The Federal Housing Administration (FHA) on July 30, 2021, announced an extension of its moratorium on evictions for foreclosed borrowers and their occupants through September 30, 2021, and noted the expiration of the foreclosure moratorium on July 31, 2021. This extension is part of President Biden’s announcement on July 29 that federal agencies will use their authority to extend their respective eviction moratoria through the end of September, which will provide continued protection for households living in federally-insured, single-family properties. FHA’s eviction moratorium extension will avoid displacement of foreclosed borrowers and other occupants who need more time to access suitable housing options after foreclosure.
“We must continue to do everything within our authority to make sure that foreclosed borrowers who are impacted by the pandemic have the time and resources to secure safe and stable housing, whether it’s in their current homes, or by obtaining alternative housing options,” Principal Deputy Assistant Secretary for Housing Lopa P. Kolluri said. “We don’t want to see any individuals or families displaced unnecessarily while trying to recover from the pandemic.”
With today’s announcement, mortgage servicers must continue to halt evictions for FHA Single Family Title II forward and Home Equity Conversion Mortgage (HECM) foreclosed properties, except for those properties that are legally vacant or abandoned.
Mortgage servicers may initiate or continue foreclosures in accordance with FHA requirements once the Single Family foreclosure moratorium expires as planned on July 31, 2021, but may not evict a foreclosed borrower or other occupant.
The CDC eviction moratorium allowed to expire at the end of July has been reinstated provisionally “in counties with heightened levels of community transmission in order to respond to recent, unexpected developments in the trajectory of the COVID-19 pandemic, including the rise of the Delta variant.” The CDC said its extension of the eviction moratorium is intended to target specific “areas of the country where cases are rapidly increasing, which likely would be exacerbated by mass evictions.”
“Throughout the pandemic, MHI has worked with a coalition of national housing industry organizations to call for rental assistance to reach those in need and oppose a blanket federal moratorium on evictions,” the Manufactured Housing Institute said Aug. 3 in a statement on the extension. “The coalition is calling on the White House and Congress to focus on getting the nearly $50 billion that has been made available in federal Emergency Rental Assistance to those residents and housing providers in need.”
Manufactured Housing Industry Transaction Being Finalized, Planned for Completion in October
Cavco Industries has signed a binding offer for the purchase of Commodore Homes, the nation’s largest independent manufactured home builder.
Cavco is traded on the Nasdaq under the ticker symbol CVCO.
The scheduled Commodore acquisition is expected to be complete in October. The acquisition provides an increased market presence for Arizona-based Cavco in the midwest and mid-Atlantic markets, as well as an entry to the northeast housing market.
The purchase price for the acquisition is about $150 million, though pricing adjustments are anticipated in the months to come.
Cavco President Bill Boor said he and other executives with the two companies have been meeting and will continue to meet as filings are made and the transaction is made final. Part of the filings and approval is a regulatory review.
“We don’t think there is an issue created by this transaction, mostly because it really is a new territory for us. We have done very little business to this point in the northeast,” Boor said. “And a lot of the Commodore product is modular, and that’s something we only have going in one plant currently. We have new geography, and new product in the transaction so we don’t expect a problem with anti-trust.”
He said the daily agenda is 100% getting ready for the transition.
“We at Cavco have a long history of acquisitions, and we typically want to keep people in positions, but there are bound to be areas of duplication where we might make a shift,” Boor said. “Even if a position isn’t changing, there are different administrative processes. There’s a lot of work that goes into figuring out what we’re going to focus on day one, day 30, and in six months, how are we going to bring these two companies together?”
Acquiring Commodore means Cavco will assume and operate six new manufacturing facilities, two retail locations, and a home finance organization.
Boor said Commodore brands should remain intact following the acquisition, as has been the case with Fleetwood a dozen years ago and Palm Harbor about 10 years go.
“We do not intend to change them,” he said. “Those brands have a lot of value for the dealers and for homebuyers in the market.”
Boor praised the vision and work ethic developed at Commodore under Barry Shein’s leadership. He said the company has a reputation for quality, design, customer relationships, and integrity that is very consistent with Cavco’s philosophy and approach to doing business.
“This deal took quite a while to put together and the upside is that we really got to know each other really well,” Boor said. “They’re very knowledgeable and very good people for us to be working with.”
