Are You Among 5 Groups Millions Harmed by Market Manipulation and Misinformation on Manufactured Homes? Mobile Homes-Manufactured Housing-Trailer Houses-Prefabs-Modulars Part II FEA
Yesterday’s article on this topic began with these words: “Taxpayers. Employees. Affordable housing seekers. Smaller businesses and possible startups. Investors. They are the five (5) groups that are among those apparently harmed by purported evidence of market manipulation and routine misinformation that is commonplace regarding manufactured homes.” FEA is short for Facts-Evidence-Analysis. The definitions promised are in the first installment of the article which is linked here. If you have not yet read the first installment, it is recommended that you do so before proceeding to this second installment. Following the definitions of various forms of factory-built housing, including but not limited to manufactured homes, yesterday’s article presented (1) Taxpayers (2) Affordable housing seekers. So, today’s installment will address (3) smaller businesses and possible startups, (4) employees, and (5) investors.
What will also be addressed in this installment is “purported evidence of market manipulation.” It should be noted that proper definitions are part of the “commonplace” or “routine misinformation” about “manufactured homes.” So, for years, MHProNews as well as our MHLivingNews sister site have provided definitions and their sources. With those foundational points in mind, let’s plow ahead in the balance of the 5 groups harmed by “purported evidence of market manipulation and routine misinformation” about HUD Code manufactured homes.
(3) Smaller Businesses and Possible Startups.
From sources deemed reliable there are reportedly “numbers” of prior builders of HUD Code manufactured homes that would re-open one (or more) production centers once total national production achieves about 200,000 units in the U.S. a year. Even absent those sources, a document produced by the Manufactured Housing Institute (MHI), which was later removed from their website (but was retained by MHProNews) suggests something similar. See that illustration with annotations by MHProNews below. Per MHI’s graphic shown below, in 1995 there were 92 corporations and 285 plants producing HUD Code manufactured homes. In 1998 was the latest year for a highwater mark and that year there were 89 corporations with 330 manufactured home producing plants.
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3a) Among the thousands of businesses that were lost in the slide of manufactured housing from producing 373,143 new homes in 1998 to the bottom in 2009-2010, when only 49,683 (2009) and 50,056 (2010) were built were several independent or other trade publications. The now defunct, but previously vibrant for decades, Manufactured Home Merchandiser Magazine was the source of some of the data the follows.
MHProNews Table
Year
New HUD Code Manufactured Home Production Total for Years as Shown
1995
344,930
1996
363,345
1997
353,686
1998
373,143
1999
348,075
2000
250,366
2001
193,120
2002
165,489
2003
130,815
2004
130,748
2005
146,881
2006
117,373
2007
95,752
2008
81,457
2009
49,683
2010
50,056
2011
51,618
2012
54,881
2013
60,228
2014
64,334
2015
70,544
2016
81,136
2017
92,902
2018
96,555
2019
94,615
2020
94,390
2021
105,772
2022
112,882
2023
89,169
2024
103,314
3b) No less a source than Kevin Clayton, CEO of the Berkshire Hathaway (BRK) owned Clayton Homes said that the loss of financing in the manufactured home industry and other factors caused thousands of manufactured home businesses to vanish. Why Clayton mentioned 2005 or 2000 instead of 1998 is a fair question. That said, not Kevin said that “limited financing options for our home buyers” was a factor “which has accounted for more than 160 plant closures, more than 7,500 home center closures, and the loss of over 200,000 jobs.” Needless to say, most of those businesses that were closed were smaller businesses. But that also implies that if manufactured housing truly revived in a robust fashion a wave of new production centers (a.k.a.: plants or factories), retail centers, and other businesses would likely occur. Note this remark by Clayton was made to Congress under “truth in testimony” certification.
3c) Looking deeper into the issues, even some larger businesses were lost, not just smaller or midsized ones. From the now defunct Manufactured Home Merchandiser Magazine was the following.
“In the business world, the rear-view mirror is always clearer than the windshield.” – Warren Buffett. That begs a key question. Why don’t more people LOOK at the rearview mirror so they can learn more about the patterns that influence what’s ahead? Note: depending on your browser or device, many images in this report can be clicked to expand. Click the image and follow the prompts. To return to this page, use your back key, escape or follow the prompts.
