Fed Chairman Jerome Powell takes questions during the Dec. 23 media conference.
Rates Remain, May Come Down in ’24
The Federal Reserve in its Dec. 13 meeting again opted to pause further hikes on interest rates. Analysts believe rates could come down in 2024 and concerns about a potential recession also seem to be abating.
Recent consumer and production index numbers have been flat or minimal. The recent meeting makes pauses from the Fed twice in the last three meetings, with a quarter-point hike in July. This follows a record 10 consecutive rate hikes beginning in March of 2022. That streak included four consecutive three-quarter point hikes during the second and third quarters of last year.
The Fed wants the market to reach maximum employment with a 2 percent inflation rate, which is another 1.2 below the current rate. Inflation had been as high as 9 percent.
“The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Committee stated in its release on the rates decision.
What To Know About The Federal Reserve
The Federal Reserve, commonly referred to as the Fed, plays a vital role in shaping and maintaining the stability of the United States economy. Established in 1913, the central bank is responsible for conducting monetary policy, supervising and regulating financial institutions, and promoting overall economic stability.
At the core of the Fed’s responsibilities lies its control over monetary policy. The Federal Open Market Committee, comprised of members from the Federal Reserve Board and regional Federal Reserve Bank presidents, determines the course of this policy. By adjusting interest rates and managing the supply of money and credit in the economy, the Fed aims to foster conditions that support maximum employment, stable prices, and moderate long-term interest rates.
One of the primary tools used by the Federal Reserve to influence monetary conditions is the manipulation of the federal funds rate. This interest rate, the rate at which banks lend reserve balances to each other overnight, serves as a benchmark for various lending rates throughout the economy. By raising or lowering the federal funds rate, the Fed can influence borrowing costs for businesses and consumers, thereby affecting spending and investment levels.
The Federal Reserve also acts as a supervisor and regulator of financial institutions to ensure the safety and soundness of the banking system. It conducts regular examinations of banks and implements regulations to protect consumers and maintain the stability of the financial system. The Fed’s oversight extends to a wide range of institutions, including commercial banks, savings associations, credit unions, and holding companies.
In times of financial crisis or economic turmoil, the Federal Reserve serves as a lender of last resort. During the 2008 financial crisis, for example, the central bank implemented a range of emergency measures to stabilize the banking sector and support credit markets. It provided liquidity to financial institutions, expanded its balance sheet through large-scale asset purchases (known as quantitative easing), and introduced innovative lending facilities to address the severe market dislocations.
Total nonfarm payroll increases slightly outpaced expectations in November.
Total nonfarm payroll employment increased by 199,000 in November, and the unemployment rate went down to 3.7 percent, the U.S. Bureau of Labor Statistics reported in early December.
The job gains were most prevalent in the areas of health care and government. It also increased in manufacturing, reflecting the return of workers from a strike. Employment in retail trade declined.
Health care added 77,000 jobs, above the average monthly gain of 54,000 over the prior 12 months. Over the month, job gains continued in ambulatory health care services, hospitals, and nursing and residential care facilities.
Government employment increased by 49,000 in November, in line with the average monthly gain of 55,000 over the prior 12 months. Employment continued to trend up in local government and state government over the month.
Manufacturing rose by 28,000 in November, reflecting an increase of 30,000 in motor vehicles and parts as workers returned from a strike. Employment in manufacturing has shown little net change over the year.
The labor force participation rate was little changed at 62.8 percent and has been essentially flat since August.
In November, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.4 percent, to $34.10. Over the past 12 months, average hourly earnings have increased by four percent. In November, average hourly earnings of private-sector production and nonsupervisory employees rose by 12 cents, or 0.4 percent, to $29.30.
In November, the number of persons not in the labor force who currently want a job was 5.3 million.
The Sterling model from Clayton attracts a new buyer with modern styling. The design uses warm colors, mixed materials, and open leg furniture. Buyers have been excited to call this home. All photos by Lisa Stewart Photography.
2024 Home Design Trends
Someone said recently that they were excited to have the housing market “get back to normal”. I didn’t have the heart to tell them that those days are long gone. With the rapid advances in technology, artificial intelligence, and how we receive information daily, those days are a memory. Reviews.org found that most people reach for their phones to check emails, TikTok, and texts over 144 times a day for over four hours and 25 minutes. It sounds like a lot, but that is less than two minutes per phone check.
