It eliminated the nicked walls and scratched floors when furniture is moved out of a sold home. The houses started selling so quickly that she got contracts before we could finish hanging the artwork!
By knowing who your buyer is and what your retail center’s strengths and weaknesses are, it is possible to tap into one of these niche markets or find one of your own. We are excited about what the future holds for all of us!
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