Commodore builds manufactured homes in two states — Indiana and Pennsylvania — under the brand names Commodore Homes of Pennsylvania, Commodore Homes of Indiana, Colony Homes, MidCountry Homes, Pennwest Homes, and R-Anell Homes. The company has about 1,200 employees and operates across the northeast, midwest and mid-Atlantic regions. Its retail operations are in Indiana and New York.
Commodore generated net sales of approximately $258 million and sold over 6,600 modules, equating to over 3,700 homes, in the last 12 months, according to a joint press release issued by the companies.
Commodore President and CEO Barry Shein said he and his team feel they’ve found a great fit with Cavco.
“Based on their vision for the industry and business philosophy, I have complete confidence that this is the right move for our dedicated associates, our valued suppliers, and our long-time customers,” Shein said. “I offer my full support to ensure a smooth transition and a successful future for Commodore and its employees as part of the Cavco family.”
Boor said he anticipates a good blend of business practices prevailing from the transaction.
“There are huge opportunities in operations. A lot of times when one company buys another there’s a tendency to come in and say you’re going to implement all of operating procedures across the new locations,” Boor said. “The really interesting thing is that Commodore does some stuff in manufacturing that I am really looking forward to investigating and bringing into all of our plants.”
In a separate announcement from Cavco earlier in July, the company said it has completed a 22,400 square foot expansion of its Palm Harbor operating facilities in Forth Worth, Texas. Eric Fletemeyer, general manager for the facility, said the added space means six new stations for homebuilding.
“Our plant will enjoy increased output, less rework, improved drying times, fewer delays, and fewer defects, while helping to create a highly efficient and employee-friendly workplace,” he said.
A SECO Planning Committee member speaks with an exhibitor at SECO19 in Atlanta, Ga.
The gathering’s second year going virtual will cater to hundreds of mobile home community owners and managers
The SECO National Conference of Community Owners announced today that registration is now open for SECO21. Registration for the Sept. 27 – Oct. 1 event includes an early bird discount for manufactured housing professionals who register before July 31.
Now in its 11th year, SECO has been a landmark conference “for community owners, by community owners,” providing the opportunity to learn, interact, network, and shop the latest manufactured housing offerings. The event has grown since 2009 into a national event representing all parts of the industry, with an emphasis on small to midsize community owners.
“We’ve decided to host SECO21 virtually following SECO20’s strong success as our first virtual event,” SECO Co-Founder and organizer Spencer Roane said. “The virtual format allows for an even wider network of industry professionals to network and take part in our roundtables, presentations, and panel discussions.”
Register Today for a Discounted All-Access Package
SECO21 attendees who register before July 31 can take advantage of a discounted $399 Early Bird All-Access package. The package not only includes an all-access pass to SECO21, but also event recordings from both SECO21 and SECO20 (a $746 value). SECO20 event recordings will not be made available with any other ticket. All-access tickets to SECO21 will increase to $499 on August 1.
After SECO20 attracted nearly 500 attendees, SECO21 expects around 700 attendees to take part this year, which will be its second as a virtual event. Beyond attendance, SECO21 has several exhibitor and sponsorship opportunities still available for industry professionals and organizations. Sponsorship packages are available at the bronze, silver, gold, and platinum levels.
This year’s conference is once again a partnership with MHVillage, the leading marketplace for manufactured and mobile homes.
“We’re working hard to make SECO21 another standout success for community owners across the nation,” Mark Dollan, Vice President of Marketing for MHVillage, said. “Community owners and managers have relied on SECO time and time again to deliver the insights and industry updates that they expect, and we’re ready to exceed those expectations.”
For more information on SECO21 or to register online, visit secoconference.com. SECO21 is an industry conference for manufactured housing professionals and is not open to the general public.
About SECO National Conference of Community Owners The SECO National Conference of Community Owners was founded 11 years ago by a small group of committed manufactured housing professionals and has been held each year near Atlanta. The gathering is dedicated to building an industry environment and culture that looks to share best practices and help form new ideas. SECO, a tax-exempt 501(c)(3) organization, was created for community owners, by community owners. All proceeds go toward planning and programming for the next year’s national gathering. Any excess revenue supports the Veterans Assistance Fund founded by SECO organizers in 2018 in support of veterans and first responders across the U.S
Chateau at Onion Creek is a Roberts Communities all-ages offering in Austin, Texas.