When I started thinking about design trends and where the world is going, I thought a great place to start would be to ask the artificial intelligence source Chat GPT what it saw in its crystal ball.
This was the response…
“Interior design trends are constantly evolving, and new trends emerge each year based on various factors, including societal changes, technological advancements, and evolving design aesthetics.
“To stay up-to-date with the latest interior design trends for 2024, I recommend consulting interior design magazines, websites, and experts who regularly track and report on emerging trends in the field. You can also follow interior design influencers and professionals on social media platforms like Instagram and Pinterest to get a sense of what’s currently popular in the world of interior design. Additionally, visiting design shows and exhibitions can provide insights into upcoming trends in the industry.”
As a design influencer and professional who has visited quite a few design, building, and lifestyle-focused conferences this year, I have a lot to share. It has also been a great learning experience to have “LifeStyled” over 100 manufactured housing model homes this year. Being in homes hearing about what consumers think, and what their likes and dislikes are has been a huge advantage. Here are the trends I see being important as we move into 2024.
Artificial Intelligence vs Practical Knowledge
The design world is buzzing about artificial intelligence, and how it will impact the design community. As we found when we used Chat GPT to find design trends in the future, artificial intelligence can share what has been out there in the past, but can’t predict the future. There will still be a need for professionals who have had hands-on experiences with consumers and products to accurately predict where we will be heading into 2024 and beyond.
Where artificial intelligence can be useful is in designing new products. It is all about giving the right prompts and information to the service to be able to get something useful in return, and sometimes that doesn’t even work. MidJourney and other AI applications are a great way to try out new ideas or make mood boards without having the expense of designing a physical product.
Meaningful Design
The days of disposable incomes are long gone. Even if people are in the enviable position of having won the lottery, or otherwise having more cash than they need, consumers are thinking twice about how they spend. Are they likely to use that extra cash to buy a second home they can share with family and friends or to take that European vacation they have always dreamed about?
Meaningful design refers to the creation of products, services, or experiences that have a deep and significant impact on individuals and society. It goes beyond aesthetics and functionality to consider the emotional, cultural, and ethical dimensions of design. This will continue to be one of the top trends throughout the next decade.
In meaningful design, the focus is on addressing real needs and improving people’s lives. It involves understanding the context, values, and aspirations of the users or stakeholders and incorporating those insights into the design process. By doing so, designers aim to create solutions that resonate with people on a deeper level and evoke positive emotions or experiences.
Overall, meaningful design goes beyond surface-level aesthetics and functionality to create experiences that connect with people’s emotions, values, and aspirations, while addressing real needs and making a positive impact in the world.
Curated Collections
Maximalism is replacing that stark, minimalist look that we have been seeing the past few years. A word of caution — this is not an easy look to execute. More isn’t always better. What we see are carefully chosen objects that all relate and make a collection that is easy on the eyes. A mass of items that are pulled out of your warehouse just because they are paid for aren’t necessarily a collection, and is likely to turn off buyers.
Modern vs. Contemporary
Cold, contemporary spaces with white walls, abstract designs, and everything new are being replaced with modern spaces that can still have clean lines, but mix in warmer colors. Green, like living plants and similar warmth in the artwork, rugs, and accessories is bringing the natural world inside. The black and white farmhouse that we have seen for years is being replaced with a “Modern Farmhouse” that has warmer wood tones on floors and cabinets, adding texture, as well as furniture that you aren’t afraid to use.
Kitchen Colors
Color is back! In 2024, you will see a lot more colorful cabinets, countertops, and even appliances coming to a kitchen near you. An affordable way to use this trend in your homes is to add color with countertop appliances, pots, and linens. These are easily replaced but make your home on-trend.
Living Large in Small Spaces
Consumers are learning how to live in a smaller space without sacrificing their lifestyle of choice. The scale of furniture and accessories is critical to make a smaller space function well and not look crowded. The use of area rugs add color and anchors a space. Open-armed chairs, and sofas that show some leg are great ways to make a room more inviting. “Drink Tables” are replacing full-size end tables. Think about traffic flow when you are designing a room.
Separation of Space
With all of us working more at home, we have started to value our privacy more than ever. We create “Zoom Rooms” where the entire household doesn’t have to hear an online conversation, and where we can avoid the dog wanting to go out. We are seeing more study halls, too, that actually use a hallway to create a place for kids to do their homework or for a parent to create new Pinterest ideas.
