A new manufactured home from Clayton with residential design features now permitted in R1 and mixed-use districts of Panama City, Fla.
Legal Battle Results in Greater Access for Factory-Built Housing
FMHA Executive Director Jim Ayotte.
Panama City, Fla., voted recently to change its residential zoning code to allow “Residential Design Manufactured Housing” into all areas zoned for residential and mixed-use.
The Panama City Commission voted unanimously to approve the measure following months of legal maneuvering by the Florida Manufactured Housing Association and its attorneys.
Panama City Includes ‘Residential Design Manufactured Homes’ in New Single-Family Housing Code for All Districts Zone for Residential and Mixed-Use
“On June 23, the city commission unanimously approved Ordinance 2740, which defines a Residential Design Manufactured Home as a home complying with the Fannie Mae MH Advantage™ or Freddie Mac CHOICEHome® mortgage program,” FMHA Executive Director Jim Ayotte said in a statement.
The notification and request for a change was accompanied by a records request to help document the case. City officials acknowledged during a November meeting with FMHA that the city land-use code might have been discriminatory. At the time, however, the city made no discernable effort to change the code.
Florida Association Files Complaint Against Municipality
FMHA then filed a lawsuit against the city for violating the state’s public records law.
The city acknowledged it failed to comply, which provided FMHA an opportunity to attempt a negotiated settlement to avoid further litigation.
As part of the proposed settlement, FMHA requested the city to amend its land use code to allow Residential Design Manufactured Homes in residential and mixed-use districts.
Ayotte said the FMHA is preparing to meet with the city’s community development director to discuss potential opportunities for a home demonstration project.
“A demonstration project will help educate the public and neighboring government officials about the attractive, quality, and affordable workforce housing available through the Fannie Mae and Freddie Mac manufactured home mortgage programs,” Ayotte said.
The RV/MH Hall of Fame is located in Elkhart, Ind.
In an emergency meeting, the RV/MH Hall of Fame executive committee voted to postpone the Annual RV/MH Hall of Fame Induction Dinner until Dec. 3. The ceremony had been scheduled Aug. 3.
“I have had better days, but we need to do what needs to be done. And postponing the Induction Dinner amid the continuing coronavirus pandemic is the appropriate course of action,” RV/MH Hall of Fame President Darryl Searer said.
From left, Jess Maxcy, Maria Horton, Rick Robinson, Dick Jennison and Lesli Gooch are among the 420 attendees from 25 states who came to Elkhart Aug. 5 to honor the RV/MH Hall of Fame class of 2019.
In the decision, the executive committee believed the atmosphere to celebrate at the later date would be much more positive, hopefully with fewer concerns for health and safety, and with an overall feeling of peace of mind.
“And the class of 2020 inductees agreed. As it is their day, I have spoken with the inductees and the overwhelming vote was to move the date towards the end of the year,” Searer stated. “They all thanked us for agreeing to move the date.”
For more details or to make reservations, please visit: www.rvmhhalloffame.org/rsvp or call the Hall of Fame at (574) 293-2344 or 800-378-8694.
Owners and operators of manufactured home communities are seeing interesting developments in three areas of the business.
New Greenfield Projects
Community Expansions
Older Community Upgrades
Greenfield Projects
The need for new communities is great in most parts of the country. After years of vacancies in communities, most desirable existing communities are at or near capacity, resulting in an increasing demand for new projects. Unfortunately, zoning new sites is difficult. Sewer and water availability in desirable locations where zoning is attainable is rare. Many available zoned sites are in undesirable or difficult locations. And public opposition to new communities continues to come from the “trailer park” perception.
Construction costs are rising, but so is the value of the finished project. As a result, it is important to take advantage of unique ways development costs can be minimized by using knowledgeable manufactured housing community planners and engineers.
Photo courtesy of Zeman Homes.
Community Expansions
It is often easier to expand an existing community than to start anew. Zoning in many cases is less difficult since it is an expansion of an existing use. And hopefully, the existing community is well managed and cared for and will generate minimal opposition. If not, it is important to bring it up to respectability before seeking approval to expand. The expansion also can provide an opportunity for existing residents to upgrade to a new home in the expansion area, allowing for the removal of less attractive older homes. New home sales in the expanded community provide an additional profit center for the owner. Additional utility services may be available from the local supplier or attainable through the expansion of the existing on-site facility. The addition of new sites to the existing community may not require a significant increase in overhead, another benefit to expansion. Care should be exercised to the disruption to existing residents caused by construction activities and some up-grade in the community amenities is advisable to minimize residence concerns.