Scott Roberts, of Roberts Communities and Roberts Resorts, will provide the keynote talk at the final Networking Roundtable, an educational networking event for manufactured housing professionals celebration of the career of the event founder George Allen.
Allen founded the Roundtable 11 years ago and organized meet-ups annually in alternating locations. The event provides networking, discussion of important industry topics, and the opportunity to make deals.
Networking Roundtable attendance is limited, so register today to secure your place.
The Roundtable attracts many of the most engaged and knowledgeable leaders in the business, from community management, to finance, retail, manufacturing, and services. Each year provides a schedule of panels and speakers covering industry trends and topics, as well as an opportunity for each attendee to introduce themselves and their company to the attendees.
Scott Roberts is an industry veteran who runs a generational business from Austin, Texas. The organization’s properties are award-winning communities that meet a wide range of resident needs.
Roberts will talk about his company’s development of raw land into land-lease communities in several regions of the U.S., noting the uptick of activity in new development in general. For the first time since the mid-90s, Roberts said, a significant amount of new land is being developed for factory-built affordable housing.
The venue for the final Networking Roundtable is positioned in the middle of Nashville’s historic Music Row. The event will have a limited amount of exhibit and sponsorship positions. The single day of programming will include a state of the industry address by Allen, the Roundtable keynote address, a cocktail mixer, a celebratory dinner, and a special presentation to cap the evening.
The Biden administration and the Centers for Disease Control and Prevention again extended a moratorium on housing evictions through the end of June 2021 just days before the prior moratorium was set to expire on March 31. As housing advocates continue to convince the U.S. and individual state governments to extend the moratorium through the pandemic, more than 10 million Americans are behind on rent or mortgage payments, and more than five million say they are at risk of eviction or foreclosure, according to a recent Census Bureau survey.
But one of the most underreported fallouts from seemingly interminable government COVID rent moratoriums and rental assistance programs, is the impact that more than a year of “bad” rental debt is going to have down the road for both landlords AND tenants.
As a reminder, rent moratoriums do not erase the contractual obligation of people to pay their rent. Neither does it erase the obligation landlords have to pay their mortgages.
There is no magical black hole for the debt that has accumulated during this period of government-sanctioned rent suspension. To be frank, it’s going to affect all of us, landlords and property owners as well as renters and taxpayers.
— Attorney Matthew I. Paletz
My biggest question has been this from the beginning: if the government continues to send out checks for rental assistance, why do we continue to need a moratorium? Eviction, as every landlord and property owner knows, is a natural part of a tenancy contract and if they cannot legally hold their tenants to these contracts, there is no real incentive for renters to negotiate payment if they can live there perpetually for free.
This is not unlike the recession of a dozen years ago, when homeowners who could not pay their mortgages, sat in their dwellings for sometimes years, rent-free, before the banks finally foreclosed on them. The banks did not want the home inventory then and I can guarantee they do not want it now if these moratoriums cause property owners eventually to walk away.
What Happens When the Moratoriums End?
You don’t have to look very far into the future to fully understand the long-term implications of these state and federal government rent moratoriums.
Eventually, those who can’t pay their current or back rent are going to find themselves harnessed with a form of renter double-jeopardy when they are evicted and looking for another place to live. Specifically, not only are landlords going to be forced to raise rents to make up for COVID-related shortfalls, pricing many renters out of the market, but they’re also going to tighten the process of financial pre-approvals, a bar many renters will not be able to meet.
Of course, government “solutions” like rent abatement and assistance programs are almost always short-term, knee-jerk fixes to much bigger problems. In this case, these programs are going to adversely affect, on a continuing basis, the people they were meant to help.
As another example of the federal government run amock is the incredulous situation that the CDC, is writing housing policy, a matter that as of press time remained under federal review. Even now, its authority is being struck down in federal courts in Texas, Ohio, and Tennessee. These moratoriums and subsequent accumulated debt will affect a renter’s credit rating, their reputation and financial status for years and years. So landlords, even when they do legally get their properties back, may have a lot of hesitation in renting to an applicant with more than a year of bad debt. The result is going to be that an awful lot of people needing a place to live will have very few options due to the government’s short-sighted policies. And no one can blame the landlords for not taking on any tenant who looks like a potential payment risk after all they’ve been through in the last year.