3d) Cavalier Homes in 1998 produced 24,387 new manufactured homes. Oakwood Homes produced 38,237 new homes that same year. Both of those firms are now subsidiaries of Clayton Homes. Depending on the source, Clayton produces somewhere around 50 percent of the industry’s production (perhaps 48 percent, per some). Clayton arguably obscures their total manufactured home production by including other forms of housing, including conventional housing, modular, etc. besides HUD Code manufactured housing. That said, in 2024 if Clayton produced exactly 50 percent of all manufactured home production that would mean they built 51,657 new homes. That’s substantially less than what Cavalier and Oakwood produced in 1998 (Cavalier=24,387 + Oakwood=38,237 = 62,624. It is even less than what Cavalier, Oakwood and Clayton (28,429) produced combined in 1998. Here’s that math: (Clayton in 1998) 28,429 + 62,624 = 91,053. If someone totaled all of the firm’s production in 1998 that have since been acquired and are under the Clayton Homes umbrella, including Schult Homes, Southern Energy, Golden West Homes, and Karsten Homes, it is safe to say that those firms combined produced more new manufactured homes than the entire industry did in 2024.
3e) While exact numbers are not available at this time, there are those who say that in the apex of the industry in the late 1990s were around 20,000 plus ‘street retailers’ across the U.S. A fellow MHI member to Clayton Homes (BRK) is Cavco Industries (CVCO). Cavco claimed that there are 4000 retailers across the U.S. But that number is disputed because of the assertion by some that the total includes selling land-lease manufactured home communities (MHCs). To further illustrate the point that fewer than 4000 street retailers exist in the U.S. is the point that Clayton Homes only has around 360 company owned retail sales centers, or as their website states: “More than 2,900 team members support Clayton Retail, with over 360 retail centers across the United States.” Clayton’s manufactured home transportation division has “More than 200 team members.” Counting independent retailers and company owned stores, per their website on this date, their website provides the locations of “All 780 locations.”
3f) So, if roughly half of the total new manufactured home production in the U.S. is built by Clayton, and many independents sell Clayton Homes, interpreting and projecting from their data perhaps there are 1600 street retail locations from coast-to-coast. That said, on June 21, 2023 the following illustration (a screen capture from a Cavco Investor Relations presentation) is misleading if not false. This may be materially incorrect, using SEC definitions. What is absolutely incorrect is Cavco’s claim at the time that there were 40,000 land lease communities. See the report linked here and the comments in the call out box and captions that follow the illustration immediately below.
Cavco’s more recent presentation does not provide these same ‘factual’ claims, perhaps because of prior fact-checks by MHProNews that debunked some of their claims. For instance. On 6.21.2023 it is now known from George “Mac” McCarthy at the Lincoln Institute, which cited Homeland Security that there are “50,393 MHCs in the US” per FEMA research. But previously, there were others that said that the Cavco provided information, which cited MHI as the source, was incorrect. The number of MHCs are shrinking, not growing.
3h) Among the purported antitrust (think market manipulation) allegations that exist in the manufactured housing industry is the Cavco’s acquisition of once independent Lexington Homes was a “killer acquisition.” Cavco may have bought Lexington to close it. Lexington Homes, per sources deemed reliable, was a member of the Manufactured Housing Association for Regulatory Reform (MHARR). Indeed, several of the acquisitions of firms by Clayton Homes (BRK), Champion Homes (SKY), and Cavco Industries (CVCO) were MHARR members. Given that MHARR has long been seen as a thorn in the side of MHI and given that MHI has long been dominated by larger manufactured home producers, community operators, and lenders, it is at least a plausible concern based on evidence.