Photo courtesy of Zeman Homes.
Community Upgrades
Upgrading an existing community is a win-win for the owner, the residents, and the industry. The community already is properly zoned and in a great location. Making the community more attractive and livable should be welcomed by residents and neighbors alike. On the negative side, some communities have rezoned undesirable properties making the addition of newer homes difficult. However, many of our more progressive state associations have tackled this matter and made the practice unlawful. Often municipalities require reconfiguration of home-sites to conform to the existing regulations regarding setbacks and lot sizes. Fortunately, many states allow for lot reconfigurations to reflect the rules that were in effect when the community was originally constructed. Michigan and Indiana are two states with that advantage. Many times, residents become concerned about their future. However, if the owner has the foresight to get its image in order first — entrance upgrades, street improvements, refreshed structure appearance, and landscaping — it can stimulate residents to upgrade their home and home-site appearance.
Revisions to the community’s “Guidelines for Living” in a reasonable time frame will assist in that effort.
All three of the options discussed, if properly done, will give the industry a much-needed image boost and ready the market for expansion.
Donald C. Westphal, Associates, LLC, winner of seven Community of the Year Awards, has a 50-year history of planning great Manufactured Communities and is still enthusiastically serving the industry. Learn more at www.dcwestphal.com.
The launch of MHI 2.0 in January saw a change to our organizational leadership structure and a new strategic approach for elevating our industry. MHI’s strategy to grow the manufactured housing market encompasses three areas of opportunity where our Association can best support the industry’s efforts to create more options for Americans in need of quality, affordable housing.
Grow the Market
The need for high-quality, affordable housing has never been greater and manufactured housing presents one of the most viable, common-sense solutions to creating more affordable housing stock throughout the country. MHI, along with our industry and state association members, has laid the groundwork for this unprecedented time by consistently challenging federal state and local barriers that limit access to manufactured housing. Growing the market for manufactured housing is the core mission of MHI 2.0, and we’d like to share with you our pillars for ensuring the success of that mission and securing a better future for housing in America.
The interior of a new model from Adventure Homes.
Tell Our Story
We don’t have to tell you the people and companies who make up this industry are some of the best in the world—you’ve experienced it up close at our meetings and events. You also know our industry makes some of the most quality, affordable homes in the country. Yet, misconceptions about manufactured housing have created challenges that have been difficult to overcome and affected how our industry is handled by regulators.
Telling our story is key to setting the record straight and introducing people to the benefits of owning a manufactured home. Here in Washington, D.C., MHI is using every opportunity to interact with the U.S. Department of Housing and Urban Development (HUD), the Administration and Congress to share our story, with great success. So far in 2020, HUD has made a number of changes and proposals to its regulation of manufactured housing to alleviate federal, state and local regulatory barriers to this affordable homeownership option including calling for a Deputy Assistant Secretary of Manufactured Housing and updating the HUD Code.
HUD Secretary Ben Carson addresses manufactured housing professionals at the MHI Congress & Expo in New Orleans.
As a member of the President’s cabinet and the nation’s housing spokesman, HUD Secretary Ben Carson is an advocate for what manufactured housing offers – quality homes, built with the features consumers want, at affordable prices. In Congressional Committee hearings, in media interviews, and in conversations about affordable housing, Secretary Carson is constantly reminding the country about the value and sustainability of manufactured housing. These actions by Secretary Carson and HUD are a direct result of MHI and our members effectively telling the positive benefits of manufactured housing as an affordable homeownership option.
MHI also tells our story through communications to our members. Every week, MHI publishes a newsletter to our Federated States Division, updating them on happenings around the country and in Washington, D.C. We also provide our members with valuable research, interact with the media and provide analysis on new information as it becomes available. Keeping the industry well-informed, through distributions like our biweekly MHI News & Updates, is crucial to ensuring our members are prepared with the most up-to-date, accurate information available to help share our industry’s story.