As a result, this bad rental debt will not only keep families from finding affordable housing in the future, but financially will leave landlords holding the bag if these tenants file bankruptcy. Then, the next logical domino to fall is local municipalities, which are going to find themselves cash-strapped due to a lack of revenue and will in turn undoubtedly raise taxes and add more red tape to their housing oversight, costing everyone additional money in fees and other regulations. Again, a foreseeable consequence that will negatively affect renters.
Anyone who follows these types of government programs could see from a mile away how this overreach, which I find unconstitutional, would disrupt the delicate balance between landlords and tenants. The bottom line is this governmental interference is unsustainable, and the negative effects will be with us all for years to come.
Matthew I. Paletz is the CEO of Paletz Law and he is licensed to practice in Michigan and Ohio. He is a leading national advocate and supporter of legislative efforts on behalf of the real estate industry with his practice emphasis dedicated to landlord-tenant law, nationwide fair housing defense of property owners, and protecting the rights of creditors in bankruptcy. Paletz Law is on the cutting edge of technology and offers PaletzTrack, an online software platform and mobile app. You can find them at www.PaletzLaw.com
A UMH Properties community in Ohio. Photo courtesy of UMH Properties.
MH REITs Report is a Quarterly Overview of Manufactured Housing Industry Real Estate Investment Trusts
The research team at Hoya Capital Real Estate is excited to continue our quarterly column published in partnership with MHInsider to provide insight and commentary on publicly-traded manufactured housing stocks. Every quarter, we’ll publish an update to discuss the stock performance, earnings results, and major news and events reported by manufactured housing real estate investment trusts, or MH REITs.
Overview of MH REITs
There are three U.S. exchange-listed Manufactured Housing REITs which collectively account for roughly $35 billion in market value: Equity Lifestyle (ELS), Sun Communities (SUI), UMH Properties (UMH). Additionally, newly-listed Flagship Communities (FLGMP) trades on the Toronto Stock exchange.
Manufactured Housing REITs collectively own roughly 350,000 manufactured housing and RV sites across the United States with a portfolio skewed toward higher-end communities with a more “retiree-oriented” demographic than the all-ages community.
Through a series of acquisitions, Equity Lifestyle and Sun Communities have recently expanded into boat marinas as well while the smaller UMH Properties and newly-listed Flagship Communities focus on traditional manufactured housing communities.
Manufactured housing REITs have emerged over the past decade from relative obscurity into several of the largest publicly-traded owners of real estate in the world. Beneficiaries of the lingering housing shortage across the United States resulting from a decade of underbuilding, manufactured housing REITs have been the single-best performing REIT sector since the start of 2010, delivering an incredible 22% annual compound total returns from 2010 through 2020.
Manufactured housing REITs outperformed the broad-based Equity REIT Index for a remarkable eighth-straight year in 2020, the longest streak of outperformance for any property sector since the dawn of the “Modern REIT Era” in the early 1990s.
From an investment perspective, despite their high growth rates, MH REITs are a traditionally defensive and countercyclical sector due to the “sticky” nature of MH demand and cash flows. While these REITs are not known for their high dividend yields, these REITs have delivered some of the strongest rates of dividend growth of any REIT sector.
Second Quarter 2021 MH REITs Performance
MH REITs were under pressure earlier this year by the ‘REIT Reopening Rotation,’ but this underperformance didn’t last long as MH REITs have been one of the best-performing sectors since the start of the second quarter. MH REITs are now higher by 21.8% this year, slightly lagging the 23.7% gains from the broad-based Vanguard Real Estate ETF (VNQ), but beating the 16.5% returns from the S&P 500 (SPY).
Consistent with the trends across the residential REIT industry over the past quarter, MH REITs significantly boosted their growth outlook over the last quarter, citing strong rental housing demand and substantial upward rent pressure. Same-store Net Operating Income (“NOI”) growth continues to accelerate following a brief pandemic-related slowdown as property-level growth is now expected to rise by nearly 7% for full-year 2021.
