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Designing Your Debt Portfolio

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Contributed Content
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Manufactured home community debt portfolio commercial real estate investors factory built housing manufactured homes manufactured housing lending Wells Fargo

By Nick Bertino, Tony Petosa, and Matt Herskowitz

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 Treasury yields 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.

House Price Index Shows Yearly, Monthly Gains Across U.S.

By
Sean Vichinsky
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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.

It’s All About the Numbers

By
Darren Krolewski
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Manufactured Housing Industry Marketing Metrics MHInsider magazine MH Professionals
Marketing metrics that matter most.

The Essential Metrics Every Marketer Should Know

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.

Why Selling Now Is So Much Better Than in 2020

By
Contributed Content
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Selling manufactured housing communities now versus 2020 handshake desk

By James Cook

Manufactured housing industry manufactured home communities brokerage
James Cook

At first glance, this title may sound crazy, but there is a new paradigm that I have been observing, and watching clients enjoy for the last nine months or so. When you get a good appraisal or broker’s opinion of value today, it will almost certainly come in 15 to 25 percent below the peak of 2021 or early 2022, and in most of our client’s cases, this translates to a significant amount of money, millions usually.

So how can I say this is a good thing for you, the seller?

Well, let’s first discuss why commercial real estate values are down, before you move on and assume I am crazy.

Interest rates have increased from a 3 or 4 percent to 6 or even 8 percent within the last 18 months.

Believe it or not, this has a pretty big impact on MHC values. Why is that when all the buyers are using cash? Well, there are a couple of things to note. While buyers may close all-cash sometimes, almost every major buyer eventually finances their purchase. So, the cost of debt doubling, on let’s say a $10 million purchase, is huge. When we used to sell great properties at a 4 or 5 percent cap rate, a $400,000 net income could translate to a $10 million in value (i.e., a 4 percent cap rate). Today, a loan for 65 percent of that purchase price, or $6.5 million, will cost $390,000 in just interest, assuming a 6 percent rate. Now, if you want to amortize the loan, the all-in payment would be closer to $480,000 on a 30-year amortization schedule. So, as the seller of a property producing $400,000 in net income, you ask the $10 million price tag you were offered two years ago, or even a year ago, by the laggards in the market. To do so, the buyer would have to withdraw $3.5 million, plus transactional costs from their treasury or savings account, and then lose $80,000 a year after debt service or make a negative rate of return of roughly 2 percent.

This scenario is very simplified, but you get the idea. No buyer with millions in equity today is likely to make that choice. Then you ask, why not just pay all cash?

Well, equity today is making 8-plus percent, typically with additional upside, while the deal you are offering only pays a 4 percent rate of return, with work and risk. The buyer can buy a 5-year, or 10-year treasury note and make a state tax-free income of 4 to 4.5 percent (as of mid September). Therein lies the problem, to which there are only two solutions; lower your price and/or have TONS of upside remaining in your property.

Sorry to go into a wonky math lesson, but I like to use examples instead of generalizations. Here’s a little proof I may be right. The fact that ACROSS ALL SECTORS of commercial real estate sales have fallen by 70 to 80 percent in 2023.

That is the worst slowdown in almost two decades.

The market is screaming that values are down, even though no seller wants to hear it. To add insult to injury, $2 to $3 trillion in commercial loans balloon by 2025, and the debt markets are the tightest they have been since 2008.

Roughly half of those loans will default and either end up in an “extend and pretend” situation or foreclosure. This has lenders reeling and very nervous about putting new money on the street. Add that to the fact that every treasury they bought and every loan they made in the last 4 to 5 years has had to take a write-down, which is the kind of thing that caused SVB, Signature, and then First Republic to fail.

While no owner is happy to hear their property is down by 20 percent, or more in some cases, I will try to layout below why they are in a much better spot selling that same manufactured home community today for $8 million than they could have been in two years ago for $10 million.

The Good News and Why Now Is the Time to Act

With all that perspective, let’s accept one thing — 2020, 2021, and early 2022 were a major bubble. The Fed created this bubble and burst it, and I can’t figure out why they don’t just take a long pause on rate hikes. The speed and magnitude of the hikes are damaging the banking industry and, in turn, commercial real estate, and will eventually cause a wave of stress across the entire economy.