Engage Our Members
To keep our members updated and engaged, MHI facilitates numerous networking opportunities throughout the year, including member-only meetings, industry-wide events, and educational programming. In 2019, more than 2,400 industry leaders attended seven MHI events designed to create connections and involve our members. Through these events, MHI is able to engage with its membership and hear first-hand about what is happening in the industry. These member interactions are an important part of MHI’s effective strategy to grow the market and we welcome the opportunity to discuss the issues that are important to our members. For a full calendar of events and offerings, visit our website atwww.manufacturedhousing.org.
Develop Our Team
MHI understands that growing the market requires highly knowledgeable and qualified people at every touchpoint throughout the manufactured home buying process. Because MHI represents every segment of the manufactured housing industry, we are constantly expanding our offerings to ensure our members have the tools and resources necessary to succeed. We offer members a variety of educational opportunities and accreditations through the Manufactured Housing Educational Institute (MHEI) – each tailored to suit individual segments of our industry. From installation to community management accreditation to the latest issues and trends, our organization is committed to providing the tools to ensure our industry is providing consistent, exceptional service. In December, MHI and MHEI announced the launch of our Accredited Community Manager (ACM) 2 course. This curriculum builds upon the information and resources learned in ACM 1 and offers additional tools needed for success. The program is offered both in-person and online and offers guidance for managers on how to keep sites full and treat residents fairly. To learn more about MHI’s educational offerings, visithttps://www.manufacturedhousing.org/education/.
MHI members and meeting guests talk during a recent MHI event.
MHI also holds a variety of educational workshops and makes presentations at dozens of state association meetings and other industry events across the United States. We also offer webinars to expand and grow industry knowledge on a diverse range of topics including Fair Housing, Government Affairs Initiatives, and much more. Further, MHI offers a variety of ways to keep members informed about our work in Washington and issues relevant to manufactured housing—including a bi-weekly newsletter exclusively for members and webinars on key industry topics.
MHI is delivering tangible value and results for its members so they can stay ahead of the momentum and thrive. We are committed to creating opportunities for members to learn about the latest topics impacting the industry by presenting engaging speakers and panels, offering educational programs and conducting cutting-edge research. In addition, MHI is making it possible for the industry’s collective voice to be heard so that policymakers at the federal, state and local levels partner with us to help the industry prosper.
If you have questions, please reach out to MHI’s Advocacy and Communications Team at mhigov@mfghome.org or 703-558-0675.
Datacomp published July 2020 JLT Market Reports for manufactured home communities in Colorado, Delaware, New Jersey, and Wyoming, which include mobile home rent comps, occupancy, and other vital up-to-date data.
JLT Market Reports provide detailed research and information on manufactured home communities in 184 U.S.housing markets. Reports include the latest rent trends and statistics, marketing programs, and a variety of other useful management insights.
Datacomp’s JLT Market Reports are the nation’s #1 provider of market data for the manufactured housing industry. JLT Market Reports are recognized as the industry standard for manufactured home community market analysis.
July 2020manufactured housing market data published in JLT Market Reports for Colorado, Delaware, New Jersey, and Wyoming include information on 240 “All ages” and “55+” manufactured home communities.
Altogether, the reports from the four states’ manufactured home communities include data representations for 62,673 homesites.
Regional Trends in Manufactured Housing Community Rent and Occupancy
The West region manufactured home communities show a year-over-year 0.9% increase in occupancy to 95% as well as a 4.5% increase in adjusted rents year-over-year.
Northeast region manufactured home communities show a year-over-year 0.2% increase to 94% as well as a 2.9% increase in adjusted rents year-over-year.
“Looking at the July 2020 JLT Market Reports, the stability of the industry and the value provided in affordable housing is made evident by the consistently strong occupancy rates in varying markets,” Datacomp Co-President and Chief Business Development Officer Darren Krolewski said. “The sustained high occupancy rates also show that the very moderate increases in rent are in line with market demand.”
What’s in JLT Market Reports?
Each JLT manufactured home community rent and occupancy report from Datacomp has detailed information about investment grade communities in the major markets. The detailed information includes:
Number of homesites
Occupancy rates
Average community rents, and increases
Community amenities
Vacant lots
Repossessed and inventory homes, and much more
JLT Market Reports also include management insights that rank communities by number of homesites, occupancy rates, and highest to lowest rents. Established reports show trends in each market with a comparison of July 2020 rents and occupancy rates to July 2019, as well as a historical recap of rents and occupancy from 1996 to present date in most markets.