Growth in funds from operations – the earnings per share “equivalent” for REITs – is driven by the combination of same-store “organic” growth and by external growth through acquisitions and new development. Forward guidance over the past quarter was particularly impressive as ELS and SUI project growth in Funds From Operations (“FFO”) of nearly 14% this year – which would surely be one of the strongest growth rates in the REIT sector.
Utilizing a strong cost of equity capital, these REITs have continued to grow externally by adding units to existing sites and by growing via acquisitions and site expansions. MH REITs acquired more than $1.5 billion worth of properties over the last year, largely in one-off acquisitions while disposing of just $10 million in assets. The most significant deal in 2020 was Sun Communities’ $2.1B purchase of Safe Harbor Marinas, which owns and operates 101 institutional-quality boat marinas.
Manufactured Housing Industry Data Points
MH REITs’ amplified focus on analogous asset classes – RV parks and marinas – was perfectly-timed, providing an added external growth tailwind. “Work-From-Anywhere” has fueled soaring RV, boat, and vacation home sales. The RV Industry Association expects RV wholesale shipments to climb to their highest historical total ever. While the RV industry has faced similar supply chain issues as traditional homebuilders, the RVIA sees shipments rising to 576k units in 2021, which would be a 14.1% gain over the current comparable record high of 504,600 units in 2017.
The National Marine Manufacturers Association, meanwhile, reported that powerboat sales are also poised to set record-highs this year despite inventory levels that are “the leanest they’ve ever been.” With SUI’s major investment in Safe Harbor Marinas, these MH REITs are now the two largest owners of marinas in the United States, an asset class with nearly identical fundamental characteristics as their large portfolio of RV parks. Marinas offer substantial operating parallels to the company’s RV business and that there are roughly 4,500 marinas in the US, of which 500 would be considered “institutional quality.” Earlier this year, ELS also expanded its marina portfolio with a purchase of 11 marinas, containing 3,986 slips, for $262.0 million.
MH REITs Key Takeaways
Low supply and strong demand have driven stellar fundamental performance for MH REITs over the past half-decade, and the MH sector continues to deliver sector-leading NOI and FFO growth. Consistent with the trends across the residential REIT sectors over the past quarter MH REITs significantly raised their growth outlook, citing strong rental housing demand and substantial upward rent pressure. While MH REIT valuation are now back towards the top-end of their historical range following double-digit returns over the last quarter, don’t bet against MH REITs, the perennial outperformers of the real estate sector and key beneficiaries of the persistent housing shortage across the United States.
MH REITs REPORT Terms Defined
FFO (Funds From Operations): The most commonly accepted and reported measure of REIT operating performance. Equal to a REIT’s net income, excluding gains or losses from sales of property and adding back real estate depreciation.
AFFO (Adjusted Funds From Operations): A non-standardized measurement of recurring/normalized FFO after deducting capital improvement funding and adjusting for “straight line” rents.
NOI (Net Operating Income): Typically reported on a “same-store” comparable basis, NOI is a calculation used to analyze the property-level profitability of real estate portfolios. NOI equals all revenue from the property, minus all reasonably necessary operating expenses.
Hoya Capital Disclosures
I am/we are long ELS and SUI. I am not receiving compensation for it. It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. A complete discussion of important disclosures is available on our website www.HoyaCapital.com.
As a manufactured housing community owner, the thought of selling a property right now may be a little formidable. Many are generational owners with years of hard work put into their community, only now to be hit with a proposed retroactive capital gains tax increase.
Under the Biden administration’s new tax proposal there is a way for manufactured housing community owners to still significantly defer their capital gains tax. While just cashing out is easy and the most common solution, owners will likely be required to make a large tax payment at the sale. Currently, if a property is sold, owners would incur a capital gains tax rate of 15-20%.
Unfortunately, under the new pending tax code changes, we could see the capital gains rate up to 43.4%. This increase would take effect for sales of stock and businesses after the April 28, 2021 announcement. In addition, the more commonly known 1031 exchange that allows investors to defer paying taxes on real estate by rolling profits into their next property is proposed to be limited under the new tax code.