3i) Antitrust and consumer rights advocate Samuel “Sam” Strommen research for Knudson Law alleged that ‘the big three’ of manufactured housing were colluding in dividing up the manufactured home industry’s production among themselves. Strommen’s allegation was well after Representatives Maxine Waters (CA-D), Emanuel Cleaver (MO-D), Keith Elison (MN-D), and Mike Capuano (MA-D) who said that Clayton itself had a ‘near monopoly’ over manufactured home lending. That said, their referral to the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DoJ) antitrust division apparently went nowhere, even though the CFPB and the DOJ were mostly under Democratic leadership during and since the time of their referral.
3j) To the points raised by Rep. Waters and her colleagues or Strommen, who specifically said that Clayton’s sister brand 21st Mortgage Corporation appeared to be guilty of the antitrust violation of “tying.” According to the DOJ website: “Tying exists when the seller of a product requires his purchasers to take another product as well.”
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According to Cornell’s Legal Information Institute (LII) are the following.
“A tying arrangement is an agreement in which the seller conditions the sale of one product (the “tying” product) on the buyer ’s agreement to purchase a separate product (the “tied” product) from the seller.” …
“Antitrust concerns arise when such arrangements are used to maintain or augment the seller’s pre-existing market power or impair competition on the merits in the market for the tied product. When unlawful, tying arrangements may be illegal per se or illegal under the rule of reason.”
3k) The evidence of market manipulation of the manufactured housing industry can be broadly classified in two different ways, per researchers.
There is evidence of market manipulation by conventional housing competitors of HUD Code manufactured housing.
Then there is evidence of market manipulation by those in the manufactured housing industry.
To provide evidence for both, consider the following reports.
3l) Strommen used the following as an example of how the Big Three producers (all of which have had board positions at the Manufactured Housing Institute or MHI) showed the following. Not only was that arguably materially incorrect (and thus a potential SEC violation) but if it was done to offer cover for Clayton Homes than it was also evidence of collusion that may violate antitrust laws. Clayton at that time reportedly had a 50 percent market share, perhaps a bit more, not 47 percent, as Skyline Champion (SKY) stated in their investor relations graphic.
This is a hard statement to defend. Per our sources, Skyline Champion buys this data and should have known that what they published here was wrong. That suggests that for some reason, Skyline-Champion and Clayton have worked to understate Clayton’s market share to the industry, potential investors, and presumably public officials.
3m) The results of the policy by Berkshire Hathaway owned 21st Mortgage Corp and their 2009 “tying” letter to their sister brand, Clayton Homes, appeared to accelerate the consolidation of the industry and the growth of Clayton Homes’ market share.
Why keep the industry at low ebb? Follow the money and the acquisitions.
The evidence and the facts provided herein, when carefully examined, routinely point in a direction of several apparent legal issues that routinely go back to certain MHI dominating members and some select and apparent allies. This is similar, in hindsight, to the different but still insightful pattern that was discovered when investigators examined why the Madoff scandal was not exposed sooner. Madoff’s scam and that of those apparently monopolizing manufactured housing are different. That said, among the similarities is this. In both instances, some of those not directly involved in the primary offending company were benefiting. Those secondary benefits shed light on MHI and what has been occurring since the dawn of the Berkshire era. Note: depending on your browser or device, many images in this report can be clicked to expand. Click the image and follow the prompts. To return to this page, use your back key, escape or follow the prompts. https://www.manufacturedhomepronews.com/tim-williams-ceo-of-berkshire-owned-21st-mortgage-corp-and-manufactured-housing-institute-board-member-makes-stunning-admission/
3n) But it isn’t just production or retail that are impacted by evidence-supported claims of antitrust violations. There is also the land-lease manufactured home community (MHC) sector. Strommen referred to those as “the REITs” in his antitrust research. But since his research was published by MHLivingNews and MHProNews, several antitrust lawsuits were launched on behalf of residents living in communities that are often operated by MHI member firms and/or by firms that are members of an MHI linked state association.
3-o) Besides reporting on the antitrust lawsuits, mainstream media has at times suggested that a oligopoly style monopolization is underway in the manufactured home community sector.
