MFH News and Views: Manufactured Home Production Growth up Sharply In March, 26.9 Percent

According to latest official statistics from The U.S. Department of Housing and Urban Development (HUD), compiled and reported by the Manufactured Housing Association for Regulatory Reform (MHARR), manufactured housing production continues to surge into the second half of 2016.

Once again the number of manufactured homes produced by U.S. manufacturers have shown significant growth. Producing 7,110 homes during March 2016, a 26.9% increase over the 5,602 HUD* Code homes produced during March 2015. This was on the heels of the strong February 2016 increase of  27.6% over the home production in February 2015. Cumulative industry production for 2016 now totals 19,101 homes, a 24.2% increase over the 15,374 HUD Code homes produced over the same period in 2015.

(*the cited statistic do not include modular homes,also produced by manufactured home builders, which have become an important segment of affordable home production within the last few years.)

Following the great recession from 2008-2010, the manufactured home industry began an acknowledged rebound in 2011 that has since shown significant growth in production and shipments each successive month and year since August 2011. That winning streak has continued through 2015 and into the first five months of 2016.

The top10 shipment states from the industry production rebound in August 2011, through March 2016, with current month March (2016), year to date (2016) and same period prior year (2015) are as follows:

Manufactured Home Production Growth up Sharply In March, 26.9 Percent

The latest information for March 2016 results in no changes to the cumulative top ten list, with Texas having a continuing stronghold in the number one position.

MFH ANALYSIS

The shipment of homes produced by manufacturers closely align with sales by retailers across the country. Latest statistics attest to manufactured home production and sales growth surging – at the same time that the overall U.S. homeownership rate, according to U.S. Commerce Department data, fell to its third lowest level on record in the first quarter of 2016 – proving what MHARR and MFH had been saying all along, that Americans increasingly recognize the affordability and quality of HUD Code homes and want to be manufactured home buyers. So, why are so many not realizing the uniquely American dream of affordable home ownership?

The largest obstacle preventing hard working middle and lower income families from becoming homeowners is due, in large part, to a result of a distorted financing market for chattel loans, which represent the vast bulk (80%) of the manufactured homes produced and sold. Chattel loans are are high-interest personal property financing, similar to loans for automobiles, boats, etc. This begs the question, If manufactured homes are equal in every respect to site built homes, why don’t home buyers have access to residential mortgage financing? The following excerpt from MHARR editorial attached to the March 2016 statistical report summarizes the difficulties in accessing equitable financing for deserving manufactured home buyers:

“The total absence of securitization and secondary market  support for those loans (chattel) by the Government Sponsored Enterprises (GSEs) is a travesty that discriminates against the same lower and moderate-income Americans that the GSEs are statutorily charged with serving. Those discriminatory policies restrict genuine free-market competition for consumer financing within the manufactured housing market, create an uneven financial playing field between the manufactured homes and other types of homes, and effectively exclude untold numbers of buyers and potential manufactured home owners from the market. At the same time, though they provide a rationale and basis for the higher-cost interest rates charged by the industry’s dominate lenders, which clearly want to continue profiting through those higher rates.

As a result, while part of the industry has stubbornly pursued modifications to the Dodd-Frank law in order to legitimize and protect those high-cost rates, the post-production sector has simultaneously dropped the ball in Washington, D.C. with respect to chattel financing and federally-backed securitization and secondary market support for manufactured housing chattel loans as a part of the “Duty to Serve” mandated by Congress in 2008.“

MFH would like to salute MHARR for “shedding light” on this very important issue. For informing the many  sectors within the manufactured home industry, independent manufacturers, and retailers alike, many of whom are probably unaware of the factors that may be inhibiting their success in providing today’s homebuyers access to fair and equal financing options.