OK, let’s get to the good news. If you get real, right now, accept the current market pricing, hire the right broker, run a process, and get bids from all the real buyers at once. There is still cash in the transaction, many times more than 80 percent. The main reason this makes sense is that today your cash actually has value. That is the good news. Two years ago, you would have sold, paid your taxes, and probably netted $7 million post-tax (using our $10 million deal and assuming you are a long-time holder, fully depreciated, no debt, etc.). The treasury markets were yielding an average of 1.5 percent, so on your $7 million, you would have netted a whopping $105,000 a year. Here is the fun part. When treasuries went to 4-plus percent the cash value of those treasuries would be decimated. Compare that with an owner selling the same deal today for $8 million, netting $5.6 million in post cap gains, recapture, the Affordable Care Act, and then purchasing 4 percent treasuries. Their net income is $224,000, or two times higher than before.

Here is the clincher… many people almost expect the Fed to tear at the economy like they have the banking system. Then, they expect the Fed to reverse and lower rates. Now, that could take 12 or even 24 months, but your treasuries at 4 percent yield will go up nicely in value.

The take-home is this: You can’t time the market, top or bottom (as Buffet has always said), but a seller getting 80 percent of their highwater-mark price today is a better deal for seller than the buyer. Almost anywhere sellers put their money in 2020-2022 it would be down, and in many cases, more than 20 percent. So, you made the right move to hold past the peak, but don’t stay too long at the party.

I think we are in the perfect spot in the market where an owner can still sell for a good number, buy some treasuries, and sit back and relax. There could be some bargains coming soon or your value could take a much bigger hit depending on what the Fed does on hikes in the next few months. Banking is really in a tough spot and while we are still getting loans done, it is not easy, and debt is way more expensive.

How You Can Take Advantage

So, how are we getting deals done?

Volume is down and listings are down, so funds and buyers still in cash that must be deployed are jumping on the best properties and the ones with a lot of upside. Then, in “market deals”, where the seller doesn’t want to take as big of a discount, we are seeing them agree to owner financing. We are seeing as many seller-financed deals this year as we have seen in the last 10 years. This can be a win-win since the seller gets their price and surety of closing since there is a guaranteed lender, and buyers are often willing to put up non-refundable money much faster with the lender-risk removed. The seller also gets a pre-capital gains-tax return that is above the treasury yield, and the buyer gets a rate that is lower than the market rate. Spreads between treasury rates and borrowing rates are pretty high, mostly 200-300 basis points, in some cases 400 basis points, which is why financing is so hard on returns.

This makes for a perfect opportunity to carry paper and take advantage of that delta while solving both the buyer’s and seller’s challenges.

About the Author
James Cook is the national director of brokerage for Yale Realty and Capital Advisors. He entered the manufactured housing and RV property asset class in 2005 as a licensed agent listing homes for a local investor. In 2012, he founded the fully integrated finance and brokerage shop and has accumulated transactions exceeding $1 billion. He offers perspective at a national level, providing insight into the niche industry.

House Spending Bill Impacts DOE Funding

By
Patrick Revere
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US Capitol building house of representatives manufactured housing department of energy

House Unanimously Passes Amendment Restricting DOE Funds for Manufactured Housing Energy Standards

The U.S. House of Representatives unanimously approved an amendment proposed by Rep. Ralph Norman, R-S.C., that would bar the use of Department of Energy funds to enforce the department’s energy standards for manufactured housing. The move came as part of House deliberation on the DOE funding bill for 2024.

There was no opposition to the amendment. It went through on a voice vote, one of the few amendments to do so.

The industry’s national advocacy group, the Manufactured Housing Institute, has strongly supported the measure, and expressed gratitude to state association partners for helping garner the overwhelming support from the House.

“While MHI is supportive of improving energy efficiency standards for manufactured housing, the message to Congress is that halting implementation of the DOE’s flawed approach and re-affirming HUD’s long-standing exclusive control over federal manufactured housing standards is the best way to ensure the timely adoption of improved energy efficiency standards for manufactured housing while preserving affordability,” MHI said to members in a prepared message.

In related news, the House Energy and Commerce Committee’s Energy, Climate, and Grid Security Subcommittee recently passed legislation to repeal Section 413 of the Energy Independence and Security Act of 2007, and nullify the DOE’s final energy standards rule.

The need for legislative intervention arises from the fact that DOE standards were developed without substantial consultation with HUD. Rep. Norman’s measure and the other amendments still need to secure Senate and White House approval.

Louisville Manufactured Housing Show Opens Attendee Registration

By
Sean Vichinsky
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The Midwest Manufactured Housing Federation has opened registration for the 2024 Louisville Manufactured Housing Show, taking place Jan. 17-19 at the Kentucky Exposition Center in Louisville, Ky.