3p) This isn’t just apparent evidence of antitrust violations or market manipulation. For those who grasp the two laws passed by Congress in 2000 and 2008 meant to benefit manufactured housing which MHARR and MHI both said are not being properly enforced, there is even more stunning evidence of collusion that seems to support the allegations made by professionals like Doug Ryan (then with CFED which later rebranded as Prosperity Now), senior economist James Schmitz and his colleagues, and Sam Strommen. For decades ‘mom and pop’ operators developed ‘mobile home parks’ (more properly known since June 15, 1976 as manufactured home communities or MHCs) adding to the total number of sites available for HUD Code manufactured home placements. Because new communities were steadily coming online there was a ‘free market check’ on the rates that existing manufactured home communities (MHCs) could charge. That’s what ample and growing supply and steady demand tends to result in. But when zoning barriers apparently increased to ‘zone out’ manufactured homes and placement became a greater challenge, dominating community operators often involved at MHI celebrated the difficulty of getting new communities developed. Is it any surprise that with supply constrained and demand ‘recovering’ from the lows of 2009 and 2010 that site fees have skyrocketed in thousands of locations around the country?
Here is how Equity LifeStyle Properties put it in their investor relations (IR) presentation. Note, to see the illustration below in a larger size, depending on your browser or device, click the image and follow the prompts or click here to open in a new window and follow the prompts to see it in a larger size.
3q) With the ELS presentation above in mind, now look at some similarities between ELS’ IR pitch page above and the Sun Communities (SUI) investor relations (IR) pitch page shown below. Sun said in bold near the top “Compelling Supply-Demand Fundamentals” while ELS said “supply constrained asset class” that has “Growing demand coupled with almost no new supply is a strategic advantage for ELS.” To illustrate the point, imagine if apartment operators managed to somehow constrain new apartment construction and then celebrated “Growing demand coupled with almost no new supply is a strategic advantage…” The Sun illustration below can be opened to a larger size at this link here, or depending on your device/browser, click the image and follow the prompts.
“Virtually no new supply [of land lease manufactured home communities or MHCs] has been added for years” That is stated in contrast to the fact that with multifamily housing (apartments, etc.) there is a steady addition of new developments and rental properties being produced. https://www.manufacturedhomepronews.com/sun-communities-compelling-supply-demand-fundamentals-virtually-no-new-supply-added-for-years-but-manufactured-home-sales-drop-quarterly-y2d2023-data-with/ Note: depending on your browser or device, many images in this report can be clicked to expand. For example, in some browsers/devices you click the image and select ‘open in a new window.’ After clicking that selection, you click the image in the open window to expand the image to a larger size. To return to this page, use your back key, escape or follow the prompts.
3r) Additionally, while MHI offers an apparent ‘fig leaf’ of advocacy for the full and robust use of the Manufactured Housing Improvement Act of 2000 (a.k.a.: MHIA, MHIA 2000, 2000 Reform Act, 2000 Reform Law) and its enhanced preemption provision, they have not yet sued to get that law enforced over 2 dozen years after it was first enacted. That remark below is arguably useful for MHI when they tell “all segments” of the industry (e.g.: independent street retailers) of their ‘efforts’ to get federal “enhanced preemption” enforced. That fig leaf is also potentially useful for their defense against antitrust charges (see Strommen’s remarks on MHI’s role in an apparent antitrust violation(s) that fosters consolidation of the industry).
3s) The direct and indirect evidence plus several allegations and admissions made by people with some knowledge ought to be more than sufficient to spark a serious antitrust probe by state attorney general(s) and/or by federal antitrust enforcers. Some examples follow. Note that each of these are apparently part of the evidence of why manufactured housing is underperforming during an affordable housing crisis.
Andy Gedo’s remarks below are quite relevant to this discussion. Per Gedo, a longtime MHI member, “Clayton’s finance capability is a barrier to entry (what you [MHProNews/MHLivingNews] like to call a “moat”) that limits competition. Barriers to entry can sometimes be exploited through unfair competition to gain monopoly power in a market.” But note that it isn’t MHProNews or MHLivingNews that developed that term “moat” it is a Warren Buffett term, as the quote from Kevin Clayton further below reflects. MHProNews, MHLivingNews and this contributor to the mainstream Patch is merely applying a term popularized by Buffett and preached by his acolytes and business managers.