The July 2020 JLT Market Reports for manufactured home communities in Colorado, Delaware, New Jersey, and Wyoming 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.
David Ruby is the owner and operator of Gemstone Communities. Photos courtesy of Gemstone.
David Ruby began his career in private equity before starting his own business in the manufactured housing industry almost six years ago. It’s become an industry theme: so much “new money” coming to manufactured housing, and the news stations and political platforms have been quick to criticize those new players who make mistakes.
But new owners and investors who are reticent to inquire and learn are a very small part of the mosaic that makes up manufactured housing.
Ruby knows that, proves that, and wants to set the record straight.
“My wife would help me send out the residents’ monthly statements. We would cut postcards out of cardstock, hand stamp them and then walk them down to an old blue mailbox at the end of our street,” Ruby said.
Gemstoneexpanded into a spare office at a small law firm run by a friend and colleague. Now, with rapid growth and expansion, Gemstone has moved to a brand-new, state-of-the-art office building in Troy, Michigan.
The company shows an authentic and sophisticated approach to property management.
Gemstone acquired its first three communities in southern Indiana in 2014. Since, it has grown to own and operate 39 communities in seven states across the country. All of those acquisitions happened in about 20 deals.
And Ruby isn’t looking to stop acquiring anytime soon.
“We see continued opportunity in this industry for growth. There is no shortage of undercapitalized properties that, with hard work and investment, can’t become exceptional communities,” he said. “We believe we have the right attitude and resources to make that happen.”
Learning the Business
Ruby removes aged homes from one of his communities.
And Ruby is not one to tout. It’s definitely been a learning curve and a humbling experience for him. He knows he made a fair amount of newbie mistakes in due diligence, received a hands-on education in infrastructure crawling underneath homes in the middle of winter to find water leaks, and has learned to navigate the eclectic personalities on every side of the industry.
But, the one thing he always has done, is put the residents first.
“A couple weeks ago we had a resident come out with tears in his eyes because we were paving his driveway,” Ruby said. “He told us no one had ever done anything like that for him. It was a big deal to him, not us, but what you learn is that people genuinely want to live in a nicer place and we can help make that happen.”
Gemstone Communities sometimes spends more than allocated in deferred maintenance and capital expenses. That is because Ruby views his communities as long-term investments. To date, he has not sold anything.
“When you see how some other owners operate, by making bare improvements if any, and aggressively increasing rents, it becomes difficult to justify the purchase. We have acquired some of these properties. We have to pay substantially more than the previous owner paid, even when they’ve owned the property for a short period. Their model is to quickly increase income and “flip” the deal. And when rents are pushed so quickly it is challenging for us to make the necessary improvements. We balance this challenge with a long term investment horizon. We believe in manufactured housing and we know that if we put the work in we can justify the purchase price,” he said.
Gemstone Communities By State
Florida — 15
Indiana — 4
Louisiana — 1
Ohio — 13
N.J. — 1
Michigan — 2
Texas — 3
A good example of the learning curve can be found in one of the first properties Gemstone acquired in Indiana.
“The rent roll was a little light, the homes weren’t in great shape and the expenses weren’t exactly represented accurately. We had to hustle, bring in homes, increase the occupancy to make the deal work. It was a good experience. And things are going well now,” Ruby said. “We have about 4,500 sites under management. We more than doubled last year. We acquired five communities on our own, with our own pool of capital, and we did a large deal down in Florida with Chicago-based Inland, one of the nation’s largest commercial real estate firms. That was a purchase of 13 properties and nearly 1,400 sites.”
Staffing Up for Success
Ruby said one of the most difficult decisions was when and whom to hire. Gemstone waited about three years to hire its first on-staff corporate employee, which may have been too long, according to Ruby.
“It’s hard,” he said. “It’s hard to make that first hire. You keep pushing it. Say it’s an entry-level salaried person, I was looking at that expense on a monthly basis and wanting to push it just one more month. However, once I finally mentally separated the business bank account from the personal bank account it became easier and things fell into place. You don’t realize how much you need that support though, until you get the first person in, assuming it’s a good hire. It’s absolutely critical. And then it starts to snowball. Today we employ over 50 people and each one of them is absolutely crucial to our success.”
Skyline Champion Corporation President Mark Yost speaks at the Innovative Housing Showcase in June of 2019.