For over 60 years, the three-day show has been the precursor to the spring selling season and offers manufactured housing professionals from all corners of the industry the support and resources needed to make 2024 a strong sales year for their business.

“Over 3,000 industry professionals come to Louisville every January to tour the latest model homes on display and connect with fellow builders, developers, retailers, community owners, operators, and installers,” MMHF Chairman Eric Oaks said. “We’re excited to invite everyone back to Louisville for yet another year of industry networking and touring the latest innovations in manufactured housing.” 

The event will once again take place at the Kentucky Exposition Center in Louisville where industry professionals can view dozens of the latest model homes from the top manufacturers in the industry. Attendees at The Louisville Show can view more factory-built homes than any other indoor event in the U.S, as well as learn from industry leaders as they share their expertise and insights for 2024 and beyond.

Attendees can visit TheLouisvilleShow.com/Register to register to attend the event, as well as to sign up to receive more information about The Louisville Show, including sponsorship opportunities.

Those interested in exhibiting at the event are urged to visit TheLouisvilleShow.com/exhibitors or call (616) 888-8030 today. 

Attendees should also visit thelouisvilleshow.com/hotel to book their lodging for The Louisville Show and save on total attendance costs.

“Once these rooms are gone, they’re gone for good,” Darren Krolewski, co-president and chief business development officer of show manager MHVillage/Datacomp, said. “Lodging has almost always sold out ahead of The Louisville Show, and we’re expecting a sell-out event this year.” 

The Louisville Show is an industry trade event not open to the general public. For more information about the event, visit TheLouisvilleShow.com.

Bedrock Wireless Offers Construction Monitoring System

By
Contributing Writer
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red house developing new home site manufactured home construction site camera tech
Bedrock Wireless provides remote oversight of new home sites or manufactured home development.

By Chris Meyers

For communities across the country looking to expand, site security can often be high on the list of concerns. Infilling with new homes, not to mention the construction of a clubhouse or other robust amenities, is a lengthy process. When crews have gone home and nobody is left to monitor the new phase, trespassing, potential vandalism, and theft become a greater possibility.

Community operators who are looking for ways to monitor their construction sites, ensure the security of a property, and maintain budgets by reducing loss now have a new, simple, yet high-tech offering to consider.

Bedrock Wireless offers a product with comprehensive site monitoring that allows users to constantly keep an eye on their assets at the property and in the position that is most important to them.

The new system is made up of four cameras, each with 360-degree coverage, mounted on a 4×4 wood post. Despite its simplicity, Bedrock offers a range of features that maximizes effectiveness and usability. The system allows live, online check-ins at any time. Additionally, it has an AI-based motion recording and floodlight system designed to recognize people and vehicles, providing constant surveillance even when its user is not watching. Furthermore, Bedrock Wireless is allowing unlimited accounts and sharing for their device, as well as unlimited video storage, smart device connection, an automated email upon power loss, and even a timelapse feature.

“The device itself is waterproof and can operate between temperatures of negative 40F ° and 115F°, making it quite robust,” Bedrock Wireless founder and CEO Stephen Smith said. “It weighs in at around 25 pounds, allowing ease of transport.”

The device is plugged in for power and has battery backup that lasts two hours.

The cameras have a field-of-view of 110 degrees, and can view as far as 150 feet in the daytime and — with built-in infrared capabilities — around 70 feet at night. Each camera has a resolution of four megapixels, higher resolution than standard definition cameras.

Overnight the system also makes use of flood lights to illuminate any suspected trespassers. Finally, this system comes in at $350 a month, making it well within the budgets of community operators looking to expand.

“The Bedrock Wireless camera system is simple and easy to use, while being sturdy and reliable,” Smith said. “It is a valuable tool for manufactured home community operators in the midst of expansion or improvement projects. With its constant surveillance, threat deterrence, robustness, and ease of access, this system provides a cost-effective solution to the security concerns.”

MHInsider is the leader in manufactured housing news and is a product of MHVillage, the top website to buy, rent, or sell mobile and manufactured homes.

Job Gains Nearly Double Expectation

By
Patrick Revere
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teleworker typing hot jobs market manufactured housing attainable homes factory built
The U.S. economy added nearly double the number of jobs anticipated in September.

Consumer Spending Follows Suit

The September jobs report surprised with nearly double the gains analysts anticipated, picking up more than 336,000. The consensus was for something in the neighborhood of 150,000. The unemployment rate came in at a steady 3.8 percent, up 0.1.