This tax proposal is supposed to target the ”wealthy,” but President Biden seeks to limit 1031 exchanges on transactions with profits exceeding $400,000. With that being said, most mom-and-pop-owned communities would still exceed this price point and likely not qualify for a 1031 exchange, resulting in an increased capital gains tax rate. Luckily, there is a better way for owners to sell their property and significantly defer capital gains tax at the sale — through the 721 transaction.
What is a 721 Contribution, 721 Transaction?
Under this equity swap arrangement, the proprietor can potentially sell their property, continue to receive cash flow, eliminate daily management responsibilities and benefit from significant tax deferral.
The 721 Contribution allows you as a property owner to become an investor in a private equity firm or REIT while adding your asset to an already existing real estate portfolio that is actively managed by a hands-on manager with a proven track record of delivering outsized returns to investors.
The 721 contribution is a less known but often more effective solution that allows the property to be easily transferred while significantly deferring capital gains taxes that have built up over the years.
While it should come as no surprise that many generational owners focus on selling for the highest price possible as they need to reinvest after-tax sale proceeds to live off and eventually pass down to heirs. An often less known and more profitable approach is to defer the tax and let a proven operator compound before-tax sale proceeds. Upon the investment, owners can receive a preferred dividend on the total equity investment in a fund, along with a share of profits in a fund all while having no more managerial duties and significantly deferring their capital gains tax.
The return on your investment could provide similar or even greater cash flow compared to managing and owning a property and potentially solve estate planning issues as it’s often simpler and more practical to pass down a passive investment versus a management-intensive piece of real estate.
Thomas Coury is the marketing and business development coordinator for Crystal View Capital, a private equity firm that specializes in acquisitions of manufactured housing communities and is a leader in providing manufactured community property owners the option of a 721 contribution. If a 721 contribution is of interest, please consult with a financial adviser or estate planning attorney to confirm that a 721 contribution could be the best option for your asset.
SECO21 returns Sept. 27-Oct. 1 in a virtual format that will build upon the experience attending manufactured housing professionals had last year, with increased interactivity and engagement potential including expanded opportunities to sponsor and exhibit at the event.
The SECO National Conference of Community Owners was organized for community owners, by community owners 11 years ago and each year has planned and hosted an event for industry professionals looking to network, buy properties, invest in the industry, or launch a new product or program for land-lease community operators.
A new, highly tailored interactive meeting platform will be put to use for SECO21, allowing the hundreds of event guests to attend mixers, sit in on topical presentations and professional panels, set meetings, and shop the industry’s most recent and relevant service and supply offerings.
This SECO virtual conference once again is a partnership between the event coordinators, a 501(c)3 registered non-profit, and MHVillage, the leading marketplace for manufactured and mobile homes.
Take advantage of the opportunity to showcase the product or service of your choosing as a sponsor or exhibitor at SECO 21. Event organizers anticipate SECO21 to be even more well attended than the inaugural virtual event that provided 38 corporate exhibitors for 487 attending professionals.
The new virtual event platform provides even greater opportunities for sponsorship and branding to engage with SECO attendees. Sponsorship opportunities include …
A presence within designated exhibit hall and networking times each day of the event
Visibility through promotional emails and advertising leading up to SECO21
Promotional mentions and opportunities to speak to attendees during SECO educational sessions
Opportunity for your promotional materials to be included in a physical “swag pack” mailed to each SECO attendee
“SECO21 has sponsorship packages available at the bronze, silver, gold, and platinum levels with unique opportunities to interact with attendees, including positions in the event program, one-on-one meetings with attendees, as well as in-session branded introductions of speakers and presenters,” SECO co-founder and organizer Spencer Roane said.
SECO National Conference of Community Owners will be held Sept. 27-Oct. 1 on video screens nationwide, with multiple tracks for newcomers to the industry as well as the most experienced land-lease operators.
For added information on registration, exhibiting, and sponsorship at the SECO21 go to www.secoconference.com.
The welcome center at Loma Vista is a bright, inviting space.
Buckle your Tesla seatbelts, because manufactured housing and land-lease communities are getting ready to go on a fast-paced, exciting ride.
