News & Notes Archive - October 2005
MH industry delivers 12,000 single-section homes to FEMA staging areas in hurricane stricken Gulf Coast but there's no place to put them. How manufactured home buyers will be affected in the coming months
With more than 400,000 homeless evacuees from hurricanes Katrina and Rita living in 120,000 hotel rooms in the Gulf Region, and another 100,000 still in temporary shelters, the Federal Emergency Management Agency (FEMA) has run into strong resistance from cities and towns throughout the Gulf region opposed to being host to tens of thousands of people living in instant, and probably dysfunctional, trailer park communities, or, for that matter, even hundreds of new residents who would reside in temporary subdivisions of manufactured homes.
Aside: it’s irritating how the media so often lumps trailers and manufactured homes (“mobile homes“) together, as in “FEMA has ordered 125,000 trailers and mobile homes.“ The actual total of manufactured homes ordered by early this month was close to 15,000 single-section homes, but expect that number to rise.
As a result, by the end of the first week, 12,000 single-section manufactured homes ordered by FEMA from MH builders in the region, are sitting empty on five staging lots in Texas, Alabama, Louisiana and Mississippi. While FEMA attempts to negotiate contracts with local governments to place the homes, the dilemma has put the MH industry in a quandary.
“We just got a call from FEMA instructing all the builders to stop shipping the homes but keep building them,“ reported Bruce Savage, spokesman for the Manufactured Housing Institute, the industry trade association that is helping coordinate FEMA home orders. Savage explained many builders could quickly run out of storage capacity at their factory sites.
Unquestionably there are critical gaps in the recovery process following the largest dislocation of an American population since the Dust Bowl of the 1930s. With 330,000 families already signed up for housing assistance (a meager $786 for three months of rent), the crisis, both for these unfortunate families, and for the beleaguered federal government, will be with us for many months to come. This is truly an historic time.
If you are shopping for a manufactured home, or plan on doing so in the next six months, here’s what expect:
-- If you order a home today from a MH builder that is also providing homes for FEMA, expect a delay of 8-12 weeks. Your sales center will likely advise you if your manufacturer is handling FEMA orders and what the back log is.
-- Many MH builders not providing FEMA homes are also reporting 7-10 week backlogs due to the recovery beginning to take hold in the MH market in general. With the ’99-’04 industry downturn now all but history (and the inventory of repossessed homes nationally down below 20,000), the demand for new MH has begun to rise. As interest rates on home loans also click upwards, this trend will likely continue.
-- At this writing, home prices have gone up a click across the board. Phone interviews I conducted in the past ten days with MH manufacturers around the U.S. confirm that the rising cost of oil, energy, materials and transportation (most of it affected by the price of crude oil world-wide) has resulted in an average price jump of around $3,000 per home. This means an entry-level double-wide now costs in the neighborhood of $45,000. MH builders explain that the price increases are particularly noticeable with materials made from petroleum products, including plastic, fiberglass, shingles, adhesives, linoleum flooring, some particleboard, even nylon carpet yarn (which one builder reported went up 14% in September).
-- Expect the back log in general to improve a bit in early 2006 as the hurricane-related demand for FEMA housing ends. But the demand for MH housing should still be quite strong as tens of thousands of former home owners, with their insurance settlement checks in hand, will be shopping for new homes, particularly in the Gulf region.