Community Living
This is a huge growth area that our industry has owned for years, but site-built buyers and consumers are just now discovering the value of community living. There is an explosion in site-built “Build to Rent” communities where the homes most often are styled like townhomes with a narrow floorplan and at least three stories. There is little or no yard. A new community on a busy, noisy interstate highway in Dallas has four to six attached homes in each building and start at more than $3,000 a month. Our industry offers well-designed homes on a lot with no shared walls, no wasted spaces for stairs inside the homes, and a chance to own your own home while renting the lot. Which sounds like a better value and quality of life to you?
Precision Cooking
Consumers no longer settle for appliances that just turn on or off. They are looking for energy-efficient ways to cook that will extend the shelf life of their food. Consumers demand appliances that are affordable and functional. Appliance manufacturers are phasing out coil burners, and replacing them with glass top ranges that have come down in price and are more efficient. As we deal with global warming, having refrigeration that will keep the right temperature and humidity in them is critical. Beko Appliances just introduced HarvestFresh, which uses three-color technology to stimulate the daily sun cycle, preserving vitamins in fruits and vegetables, for a greater nutritional benefit and to keep produce fresh for up to 30 days.
Go Organic
We are reaching a tipping point where organic foods and products are the first choice of most consumers, and they aren’t shy about asking. People want to know what is in their food, and where it came from. Building products that are used in and outside our homes need to be eco-friendly, and we need to let consumers know that upfront. Low VOC (Volatile Organic Compounds) products are becoming a standard, and off-gassing is something that consumers have become increasingly aware of and worried about.
The manufactured housing industry has a huge opportunity in front of it in 2024 and beyond. Consumers are looking for better solutions, and we are poised to be their first choice for well-designed, affordable housing.
The national manufactured housing sector has been on an upswing for the past several years, and properties in the Northeast have posted similarly strong performance. While the bulk of the supply growth for the industry occurs in rapidly growing population centers in the South and the Southwest, the sector continues to expand in the Northeast, and the region is posting healthy operations performance.
There are some signs of slowing at the national level that emerged during the first half of this year, which should set the stage for relative outperformance in the Northeast region, which has been less reliant on rapid growth than in other parts of the country.
Elevated Occupancy Levels Highlight Strength of Demand, Stability of Operations
The first measurement of property performance that most operators and investors look at is the occupancy rate, and current totals showcase a very strong market. The national occupancy rate ended the first half of 2023 at 94.4 percent, ten basis points higher than one year earlier. The rate has been trending higher for the past several years, first breaking through the 90 percent threshold in 2017. Occupancy at the national level has increased in ten of the past eleven years, rising from about 85 percent from 2010-2012 to nearly 95 percent today.
In the Northeast region, long-term occupancy trends have been far more stable. The rate ended the second quarter at 94.3 percent, and the rate has held steady between 94 percent and 95 percent for the past five years.
Top states for occupancy in the Northeast region include Maryland and Virginia, where occupancy levels are 98.7 percent and 97.7 percent, respectively. Pennsylvania has the largest inventory of units in the Northeast, and the current occupancy rate in the state is 93.7 percent. Our team worked on the sale of three communities in Pennsylvania during 2023 that were all 95% occupied or higher. These communities ranged in size from 75-202 pads and were owned by long-term operators. During the tenure of their ownership occupancy did not dip below 90%, and always had a waitlist of prospective tenants. In all three cases, the buyers were looking to expand and add additional density to the communities as the affordable housing need in Pennsylvania is dire. This trend is set to continue as occupancy in Pennsylvania has increased by 30 basis points in the past 12 months, setting the stage for additional increases in the year to come.
Shipments of New Units Down Following Rapid Increases in Recent Years
The cost of all forms of housing has pushed higher over the past several years, increasing demand for less costly alternatives, including manufactured housing communities. One result of these trends has been a surge in the shipment volume of manufactured housing units. In 2022, more than 112,000 manufactured housing units were shipped within the United States, up more than 80 percent from one decade earlier.
To this point in 2023, shipment volumes have come down from their cyclical peak. During the first half of this year, 44,000 manufactured housing units were shipped, 29 percent lower than the total during the same period in the previous year.
The Northeast region typically accounts for some of the lowest inventory growth in the country. During the first half, shipments to the Northeast region reached approximately 4,000 units, down from 4,900 units one year earlier. Pennsylvania and New York combined to total more than 1,700 units, followed by Virginia (525 units), West Virginia and Maine (375 units each).
