News & Notes Archive - May 2006
The outlook for MH homebuyers this summer—where you can expect to find market conditions that favor your getting the best price and minimal delays in delivery.
I’ve been browsing recent reports on the number of manufactured homes shipped to states in the lower 48 so far this year, and comparing them to the same period a year ago. A significant plus or minus change in the totals is a good indication of how the economies in these states are performing. Generally speaking, if the shipments are down in a state, the economy there is less than robust and the retailers are likely struggling to make their sales goals, which puts you the home shopper, in a position to negotiate a better price on the home you purchase. Moreover, because factories in the region may not be busy, the home you order may arrive on your site in four to five weeks instead of eight to 20 weeks.
Conversely, if your home shopping in a hot market, retailers will be less inclined to haggle on price and the factory building your home may have a backlog of three to five months, sometimes more.
Looking at the numbers so far this year, shipments were up in 20 states, down in 25, and flat in four others. New England and the Upper Midwest have been struggling. Shipments to Connecticut are down about 25% compared to this time a year ago, with neighboring states not faring much better: Maine (-15%), Massachusetts (-19%), New Hampshire (-22%), Rhode Island (-50%), Vermont (-20%), New Jersey (-12%) and New York (8%). Pennsylvania was only down 3% but last year at this time they were up 20%.
In the region affected by Hurricane Katrina, shipments were way up in Mississippi (145%) and Louisiana (108%), while the neighboring states of Arkansas, Texas, Georgia and Alabama saw sizeable increases, clearly indicating that displaced families throughout the region are finding new homes outside the immediate Katrina impact zone rather than waiting to return to their old neighborhoods.
Florida saw a drop of 21% but this actually reflects a cooling down from the heated rebuilding boom triggered by the 2004 hurricane season. The state’s MH industry remains robust and the demand for MH is strong, especially from new retirees moving into land-lease communities. Florida-based Jacobsen Homes, for example, is reporting a seven to nine month back log of orders, much of it generated by orders for replacement homes following the ’04 hurricane season.
In the industrial heartland, the struggling auto industry has impacted sales. Michigan is down 19% and the surrounding states are essentially flat. Moving west, North and South Dakota are doing well while Minnesota, Missouri and Nebraska are negative double-digits. Kansas is flat (shipment numbers, that is). Oklahoma is healthy at plus 15%. Wyoming is going great guns at plus 126%, Montana a respectable 8%, while Colorado is down 20% from last year. The Southwest is steady, with the exception of New Mexico which is down 5%.
The western region also remained steady or slightly down. California has cooled off slightly (-8%) due to a cooling housing and job market. Washington and Oregon are essentially flat. Utah is doing very well with a 43% improvement over this time last year.
Again, shipment numbers are only a general indication of the sales climates you will encounter. My advice to clients looking for homes in strong markets where retailers may not give up much on price is to get at least two sales centers competing for your business.
Katrina post-mortem — FEMAvilles, screw-ups, quandered money and finger-pointing
In the October 2005 News & Notes, I reported that close to 15,000 manufactured homes (almost all of them skunk-ugly, bare bones single wides) that FEMA ordered in the aftermath of Katrina to house displaced families were sitting unoccuppied in staging areas throughout the South. Reason: Almost all the municipalities FEMA approached to allow the homes to be placed refused to allow them, claiming the homes would become instant slums, a blight that once allowed would be nigh impossible to eradicate. In short: a NIMBY backlash, big time.
They were right, of course. Callilng the hastily conceived refugee communities FEMAvilles, cities and towns throughout the region threw up legal and regulatory barriers and quickly brought the program to a standstill. To this day, more than 10,000 of these hastily built homes, which cost about $300 million, are sitting in a huge field in Hope, Arkansas. “Heck of a job, Brownie.”
According to an oversight committee that reviewed FEMA’s sorry performance, FEMA purchased 24,967 manufactured homes at a cost of $862 million, and 1,755 modular homes at a total of $52.4 million. Close to 60 percent of these homes had not been deployed to the Gulf region by the end of last month, and probably won’t be. Note: “deployed” does not mean the home would ever be lived in, only trucked to one of 11 staging areas.
You would think that the government would have learned its lesson after the 2004 hurricane season (when Charley and Francis ripped through Florida) and thousands of MH units were ordered and never used. But no, they learned nothing. Even worse, when the Inspector General for the Dept. of Homeland Security investigated the decision making process after Katrina, the IG was unable “to identify the FEMA official(s) who authorized the purchase of manufactured home.”
What does this mean for MH home shoppers? Not much unless you’re in the market for a really cheap home and FEMA begins selling off these homes for pennies on the dollar to fast-buck operators who will turn around and market them to the public. The homes made for FEMA are specially constructed to be for temporary use only. They’re essentially stripped down models with the cheapest construction specs, making them more useful for weekend huntsing or fishing camps, not decent family housing.