Picture the president of a major U.S. corporation that employs 7,000 people and runs 38 manufacturing facilities nationwide in an off-hand conversation about business.
What is that person likely to say?
If you ask Mark Yost, president of Skyline Champion Corporation, the conversation won’t be about personal career achievement or positioning a brand or product.
The conversation is about a rare opportunity in manufactured housing for the person this particular president is talking to.
“I’ll meet someone at a rental car facility in a state where maybe I don’t have production or retail,” Yost said during a recent interview with MHInsider magazine. “As I am meeting this person, I sense they have a good presence about them. I ask if I can talk with them for a moment and encourage them to look into our industry and ask them to go to work for one of my competitors.”
Yes, you read that right. Mark Yost is recruiting talent to his competitors.
A new Skyline home. Photo courtesy of Skyline Champion Corporation.
The Need for New Talent
Yost runs the largest publicly traded manufacturer of homes. But he sees the bigger picture. The bigger picture is a housing crisis and increasing demand coupled with an aging workforce and the ever-growing population of retirement-age talent.
“I see an industry that has phenomenal talent in every area, and that talent is getting to the point of retirement. And because the industry has been suppressed for so long there really hasn’t been an opportunity for a whole lot of new people to get in,” he said.
To combat the deficit, Yost actively engages with individuals and organizations to spread the word about the industry mission of building, placing, and promoting much-needed attainable housing.
“We are solving something that people today are very passionate about. And that is attainable, affordable, sustainable housing,” Yost said. “It clears up the number one cost burden anyone has, and when you can fix the cost burden of homeownership, it helps pay for all of those other costs, in feeding families and providing health care and education.”
Grassroots Efforts in Manufactured Housing
There is a need for a grassroots effort in every state. Talk with counselors, high school students, and young people attending trade institutes about the careers available in manufactured housing.
Yost also points to the men and women coming out of the armed services who are looking for a great opportunity in the private sector.
“When you get out and are looking for something, chances are wherever you want to live there is going to be a manufacturing plant, a retailer, a community,” he said of the enlisted. “Anywhere you want to live there likely is an opportunity for you. All it takes is one or two people talking among themselves. If you talk with most people about how they got into the industry, they typically say ‘A friend of mine suggested…’.
“Quite a few people who are the patriarchs of the industry, that’s the way they entered,” Yost pointed out. “Many times it was something that they received as a friendly tip, they anticipated being in the industry for a few months or a year, and here they are 30 years later in a position of leadership that they love.”
The master bath in a new Skyline Woodbridge model home. Photo courtesy of Skyline Champion Corporation.
Host a Trades Event for Young People
Last year, Champion hosted a day at one of their home building facilities. Students from a local high school came in to construct a small home that would be a prop for a holiday celebration.
Champion donated the materials and had experienced builders help with the project.
“Those students work hand in hand with our people and they have a great experience and go away saying ‘Well, maybe I should do that’. And that person can be a part of a company and part of an industry,” he said. “We’re a very entrepreneurial industry, and many millennials, in particular, are looking for an opportunity to create their own future, and I don’t think there is a better industry out there to help people do that.”
Equity LifeStyles residents at an Arizona resort community hit the pool. Photo courtesy of Equity LIfeStyle Properties.
Manufactured home community pools are opening across the country. National guidance and state and local mandates have been put in place on the best COVID-19 practices for community pools.
Community owners and managers who are building a protocol for how to open community swimming pools in a way that is safe during the continued measures to prevent COVID-19 have a lot of resources. What follows is a general summary of COVID-19 best practices for swimming pools in manufactured home communities.
Ask residents to plan to a one-hour visit at the pool as to give as much access as possible while at partial occupancy
Post the county/local COVID-19 health department warnings
Encourage residents to remain outside, to wear a mask, and to refrain from inviting guests
Use a no-touch forehead thermometer to check body temperatures on entry
Have residents sign in and sign a release
Arrange pool and outdoor clubhouse furniture both in number and configuration to limit group size and to create a safe distance between individuals and small groups
Eliminate bar seating
Create stands for hand sanitizer/disinfecting wipes
Have a written, posted, and known schedule for how and when to disinfect all surfaces including railings, platforms, benches, stools, and chairs
Use designated staff for COVID-19 measures to avoid interfering with employees trained for general pool safety
Examples of State, Local Guidance on Opening Community Swimming Pools
Local, county, or state departments of health for any location should provide postable signs to inform residents of risks and regulations in regard to spending time at the community pool.