There are many different factors to consider when looking to invest in a manufactured housing community. There are great opportunities across the United States that will appeal to investors for different reasons. The Mid-Atlantic through the Northeast remains an excellent opportunity to explore investments in the manufactured housing space.
Home prices across the United States moved up again in September. The Federal Housing Finance Agency reported in late November reported a 6.1 percent year-over-year increase in home prices for September, up from a revised 5.8 percent increase the previous month.
The FHFA’s quarterly analysis revealed a 5.5 percent annual increase in house prices between the third quarter of the previous year and the corresponding period this year.
September home prices were up 2.1 percent compared to the second quarter of this year.
The report highlighted a moderate month-over-month price increase in line with recent patterns. Prices in September rose by 0.6 percent, slightly lower than the upwardly revised 0.7 percent increase in August.
Mortgage loan costs dipped to a two-month low last week after reaching nearly 8 percent in October, the highest level in more than 20 years. However, low housing inventory has effectively supported property prices, preventing significant declines.
Earlier this month, the Federal Reserve opted to maintain its benchmark overnight lending rate, holding steady after a climb from near-zero levels in March 2022 to the range of 5.25 percent to 5.50 percent in July 2023.
Analysts currently foresee no further rate hikes, projecting a potential rate cut in May next year. The Fed has indicated its intention to raise interest rates only if progress in curbing inflation stalls.
MHInsider is the leader in manufactured housing news and is a product of MHVillage, the top website to sell, rent, or buy a manufactured home.
Datacomp has published the September JLT Market Reports, mobile home park comps for manufactured home communities in Idaho, Minnesota, Oregon, and Washington, which include occupancy, home details, pricing specifics, and other vital data.
JLT Market Reports provide detailed research and information on manufactured home communities located in 187 primary housing markets throughout the United States. Reports include the latest trends and statistics, marketing programs, and a variety of other valuable management insights.
Datacomp maintains and provides the JLT Market Reports and is the nation’s top market data provider for the manufactured housing industry. JLT Market Reports are recognized as the industry standard for manufactured home community market analysis.
The manufactured housing market data published in the November 2023 JLT Market Reports includes information on investment-grade manufactured home communities. Altogether, reports from the four states include data representations on 293 “All ages” and “55+” manufactured home communities with 50,218 homesites.
What’s in JLT Market Reports?
Each JLT manufactured home community market report from Datacomp has detailed information about investment-grade communities in the major markets. The detailed information on manufactured home communities includes:
Number of homesites
Occupancy rates
Community pricing
Oregon rent control and next increase data
Community amenities
Vacant lots
Repossessed and inventory homes, and much more
JLT Market Reports also include management insights that rank communities by the number of homesites, occupancy rates, and pricing detail. Established reports show trends in each market with a comparison of November 2023 rents and occupancy rates to November 2022, as well as a historical recap of rents and occupancy from 1996 to the present date in most markets.
The November 2023 JLT Market Reports for Idaho, Minnesota, Oregon, and Washington manufactured home communities are available for purchase and immediate download online at the Datacomp JLT Market Report website, or they may be ordered by phone in electronic or printed editions at (800) 588-5426.
Each fully updated report for mobile home communities is a comprehensive look at investment-grade properties within a market, enabling owners and managers, lenders, appraisers, brokers, and other organizations to effectively benchmark those communities and make informed business decisions.
Assurant, a leading global business services company that supports, protects and connects major consumer purchases, today announced that it has partnered with manufactured housing lending disruptor Zippy, making it the preferred insurance provider offered on the Zippy platform.
Zippy’s digital loan platform, which launched in 2022, combines the power of technology and intuitive online design with banking best practices and unparalleled customer service to close loans in as little as five days. Assurant’s expedited quote process and systems integration capabilities make it a natural selection to be offered to buyers financing the purchase of a new or preowned manufactured home through the Zippy platform.
Through Zippy’s first-to-market full-stack digital lending platform, the company is providing an innovative solution for manufactured housing community operators and providing a modern and accessible experience for home buyers. Through innovative API connectivity, Assurant will offer its manufactured housing insurance product during the financing process to simplify the process and ensure that homeowners who purchase Assurant’s manufactured housing insurance are protected from many of life’s unfortunate events.