Average wages were up 4.2 percent year over year and down 0.2 month over month.

“Some might interpret these data as a reason to take the risk of a recession off the table, but we don’t agree,” Brian Wesbury, chief economist at First Trust Advisors said in a letter to readers. “The labor market is often a lagging indicator and we expect the economy (real output) to noticeably weaken before employers stop hiring, on net.”

The Federal Reserve likely anticipated another jobs report with numbers under 200,000, and the “hot report” will change the conversation. There are growing concerns that yields are surging as the economy continues to be slow to respond to increased rates. The FOMC meets again in November.

In September Jerome Powell, chairman of the Fed, said it would continue to look for softening in the job market.

“Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response,” Powell said.

Consumer Spending Up 0.7 Percent

Consumer spending also surprised analysts, doubling expectations. September spending was up 0.7 percent month-to-month and 3.8 percent year-over-year.

Advance estimates of U.S. retail and food services sales for September 2023, adjusted for seasonal variation and holiday and trading-day differences… were nearly $705 billion, up 0.7 percent from August and up 3.8 percent from September last year. 

Total sales for July 2023 through September 2023 were up 3.1 percent from the same period a year ago. The July 2023 to August 2023 percent change was revised from up 0.6 percent to up 0.8 percent.

Retail trade sales were up 0.7 percent from August 2023, and up 3 percent compared with the same month last year. Nonstore retailers were up 8.4 percent from last year, while food services and drinking places were up 9.2 percent from September 2022.

MHInsider is the leader in manufactured housing news and is a product of MHVillage, the top marketplace for manufactured and mobile homes.

Everything is AI-Some

By
Darren Krolewski
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ai help digital bot in hand ai marketing manufactured housing
Let AI help optimize your marketing efforts.

Unleash the Power of Artificial Intelligence for Your Property Marketing

If 2023 has been a year of anything, it’s artificial intelligence. Human history hasn’t seen a rise in popularity this profound since New Kids on the Block hit the road for the “Hangin’ Tough” tour. 

Just as Aug. 29, 1997 was immortalized in the film “The Terminator” as the day computers become self-aware and decide to take out humanity, Nov. 30, 2022 will forever mark the day when artificial intelligence, or AI, began to reshape business as we know it. That’s when ChatGPT, a large language learning model-based chatbot developed by OpenAI, became available to the public. What’s happened since has been more dramatic than even Hollywood could imagine.

Not even a year later, a third of the companies in the annual McKinsey Global Survey say that their organizations are using generative AI tools regularly in at least one business function. In fact, according to Forbes, the market for AI products and services is projected to reach a staggering $407 billion by 2027.

The rush of enthusiasm to capitalize on AI-based products and services has been compared to the early growth of the internet, as businesses in every industry race to unveil innovative AI-based solutions to help their customers save time and deliver better results.

For the real estate and building industries, AI is already emerging as a game changer, offering numerous possibilities to automate routine marketing functions, improve response times, and better connect with prospects.

Here are some of the best ways that those entrusted with the marketing of homes and properties can use this emerging class of marketing tools to make everything more AI-some.

Let AI Talk to Your Prospects and Residents

One of the best applications for AI is handling repetitive tasks. Chatbot platforms such as Drift® use conversational AI to qualify prospects, respond to routine inquiries, and even schedule appointments. Just a few years ago, chatbots required massive databases of possible responses and significant setup to have relevant conversations with prospects. Now, AI-based analysis of millions of conversations has made it possible for chatbots like Drift to give incredibly realistic and helpful responses with minimal training. The end result is more productive community managers and sales agents, who can spend less time fielding basic inquiries and more time working with the most qualified prospects.

Let AI Help You Become a Better Content Creator

If you’ve ever struggled with writing a blog post or a listing description, AI is here to help. Tools like ChatGPT can be great for overcoming writer’s block by coming up with potential ideas, outlining topics, or turning a few bullet points into a short paragraph. A word of caution: AI writing tools can be decidedly generic, and not entirely original. Because these models learned by analyzing existing content, you should only use generated text as a starting point for your own writing and carefully fact-check any references. More robust content creation tools, like Jasper®, promise to avoid such limitations by combining multiple AI-models and learning your brand voice through analysis of your own previously written content and documents. Tools like Jasper are also better suited to create content for a greater range of use cases, such as blog posts, personalized emails, or ad headlines.