When Scott Roberts asked me if I followed Elon Musk on Twitter, I was embarrassed to say that I didn’t, but I sure do now. Roberts shared with me some of Musk’s latest posts: “Urgent need to build more housing in greater Austin area!” “Over 10,000 people are needed for Giga Texas just through 2022!” And “High School Grads: You do not have to have a college degree to work for Tesla straight out of high school. Tesla is recruiting high school students who can graduate high school and start a career at Tesla while continuing their education.”
What does this have to do with manufactured housing?
Everything.
These new entries into the workforce are our potential new home buyers, and for Roberts, Tesla GigaTexas is an easy five-minute drive from his Oak Ranch Community and nine minutes from Loma Vista, properties operated by Roberts Communities.
The gated entry at Oak Ranch.
As much as things change, they stay the same. We start dreaming about having a home of our own from when we get our first Barbie Dream House or a treehouse in the backyard. But in a city like Austin with a median sales price for a site-built home in the suburbs being $344,000 and in the city of Austin, the median list price of a site-built home being $475,000, there is no way the workforce that Tesla is hoping to hire will be able to afford a place to live. An average one-bedroom apartment rents for $1,518 per month.
With prices like this, a home of your own seems out of reach for many.
When Roberts took over the family business in 1998, they were focused on 55+ communities. When he saw an opportunity to buy failed, empty parks and revitalize them, including Oak Ranch in Austin, he wondered why something that is so good for retirees couldn’t be just as good for families.
When Roberts purchased Oak Ranch, there were no homes, and only a shell of a community center. Roberts and his team converted the property from a local eyesore to a thriving, award-winning all-ages community of 491 homesites, all of which are now full. They also decided to build The Reserve, a 55+ community adjoining Oak Ranch with a separate entrance and community center. Roberts shared that filling The Reserve has been a more significant challenge, and to date, 130 of the 160 lots are full.
Oak Ranch in East Austin. Photos courtesy of Roberts Communities.
Roberts said he thinks that we will be seeing more communities where family and 55+ communities exist nearby or side by side but cautions that the boundaries between the two need to be clear to comply with fair housing laws. This includes separate rent rolls, contracts, a fence, and even gates between the two.
The convergence of property types may be a building trend, and it’s one that should come with some “stigma relief” for families and operators alike.
This isn’t only happening in Austin — retirees, active 55+ buyers, and families all are rethinking apartment life or living in a multifamily building in a tight, urban setting.
Land-lease communities can be what so many buyers are looking for; they need to be educated about the value and quality of life that today’s manufactured homes and communities can offer.
The welcome center at Loma Vista.
From Texas to Florida Affordable Housing is in Demand
Florida is experiencing a different type of boom.
People consider leaving behind their large homes and mortgages with colossal property and state income taxes in other states to move to Florida where they can downsize, do Zoom work from home, if they choose, and enjoy a new quality of life. Now being part of a community where people check in on each other and the term “know whom your neighbor” has a new meaning.
John Hall, President of Newby Management, said that of the 45 communities they currently manage, only four are not 55+ communities, and the residents of their 55+ communities are very protective of that age differentiation. They appreciate the social aspects of the active adult lifestyle and feel more in common with the other residents of their own age range, he said. It used to be that almost every manufactured housing community in Florida had a busy shuffleboard court. Now it’s being complemented in 55+ communities with pickleball, tennis, nature trails, well-appointed fitness facilities, and of course, a pool that preferably is large enough to swim laps in and host water aerobics classes.
But something that the residents refuse to give up is their vintage bingo machines. They are so popular with their retro tubes, lights, and wire cages that Newby Management has found a company to refurbish the ones they already have in their communities. Keeping common areas updated and continually refreshing the landscaping, signage, and look of the community is one of the things that sets a well-managed community apart from the rest.
Both Hall and Roberts agree that a 55+ community can be the easiest and most challenging to manage in various ways, and call for different management styles. Residents tend to have more time on their hands and are happy to tell you where the landscapers missed cutting a lawn section or whose home needs to be power washed. They tend to take much pride in their community and want to be included and informed about decisions that will affect their quality of life. They can be your best sales tools — they want to share their happiness with others.
Let’s face it — a perception that often is necessary to overcome, especially with seniors, is that all communities are owned by giant hedge funds or corporations in the business for quick cash. The prevailing perception, which has been earned only in small corners of the industry, is that homesite fees will rise beyond the residents’ ability to pay. Part of the challenge that we have to take on as an industry is to be better about sharing the real story about many of our community owners and managers (and that industry-wide lot rent increases are only somewhere slightly above 4%).