“We have a history of innovation at Assurant, it’s in our DNA,” said Dina Olsen, Assurant’s Senior Vice President of Manufactured Housing.
“Partnering with brands like Zippy, who share our forward thinking mindset, and are eager to push the industry forward, are important to our growth goals and helping homeowners protect their homes.”
“We’re excited about our partnership with Assurant because they were quick to understand our vision for improving the borrower experience for manufactured home loans, including the speed of closings by leveraging technology,” said Ben Halliday, CEO & Co-founder at Zippy. “Assurant’s history of innovation and customer experience focus are why we are proud to be their partner. Assurant and Zippy share the vision that manufactured housing will solve affordable housing prices and believe there is so much room for expanding the manufactured housing industry as a whole.”
For over a decade, commercial real estate investors had the wind at their backs when it came time to refinance their properties. In most cases, due to declining interest rates and increasing property values, borrowers were typically able to refinance into lower interest rates and pull out additional cash beyond their maturing loan balances. Additionally, shorter-term variable rates with flexible prepayment structures offered even lower rates than fixed-rate loans, allowing those borrowers who were comfortable taking on more interest-rate risk to boost their returns and execute cash-out refinances in intervals as short as two to five years. While variable rate loans typically require borrowers to purchase interest protection, such as an interest rate cap or swap, these hedging instruments remained relatively cheap to purchase during a low-interest rate environment. Variable-rate loan options also served as a backstop for borrowers whenever a sporadic short-term increase in fixed-rate Treasury yields occurred.
For many investors who had only experienced a low inflation, declining interest rate environment there was no reason to expect a change in long-term trends. The 10-year treasury yield reached nearly 16 percent in 1981 but persistent tightening from the Fed ultimately tamed inflation and led to a prolonged decline in Treasury yields with the 10-year index dropping to 0.52 percent in 2020. Removing the recent pandemic lows, the 10-year treasury yield hovered in the 2 percent range for most of the previous decade.
But today, things are different. After pandemic-related conditions and government stimulus resulted in inflation spiking to double-digit levels in some categories, the Fed ultimately made a dramatic shift in policy. Over the past two years, we have seen a drastic increase not only in U.S. Treasury yields (the index tied to most fixed rate loans) but also SOFR (which has replaced LIBOR as the index tied to most floating rate loans) after the Fed increased rates eleven times. Faced with the headwinds of higher fixed and variable interest rates, it is now more critical than ever for borrowers to evaluate how they plan to build and design their real estate debt portfolios.
Borrowers who are currently holding variable rate loans in their manufactured home community portfolios are not only paying higher interest rates than they originally started with, but are also saddled with higher costs related to purchasing interest rate caps, which are typically required by most lenders, including Fannie Mae and Freddie Mac (the Agencies). As it relates specifically to the Agencies’ variable rate loans, at the time of loan origination borrowers were often required to purchase either a 3-year or 4-year renewable interest rate cap. Recognizing the increased cost of interest rate caps as required by their programs, today both Agencies provide flexibility related to reducing the required term on renewal caps to as short as one year. Given the higher costs of interest rate caps in today’s environment, variable rate borrowers whose initial rate caps are nearing the expiration date would be wise to reach out to their loan servicer to see if a shorter-term, and therefore less expensive, interest rate cap might be an option.
As mentioned above, in prior years variable-rate debt was often viewed favorably by borrowers seeking shorter-term loans with low interest rates and prepayment flexibility. And for other borrowers, variable-rate loans served as a viable backup option during times when fixed interest rates spiked. But in today’s market, SOFR has risen to a level where the starting rates on variable-rate loans can be as much as 2 percent higher than longer-term fixed-rate loans. As a result of these high rates combined with the now higher costs of interest rate caps, demand for variable-rate loans has declined substantially. As a way to fill this void, the Agencies are now offering more aggressive underwriting and pricing on their 5-year fixed-rate structures; essentially providing this option as a proxy to variable-rate loans. For most transactions, they will underwrite to as low as a 1.25x minimum debt coverage ratio on 5-year loans and also provide flexible prepay options, such as 3 years of yield maintenance followed by a 1 percent prepayment penalty or 3 years of yield maintenance with the last two years of the loan term open to prepayment without penalty. Additionally, since these are fixed-rate loan structures, no interest rate caps are required, providing further cost savings versus variable-rate loan executions. A shorter fixed-rate term may also be a viable option for traditional fixed-rate borrowers who need to refinance into new debt but are forecasting that interest rates will be lower in five years as compared to where they are now and are therefore hesitant to lock in longer-term fixed-rate debt.
