News & Notes Archive - August 2005
In the wake of last year’s hurricane season, Florida homeowners are hit with double-digit hikes in their insurance rates
Starting next month, Florida homeowners insured by Nationwide Insurance, the country’s fourth largest homeowners insurance policy company, will be looking at an average rate increase of 21 percent, while owners of manufactured homes will pay an average 25 percent more for their annual premiums.
The Columbus, Ohio-based Nationwide, which insures about 300,000 homes in Florida, is the latest to win approval from state regulators to raise its rates—part of a flurry of rate increases by major home insurers in recent months—but the Nationwide hike has been particularly controversial. In early 2004, just before hurricane season, the insurer won approval for a rate hike of about 20 percent.
For manufactured home owners the two rate hikes together amount to a 45% increase in Nationwide’s premium in less than a year. In contrast, in December, 2004, State Farm, the state’s largest insurer (with 950,000 customers) requested and received a 5 percent increase. Allstate Floridian, Florida’s third-largest home insurer, raised its rates about 10 percent, pending hearings on a request for a larger double-digit hike.
Some critics, including Florida’s Chief Financial Officer Tom Gallagher, have accused Nationwide and other insurers of deliberately raising their rates so high that homeowners will be forced to drop coverage, or to recoup their losses from last year’s hurricane season. The insurers deny this. Unquestionably Florida is a tough market for insurers. If it’s not hurricane damage, there are sky-rocketing home prices and other environmental hazards such as mold and sink holes. For the record, homeowner insurance costs in Florida have risen nearly 50% since 1999.
The silver lining for purchasers of new manufactured homes: in a hurricane your MH, built to new Florida standards, will stand up as good or even better than a comparable site-built home—and your rates will reflect this. The higher average rate cited above (25%) refers to older "mobile homes" built prior to 1980.
Tip: Many insurers around the US routinely refuse to insure a manufactured home unless it has at least a 4/12 roof pitch, i.e. the roof rises at a rate of 4 inches for every foot. Most MHs have only a 3/12 pitch or less. The idea is a 4/12 roof pitch or higher signifies a home built closer to, or equal to, the construction standards of a site-built home. As odd as this sounds, the assumption is probably correct.
MH industry slowly emerging from 5-year slump. Glut of repo homes nearing an end, Florida and California markets strong, MH loans more available
A preliminary "flash" report issued Aug. 24th by the national trade association Manufactured Housing Institute, reveals the overall sales of manufactured homes (i.e., homes built to the HUD code) in July was down nearly 12 percent from the previous year, with sales of multi-section homes (e.g., double-wides) was down 16%. This works out to a total of 9,234 homes. That’s fairly gloomy news when you consider the market for new site-built housing is still sizzling.
For MH shoppers, the good news is this is a buyer’s market in most regions of the US. With retailers anxious to earn your business, you’ll be able to negotiate a fair price if you do your research (a thinly disguised plug for the Buyer’s Guide).
The market for MH is especially hot in California where many upscale MH land/lease communities (mobile home parks) are experiencing a renaissance. Solvent home shoppers, shocked at the soaring price of homes and real estate, are opting to buy new manufactured homes and site them in communities, thus saving a bundle. Among the most popular brands: Silvercrest, Golden West and Hallmark Southwest. Golden West reports its lead time for building a home ordered for a customer is 12-14 weeks. In the Southwest Cavco Industries has a 15 week backlog.
In northern Florida, Nobility Homes, Inc. reports that its net income is up 50% from a year ago and demand continues strong. Nobility’s target customer remains retirees who continue to flock to the Sun Belt, many moving into MH land/lease communities.
The lending picture for MH buyers is also improving. Industry power house Clayton Homes (with its stable of brands, including Oakwood, Golden West, Schult, Marlette and Karsten) has a robust in-house financing program, including chattel, or personal property loans, for qualifying buyers. Another Clayton subsidiary, 21st Mortgage, now offers financial services to hundreds of independent dealerships around the U.S. Palm Harbor’s in-house financing unit, CountryPlace, recently secured a new round of funding, as did Origen Financial, another MH lender. Elsewhere, Triad Financial Services is going strong. Tip: It’s almost always better to get a home loan from your local bank or credit union, so be sure to check your eligibility there first. Dealer financing is almost always more costly. A cardinal rule: shop carefully for the money first, then look for a home.