Even community owners and investment groups are starting to understand that messaging is an essential part of being successful in this industry. Paul Chase and Erick Mulicandov, principles of Iron Horse Properties, make it clear from the start that theirs is a long-term investment and that “we as owners put our head down on the pillow at night and feel good about what we do.”
If what site builders are doing is any indication, we will be seeing many more communities that have different clusters or villages in them with different styles and types of homes that attract different lifestyles and age groups.
Chris Nicely, president at ManuacturedHomes.com, shared that he sees this happening nationwide. Casata is a cluster housing concept that focuses on wrap-around services and lifestyle amenities being built in Austin. It is opening as a lease product for now and uses homes that Skyline Champion Corporation is building. They thought their market would be millennials just graduating from nearby colleges, but on opening day they toured with more than 200 people. More than half of those people ended up being active senior adults, so their marketing strategy may change.
Roberts stressed that flexibility is critical when planning a new community or changing direction on an existing one. He suggested building the initial homes and amenities at the back of the property and building towards the front. Hence, if situations change, there is an opportunity to divide the community and make part of it an all-age offering instead.
With all of these innovations and improvements going on, it seems that the perception of manufactured homes and land-lease communities is going from “only if I have to” to “consumer’s first choice”.
But we have to be the gatekeepers, earn and claim the chance to impress consumers and municipalities, to show what a good investment our homes are, and what a good neighbor our communities will be.
Iron Horse Properties is making a serious commitment to sharing with city and state leaders the new story about factory-built homes, not just buying or building a property and moving into a town. And Roberts stressed that “we want to stay affordable and achievable here. If we lose our direction, we can’t stay affordable to our customers.”
The Case-Shiller Index, a leading measure of U.S. home prices, shows the average cost of a home continues to increase in all measured markets, with all-time high home price surges in several cities.
Data released in late June for prices through April 2021 show the rise and more than 27 years of history are available for the data series.
Home Prices Year-over-Year
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 14.6% annual gain in April, up from 13.3% in the previous month. The 10-City Composite annual increase came in at 14.4%, up from 12.9% in the previous month. The 20-City Composite posted a 14.9% year-over-year gain, up from 13.4% in the previous month.
Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in April. Phoenix led the way with a 22.3% year-over-year price increase, followed by San Diego with a 21.6% increase and Seattle with a 20.2% increase. All 20 cities reported higher price increases in the year ending April 2021 versus the year ending March 2021.
Home Prices Month-over-Month
Before seasonal adjustment, the U.S. National Index posted a 2.1% month-over-month increase, while the 10-City and 20-City Composites posted increases of 1.9% and 2.1%, respectively, in April.
After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.6%, and the 10-City and 20-City Composites posted increases of 1.4% and 1.6%, respectively. In April, all 20 cities reported increases before and after seasonal adjustments.
“Housing prices accelerated their surge in April 2021,” S&P DJI Managing Director and Global Head of Index Investment Strategy Craig J. Lazzara said. “The National Composite Index marked its eleventh consecutive month of accelerating prices with a 14.6% gain from year-ago levels. This acceleration is also reflected in the 10- and 20-city composites.”
The market’s strength is broadly-based: all 20 cities rose, and all 20 gained more in the 12 months ended in April than they had gained in the 12 months ended in March.
“April’s performance was truly extraordinary,” Lazzara said. “The 14.6% gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data.”
Housing price gains in all 20 cities accelerated, all in the top quartile of historical performance. In 15 cities, price gains were in the top decile. Five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – joined the National Composite in recording their all-time highest 12-month gains.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes,” Lazzara said. “April’s data continue to be consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.”
Phoenix’s 22.3% increase led all cities for the 23rd consecutive month, with San Diego (+21.6%) and Seattle (+20.2%) providing strong competition. Although prices were strongest in the West (+17.2%) and Southwest (+16.9%), every region logged double-digit gains.
In August, the RV/MH Hall of Fame will celebrate the 2025 class of inductees, five from each industry.
“Our selection committees held meetings to review...
