News & Notes Archive - June 2006
Some recent findings, and my thoughts on the best kept secret in American housing
I recently spoke to Joan Brown, the principal director of Northwest Pride, an ad hoc group of manufactured home builders in the Pacific Northwest (Oregon, Washington and Idaho) that regularly runs TV commercials extolling the benefits of manufactured homes. The ads have been very well received. They don’t promote any one manufacturer, but instead showcase manufactured homes in general. Northwest Pride also periodically conducts focus groups with consumers and potential home buyers to learn more about their attitudes toward manufactured housing. I asked Joan to share any insights gleaned from recent focus groups.
“Comparatively speaking, the Northwest is quite a sophisticated market,” she told me. “We’ve learned we’ve made huge progress in convincing the public that we can make an attractive product indistinguishable from site-built. But, when the focus groups were asked, ‘If someone you trust were to tell you something about manufactured homes that would make you shop for one, what would that be?’–in every group without fail, the answer was: They are well built and, They will appreciate.”
You’d probably like to hear the same thing about any home you’re considering buying, whether site-built, or modular or manufactured (i.e. HUD-code). Can this be said of all manufactured homes? No way. But it is possible to make such claims for a small but significant percentage of manufactured homes, and herein lies the sweet spot of the “best-kept secret in American housing.” Allow me to explain:
I have long believed that if a manufactured home (i.e., one built to the Federal HUD building code) looks indistinguishable from a site built home and has the same quality construction as a site-built home, people wouldn’t care what code it was built to. Put that home on a piece of property, eliminate the title and tie it to the land as real estate, and, bingo, mainstream housing–and very likely at a meaningful savings over a new site-built home. That’s the heart of the best-kept secret.
Now, why isn’t this “secret” common public knowledge? The answer, I submit, is because at least 85% of manufactured homes look like “mobile homes,” not like site-built homes, and that’s what the public sees. The estimate is mine, based on years of observation. That leaves the remaining 15% with an exterior appearance indistinguishable to a site-built home. Typically, homes in this category are two-sections (i.e., double-wide) with at least a 4/12 roof pitch and an attached two-car garage.
This charming manufactured home is in a new Alabama subdivision built by a major home developer who decided to go with manufactured homes (by Patriot Homes) rather than site-built offerings. This is happening more and more. The secret is getting out. Photo courtesy of Patriot Homes.
As to construction quality, I’d estimate that around 80% of manufactured homes are simply not built with the same construction quality as comparable site-built homes. Again, this is a guestimate, but the reason for this is manufacturers need to keep the sale price down to where it’s affordable for people who can’t afford site-built homes–and that’s the MH industry’s core market. The only way to do that is lower the construction quality. But, conversely, about 20% of manufactured homes have a construction quality that equals or exceeds comparable site-built homes.
As for property appreciation, even a crummy site-built home appreciates because it’s tied to the land as real estate and taxed as improved property. With very few exceptions, the same is true with manufactured homes. But manufactured homes in this category are a distinct minority. For example, of the approximately 124,000 manufactured homes sold in 2005, only about 30,000 were tied to their property as true real estate.
So, the secret is this: If you want a manufactured home that looks indistinguishable from a site built home, has a construction quality equal or better than site-built homes, and will appreciate like a site-built home, simply order one from a reputable dealer, using the higher quality construction specs, add an attached garage, plus decks, porches and landscaping, and tie you new home to your land. You’ll do so at a significant savings over a new comparable site-built home and you will be amazed and pleased.