So, what about borrowers with properties currently encumbered by fixed-rate loans that are still a couple of years from maturity and have prepayment penalties?
Question Conventional Wisdom
Conventional wisdom would say it probably makes sense to hold fixed-rate loans to maturity since the existing interest rates on those loans are likely lower than what can be obtained in today’s market. But, perhaps this is when you might want to question conventional wisdom. As a first step, borrowers analyzing their existing debt portfolios need to ask themselves whether they believe interest rates will be higher at the time their loans mature. It is important to note that fixed-rate loans are typically subject to yield maintenance or defeasance prepayment penalties, and these prepayment penalties diminish over time assuming a steady or increasing interest rate environment. Given how drastically Treasuryyields have increased, fixed-rate loans maturing over the next two to three years with a standard yield maintenance prepayment structure may be able to be paid off with as little as a 1 percent prepayment penalty (the minimum penalty typically associated with yield maintenance) while loans subject to defeasance may actually be able to be paid off at a discount. For borrowers who are of the opinion that interest rates will be higher two to three years from now, it likely makes sense to refinance early if they can pay their loan off with a minimal prepayment penalty while at the same time locking in a new long-term fixed rate prior to rates increasing further.
Given we are experiencing a unique period in our economic history where we saw reignited inflation cause a dramatic shift in monetary policy, we believe this to be an optimal time to revisit your short and long-term assumptions on the economy and future interest rates. While the Fed is determined to battle inflation, there are some structural challenges that lay ahead such as a declining workforce and the risk of wage-price increases that may result in rates remaining higher for longer. We also suggest reviewing the terms of your existing loans for key prepayment provisions and dates and confirming that your real estate schedule is up to date. Developing a financial business plan is now more challenging, but we recommend starting by forming future assumptions on rates around your maturity dates and then designing your debt portfolio accordingly.
Tony Petosa, Nick Bertino, and Matt Herskowitz are loan originators at Wells Fargo Multifamily Capital, specializing in providing financing for manufactured home communities through their direct Fannie Mae and Freddie Mac lending programs and correspondent lending relationships. If you would like to receive future newsletters from them, or a copy of their Manufactured Home Community Market Update and Financing Handbook, the authors can be reached at tpetosa(at)wellsfargo.com, nick.bertino(at)wellsfargo.com, or matthew.herskowitz(at)wellsfargo.com.
U.S. home prices in August 2023 increased 0.6 percent from July, according to the Federal Housing Finance Agency’s monthly House Price Index.
Prices are up nearly six percent between August 2022 and August 2023.
“U.S. and regional house price gains remained strong over the last 12 months,” Dr. Nataliya Polkovnichenko, a supervisory economist in FHFA’s Division of Research and Statistics, said.
Indices Show Upward Monthly and Yearly Trends
All but one U.S. region had a monthly increase in home prices. The exception was the South Atlantic region, which experienced a 0.2 percent decrease, a “moderate weakness” as described by Polkovnichenko.
Year-over-year, the Middle Atlantic and New England had the most notable increases in home prices at 8.6 and 8.4 percent, respectively. All other regions posted a yearly increase between 2.4 and 8.3 percent.
While these increases are a slowdown from previous periods, including from double-digit growth in home prices in 2022, the continued upward trend is evident.
FHFA releases HPI data and reports on a quarterly and monthly basis. The flagship FHFA HPI uses seasonally adjusted, purchase-only data from Fannie Mae and Freddie Mac. Additional indices use other data including refinances, FHA mortgages, and real property records. All the indices, including their historic values, and information about future HPI release dates are available at FHFA.gov.
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MHInsider is the leader in manufactured housing news and is a product of MHVillage, the top website to sell, rent, or buy a manufactured home.
If you’ve watched any Food Network at all, you’re likely familiar with celebrity chef Robert Irvine and his show “Restaurant: Impossible”. Each episode profiles a struggling restaurant where Irvine and his crew swoop in to rehab the floundering enterprise with an updated menu, fresh decor, and a crash course in operations.
It’s a great show.
Unsurprisingly, many of the turnarounds are about the owners not having a good sense of their numbers. As is true in many industries, if you’re losing money on every customer, you shouldn’t plan on being in business very long.