3t) In short, there is posturing on the part of MHI that they are trying to expand the market for manufactured housing. But the actual behavior of MHI, and the behavior of several prominent MHI members, clearly seems to indicate they like the status quo. Frank Rolfe, an MHI member, flatly accused MHI for being a factor in the industry’s low production. Rolfe later said that there is no sincere desire to solve the affordable housing crisis, in essence, pointing a finger at himself as well as at other MHI members.
3u) Let’s do a mini-summary. MHI postures being in favor of industry growth but then fails to do the commonsense steps necessary to make organic industry growth a reality. Evidence for that is found in reports like those that follow below and are supported by fact checks using left-leaning Google’s AI powered Gemini as well as left-leaning Bing’s AI powered Copilot.
In an ‘in your face’ instance of MHI’s apparent corruption is that they have been advocating alongside manufactured housing industry competitors in ways that benefit those competitors and which routinely ignores the interests of smaller manufactured housing industry firms.
3v) The arguments for the apparent corruption of MHI is also supported by evidence of several well-illustrated cases of conflicts of interest, corrupt, and purportedly law violating actions and behaviors. MHI presents half-truths and paltering on a relatively common basis as they posture working on behalf of “all segments” of the industry when in fact they were apparently working for consolidators of the industry.
Lie false
palter
new dems
copilot
4) Investors, large and smaller, are arguably hurt by this pattern too. When millions of new housing units are needed, and there is demonstrable evidence that only manufactured housing can rapidly meet that need without federal subsidies, then the potential of the industry is understood to be in the tens of billions of dollars annually. Sam and Eugene Landy bucked the tide at MHI to this extent, that they came out in favor of essentially tripling the number of land-lease communities. So, despite the claims of ELS and Sun that it is a benefit to them not that there is a market advantage, it is not necessarily so. In fact, Gary Shiffman undermined his own IR presentation when he admitted that there are times when it is more profitable to develop a new community that it is to pay the ever-more costly purchase of existing properties.
Besides, as the Blue Orca controversy and related legal action reminds objective thinkers, the decisions made by Shiffman (and likely others in MHVille) is so questionable that he (and perhaps others) ‘ought to be in prison.’
5) Employees. MHProNews and MHLivingNews are the only known manufactured home industry platforms that have repeatedly made it clear that market manipulation is undermining the earnings potential of employees. Nor is that easy to debate for those who might deny that because Kevin Clayton admitted that 200,000 jobs were lost during the downturn, and fewer jobs means fewer opportunities and routinely lower pay. According to the Biden-Harris (D) regime and others have said that the lack of a truly competitive market may be costing the industry’s employees about 17 percent higher earnings potential.
There are obviously other groups that are harmed by this pattern of market manipulation and the lack of millions of more affordable manufactured homes. For whatever reasons, many researchers seem to be skittish to point the finger at possible antitrust violations, particularly if it involves larger firms that have deep pockets. That is also often true for mainstream news media, which either by design or by accident often fail to consider the potential for market manipulation as being a possible reason for the industry’s underperformance in the 21st century. No doubt millions are being impacted by this pattern that reportedly costs the U.S. economy two trillion dollars a year in lost productivity.
It is worth noting that most of the above and in our original report (installment 1, linked here) are ONLY found on MHProNews and/or MHLivingNews. MHI mentions Jim Schmitz only once and then to slam him and his co-author.
MHProNews Note: depending on your browser or device, many images in this report can be clicked to expand. For example, in some browsers/devices you click the image and select ‘open in a new window.’ After clicking that selection, you click the image in the open window to expand the image to a larger size. To return to this page, use your back key, escape or follow the prompts.
What doesn’t fit the MHI narrative is routinely ignored, downplayed, or slurred by those in the MHI media orbit.
Our son has grown quite a bit since this 12.2019 photo. All on Capitol Hill were welcoming and interested in our manufactured housing industry related concerns. But Congressman Al Green’s office was tremendous in their hospitality. Our son’s hand is on a package that included the Constitution of the United States, bottled water, and other goodies.
Tony earned a journalism scholarship and earned numerous awards in history and in manufactured housing.
For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.
This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.