Let AI Decorate Your Model Homes

Nothing shows prospective buyers the potential of a home like one that has been professionally staged and decorated. According to a survey by the National Association of Realtors®, 82 percent of sellers reported that staged homes sold faster and at higher. Unfortunately, few marketing budgets allow for furnishing and decorating every home in inventory. That’s where AI staging tools like Virtual Staging AI come in. Virtual Staging AI overlays professional furnishings and décor into the photos of empty rooms you upload. While virtual staging services have been around for some time, AI has decreased turnaround and costs, making the staging of every home a virtual no-brainer.

Let AI Put You in the Video Business

A survey by Livestream found that 80 percent of consumers would rather watch a video than read a blog post. When you combine that with research by KISSmetrics that concluded that calls to action get 380 percent more clicks when placed in videos, there’s a strong case to be made for using videos in your marketing. Yet creating and editing videos can be incredibly time-consuming and require specialized software. Enter AI tools like Pictory, which promise to automate video production by helping you write scripts and turn your text or existing visuals into professional video content. Just upload video footage or photos and Pictory will help you edit it into videos that can be used on your website, social media, or email marketing.

Let AI Help You Become More Social

If you can’t envision what it would be like to turn over your social media accounts to AI, fortunately, there’s Buffer. This popular social media management platform offers a suite of tools to grow an engaged audience, determine what and when to publish, and automate your workload while keeping you in control. Buffer’s AI assistant helps to come up with ideas for social posts, repurpose content across multiple social networks and even translate social posts into other languages. The key phrase here is assistant. While it won’t fully run your social media accounts, it will help you improve your social media content and save you precious time in the process.

In just shy of a year since the public launch of ChatGPT, AI-driven tools have already shown the right stuff to become a transformative force for marketers. From enhancing customer interactions and lowering response times, to creating more relevant content, and increasing efficiency, AI promises to unlock new capabilities step-by-step in the ever-evolving field of marketing.

MHInsider is the leader in manufactured housing news and is a product of MHVillage, the top marketplace for manufactured and mobile homes.

Skyline Champion Closes Deal for Regional Homes

By
Patrick Revere
-
Sky Champ regional homes acquired manufactured housing south
Skyline Champion shows a new home from its Genesis product line at the MHI Congress and Expo in Orlando during the spring of 2022.

The deal for Regional Homes, a builder with three manufacturing facilities in Alabama and 43 retail centers across the southeast, has been finalized by Skyline Champion Corporation for approximately $313 million.

“We are excited to announce the closing and to welcome Regional Homes to the Skyline Champion family,” Skyline Champion Corporation President and CEO Mark Yost said. “We believe Regional Homes is an excellent strategic fit given their customer-centric selling approach which goes together with our ongoing efforts to enhance our customers’ buying experience. Regional Homes’ strong presence in Alabama and Mississippi strengthens Skyline Champion’s market positioning as a leading provider of attainable housing solutions by expanding our captive retail and manufacturing distribution in this large region. We expect this transaction to generate solid returns over time with meaningful stakeholder value creation from day one, supported by Regional Homes’ attractive margin profile, its talented team, as well as available synergy capture.”

Regional Homes expands Skyline Champion’s presence in the South. Headquartered in Flowood, Miss., Regional Homes employs 1,200 people. Since its founding in 2006, Regional Homes has sold more than 30,000 manufactured homes and provided professional services including site preparation, installation, furnishing, and maintenance. It built about 5,000 new homes and had estimated revenue of $523 million in its last full year.

Heath Jenkins, the owner of Regional Homes, said Champion’s goals and operating style are an ideal fit for the company.

“This transaction provides a significant opportunity to make a positive impact for our customers and employees,” Jenkins said. “The team at Skyline Champion has been able to witness the unique culture we have developed at Regional Homes firsthand. Their leadership has shown tremendous support in our abilities, but most of all, our people — who are what make this company so special.

“I’m confident that with these alliances, we are on the path to something great,” he said.

Skyline Champion, the second-largest builder in the industry and the largest public company among its competitors, recently announced a partnership with ECN Capital Corporation to extend the company’s access to capital through a $1.14 billion merger with Triad Financial.

The purchase price was approximately $313 million, net of cash acquired, plus assumed debt, primarily related to inventory floor plan liabilities, of $93 million. In addition to the purchase price, the transaction is subject to an earnout provision as well as customary net working capital adjustments. Skyline Champion funded the acquisition with cash on hand and $30 million of the company’s common stock.

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