Maria Horton is the director of marketing and a regional manager for Newport Pacific, which provides management services for manufactured home communities. She said opening community pools will provide a way for residents to get outside and enjoy community amenities.
“We recently received information from theOrange County Health Agency on how to open community swimming pools, and it’s something we’re doing with safety as the first order of business, knowing that creating a safe and relaxing environment will be of great benefit to community residents during this time.”
It is with a heavy heart that the Florida Manufactured Housing Association (FMHA) announces the passing of Ronnie Bledsoe. Ronnie was a visionary land developer, a well-regarded businessman, and more importantly a revered family man and a friend to many.
Ronnie Bledsoe
In hearing of Ronnie’s death, FMHA President Mark Kelly said: “Those of us in the industry that had the pleasure of working with Ronnie know what a class individual he was. He was a giant in our industry and a man that was all about vision, drive, a strong work ethic, and integrity. The FMHA recently recognized Ronnie and his partner, Parker Mynchenberg, as our 2019 Members of The Year for their work at their Plantation Oaks of Ormond Beach community. We will miss him greatly and our thoughts and prayers go out to his family.”
Bledsoe’s experience as an underground utility contractor and developer, and Parker Mynchenberg’s background in civil engineering, landscape architecture, and pool design turned out to be a winning combination. Bledsoe and Mynchenberg teamed up to develop the 377-site Plantation Oaks of Flagler between 1998 and 2004. Plantation Oaks of Flagler is one of northeast Florida’s premiere 55+ manufactured home communities.
After selling Plantation Oaks of Flagler, Bledsoe and Mynchenberg took on one of their most ambitious projects, Plantation Oaks of Ormond Beach, an upscale 55+ manufactured home community. This 1,577-home, 55+ manufactured home community is located along the Ormond Scenic Loop and Trail, close to exit 273 on I-95.
Ronnie will be long remembered for his friendly nature, kindness, and generosity as a community and industry leader. Our thoughts and prayers go out to Ronnie’s family, friends, and business associates.
1. It’s early yet in the programs, but what if any type of market change have you seen with the emerging presences of CrossMod/MH Advantage/CHOICEHome?
The CrossMod product is an excellent opportunity for our industry to initiate dialogue and educate the public as well as regulators and policymakers on the quality and affordability of manufactured housing. Within the industry, we know and understand that manufactured housing is the most viable solution to the affordable housing crisis in America. However, to continually change and improve the image of manufactured housing is a difficult and slow process. CrossMod is an excellent and new segue into the dialogue that needs to be had. Undoubtedly the positive effect of this education will impact all manufactured housing products, not just CrossMods.
Outside of this education, we, as an industry, need to find a way to solve the zoning issues that prevent these and all HUD homes from going into most municipalities. This dialogue was a significant portion of our most recent MHI Financial Services Division board meeting in Nashville. It’s a real issue that MHI and their membership will be taking on.
2. What type of advantage do you feel these new programs offer lenders/retailers in the manufactured housing industry that is unattainable by originators and servicers of conventional home finance packages?
I think the biggest benefit is affordability followed by speed to build. To be able to have a home built in a factory that rivals site-built housing for significantly less cost per square foot and a much quicker build time is a significant advantage that our industry must take full advantage of.
3. If we assume these new homes and finance programs that can co-exist with standard R1 site-built homes will pare away at the exclusionary zoning practices our industry has experienced, how long do you feel it might take for a notable change to occur? From a consumer lending perspective, how do you forecast and measure this type of change?
This is a big discussion. We need to push on this, presenting to our industry and gathering a task force to explore ways to appropriately approach zoning change. The state associations do a good job of that, they’re the boots on the ground and have relationships with planners and zoning boards of appeal. And MHI really should look to them on this front.
We have the federated states division of MHI, made up of state association directors who would be a primary resource for this area of industry activity… there’s an opportunity to create a set of best practices that will go into a playbook or a tool kit of some kind,
It has been suggested that we urge the federal government to halt Community Development Block Grant (CDBG) funds for local governments that fail to meet a certain threshold of manufactured housing implementation in affordable housing initiatives. But there’s no one approach that’s going to be the ultimate solution. It will be a combination of approaches that will be a solution that works over time. The sticking point is that we’ve been at this type of effort for some time, and we don’t want to look back in another few years and say ‘Man, we should have done more or we should have done this differently.’ The important time to make that positive change is now.