The reality is, if you don’t understand the key metrics for your business, and know them well, you can’t possibly make good business decisions. This is especially true of marketing, where an endless array of advertising and promotional choices vie for our limited marketing dollars.
For the purposes of this article, we’ll focus not on how to analyze campaign performance but on what happens after an advertising campaign generates a lead. That’s where the serious numbers begin. As the final months of the year traditionally herald the beginning of a new budgeting cycle for most marketers in the manufactured housing industry, there’s no better time to brush up on some essential marketing metrics and focus on the most important marketing channels in the year ahead.
Cost Per Lead (CPL)
Quite simply, Cost Per Lead, or CPL, is the cost of generating a prospect. To calculate your CPL, divide your marketing spend by the number of leads acquired during the same period. You can calculate CPL at the campaign level, which is valuable for benchmarking campaign performance, or across all of your marketing channels as an overall benchmark. Of the two, analyzing CPL at the campaign level makes the most sense as it enables comparisons between marketing campaigns or channels. This enables you to identify the most cost-effective campaigns and make more effective budgeting decisions.
Lead Conversion Rate (LCR)
Your Lead Conversion Rate, or LCR, measures how successful you are in turning a prospect into a customer, whatever a customer represents to your particular part of the industry. In the case of a retailer, it would be a sold home. For a community, it would be a new resident. It is calculated by dividing the total number of conversion activities divided by the total number of leads, multiplied by 100. At the individual campaign level, it allows you to determine the ultimate effectiveness of specific ad campaigns or channels. At the organizational level, it reflects the effectiveness of your entire customer acquisition process.
Customer Acquisition Cost (CAC)
Customer Acquisition Cost, or CAC, measures all the expenses associated with bringing in a customer. This includes everything from advertising media costs to labor, production, sales commissions, and overhead. It is important to understand CAC to enable you to focus on the methods of customer acquisition that are most cost effective. Using this approach, it might make sense to pay a higher cost per lead from one lead source if the total acquisition cost is lower, compared to a lower-priced lead that incurs higher overall acquisition costs.
Average Customer Value (ACV)
This is an easy one. It’s how much a customer spends on average per transaction during a given point of time, such as over the course of a year or the term of a lease. If you’re a retailer, you typically have a large, one-time sale to a customer, so you need to calculate your average home selling price. If you’re a supplier, you would calculate your average customer value by adding up the average value of each transaction, multiplied by the frequency of orders over that time interval. For a community, you would calculate the value of the monthly lease multiplied by the lease term.
Average Customer Lifespan (ACL)
Average Customer Lifespan measures how long a customer stays a customer. This metric is important for two reasons. First, it is a component of calculating the lifetime value of each customer, either individually or in aggregate among all customers. Second, it provides important insights into customer turnover, or churn, which is the portion of customers that cease to be customers over a specific time period. To determine your ACL, first calculate the number of days between the first activity that created a customer and the last activity of that customer to determine an individual customer lifespan for each customer. Then total all the customer lifespans and divide by your total number of customers to arrive at the ACL.
Lifetime Value (LTV)
Not to be confused with Customer Lifetime Value (CLV), which measures the lifetime value of an individual customer, Lifetime Value, or LTV, measures the average lifetime value of all customers in aggregate. Arguably, it is the most critical metric of all because it shows how much you can afford to spend on customer acquisition and retention. LTV helps you make informed decisions about marketing initiatives as well as evaluate investments that improve customer value. That said, there are several ways to calculate LTV. In its most straightforward form, the calculation is to take your Average Customer Value (ACV) and multiply it by your Average Customer Lifespan (ACL). To get the most accurate number, however, you will also want to multiply the final number by your gross margin. To illustrate, if you determine that the lifetime value of a customer is $15,000 with a 30 percent gross margin, then your LTV is $5,000.
There are many enviable goals in marketing, visibility, and awareness among them. In the end, it comes down to one thing: what makes the cash register ring. By understanding these key metrics, you too can make better marketing decisions to make that register ring louder and more often. Oh, sweet music.
More than 1,500 manufactured housing professionals are expected in Las Vegas April 7-9 as the Manufactured Housing Institute’s Congress and Expo returns to the...
With more homes, more exhibitors, and more buzz than ever before, the 2026 Biloxi Show is expanding, and fast.
The Biloxi Manufactured Housing Show &...