The interior of a new Fleetwood home.
4. Tell us how your chattel lending programs have fared in the last year or so? Are you seeing an uptick in activity?
Although Cascade has provided land/home financing in the manufactured housing industry for over 20 years, we have only been lending on chattel for about three years. So, with our chattel programs, we really had nowhere to go but up. We have expanded and developed our loan products to assist retailers and communities in expanding their sales. On top of our wide range of loan products, Cascade has invested significant time and resources into developing technology to streamline the lending process for consumers and retailers alike. With the development of our digital loan application, we are getting a full prequalification with income, credit, and other applicable qualification guidelines considered back to the borrowers and retailers in less than two minutes. This type of technology gives retailers and communities the ability to sign and execute contracts before the borrower leaves the sales center. Site-built lenders have had this technology for years, our industry has lagged slightly behind. But at Cascade, we have addressed this and are excited about continuing to develop and streamline the lending process for our clients. We believe that our continued advancements in technology and lending programs will positively impact a boost in unit sales for the retailers and communities with whom we work.
5. Does the industry in this chattel category continue to be hampered more by the slow-to-grow secondary market or is the lean chattel market more of a reflection of so few new manufactured home communities with reliance on growth coming from existing community expansion?
As you know, the macro backdrop should be highly supportive of demand for chattel as one of the most attractive solutions to the affordable housing crisis. However, there are several forces at play that are impeding growth. There are many that point to a lack of a secondary market in the financing of chattel loans.
In 2019 Cascade executed the first securitization of newly originated manufactured housing loans since 2007. We sold a pool of $174 million of loans to institutional investors. This was a tremendous accomplishment for Cascade, but also for the entire manufactured housing industry. The lack of a secondary market for non-agency and non-government manufactured housing loans has limited lending in our industry. Creating additional liquidity by the closing of our securitization is a huge first step in creating a secondary market.
We will likely issue another larger securitization in the third quarter of this year. While our first one was unrated, we are working with rating agencies now to get this next one rated.
These initiatives should pave the way for more availability of credit for chattel buyers. That will certainly enable Cascade to assist more buyers in achieving the dream of home ownership.
That said, simply improving the financing markets is not enough. The lean chattel market is really a reflection of zoning constraints and a misplaced stigma around the sector. We need a sea change in buyer demand to move the amount of shipments into a place that is consistent with solving the country’s lack of affordable housing.
6. What does the future hold for you? What do you feel is the key to being a successful consumer lender for affordable homes?
We think affordable housing and the work MHI and its membership are doing will continue to help this industry grow, and as shipments go up we’re going to be prepared to create and offer better, more efficient programs to help finance those homes. The industry is about to finally break through the 100,000 shipments level and ideally with the right economic factors, push far beyond it. The industry has some very strong tailwinds right now and Cascade takes very seriously our role to create and provide loan products that will support sustainable industry growth.
7. What are your impressions on the overall climate for the manufactured housing industry?
Clearly this is an unprecedented moment in history. 2020 started with such strong tailwinds but the current situation with COVID-19 has altered every aspect of growth worldwide, not just in our industry. That being said, manufactured housing was the best solution to the affordable housing crisis in the United States prior to the current situation, it is the best solution during the crisis, and manufactured housing will be the best solution after the crisis. Cascade is dedicated to creating better systems for our borrowers, to aid retailers and communities in fulfilling the demand, and we take very seriously our role to create and provide loan products that will support and promote sustainable growth.
Additionally, our message is being well-articulated, and it’s being heard. A few years back it would have been absolutely unfathomable to think that the Secretary of HUD would be advocating for manufactured housing and that we would have homes displayed on the national mall in D.C. It was something we just wouldn’t have thought would happen. And to have Fannie, Freddie, and FHFA coming out to our home shows and conferences to educate themselves and the public as they work toward their Duty to Serve requirements has given the industry visibility that we have not previously enjoyed. It’s a testament to the grit of our industry. We are an industry who rolls up the sleeves, works hard for change, and doesn’t take no for an answer.
