Let's begin by stating that those who favor subsidized housing, or other programs for lower income households, routinely do so with “good intentions.”  The questions that ought to be asked are many, but we will focus on why manufactured housing professionals ought to sit up and take notice of facts, challenges and “opportunities in disguise” posed by federal, state and local subsidized housing programs.

The CBPP Says…

According to the Center on Budget and Policy Priorities (CBPP.org) 2,161,468 low income households are receiving Housing Choice Vouchers (HCVs) in 2013. CBPP also asserts that: “Private owners across the United States received $16.6 billion in HCV assistance payments in 2013.”

“Private owners” means private business owners.

Let's drill down on these facts for the next few minutes.

Millions Divided into Billion$ Means…

Take that $16.6 billion and divide it by the 2.16 million who are getting HCVs. That's an average program cost of $7,679.95 per household a year. To rephrase, that's $640 monthly. You might think, “that's rather modest,” right? But what is that getting someone with the HCV, maybe a class c apartment?

In the U.S. today, there are an estimated 420,000 vacant MH sites. $344.03 is the 15 year payment on an 8% APR loan of $36,000, which could be the financed amount on a modest 3 bedroom 2 bath single section manufactured home in many U.S. markets. While the site fees on thousands of MH land lease communities with vacancies will certainly be above $300 monthly, there are thousands of MHCs that have that monthly site fee or less.

Now let's take a different look.

One could also take a $40,000 home-site and $40,000 single section home combo as the financed amount on a fee simple purchase at 6% for 20 years (yes, lower rates and longer terms are available, but we aren't using a full PITI analysis in this calculation either), which would yield a $573.14 monthly payment.

The point is instead of giving billions in subsidies to private citizens and corporations, a similar amount of money could be used to pay the monthly payment on an modern albeit modest single section manufactured home and a home site.  Please see the graphic below as an example of such a home.

2,161,468 lost sales at $40,000 = …

Do the math. That potential 2,161,468 in MH sales @ $40,000 each represents $86,458,720,000 in lost business to those who sell new manufactured homes. As industry pros know, modern MH is lower in initial cost, more energy efficient, safer against a fire and lower cost to maintain than a comparable footprint conventional house.

Let's say our MH Industry manages to hit 70,000 new manufactured homes this year. So 2.16 million possible added orders would be about a 30 fold increase over current production levels.  More to the point, it would be spread out over years, and this alone would take us back to historic production levels.

We need to take a fresh look at many federal, state and local
programs that either harm or benefit the public and our industry.

Jobs

The Manufactured Housing Institute uses the number of 1 HUD Code manufactured home = 1 job. So that 2.16 million homes would be 2.16 million jobs, almost all of them 'new ones added' to the U.S. economy.  

Public Policy

Which is the better public policy? To rent people a unit, or to help more Americans become home owners?

There are studies that suggest the many social and economic benefits which flow to households that are buying their home versus those who are only renting.

Further, which makes the most sense? The rental market is tight now. Why should we economically support via tax dollars rentals? Doesn't it makes more sense to support new manufactured home construction with those same dollars in private-public ventures? Supply and demand suggests that more new MH sales could also help lower rental housing rates.

Clearly, this is a broad brush and we could take a poke at the above, one already being suggested: all the nuances of PITI (Principle, Interest, Taxes and Insurance) were not factored in. Another is that we don't have a figure at hand for what the federal program overhead is on HCVs. But none of that undermines the premise. This is meant as a discussion starter, not a definitive 5 year study for Harvard or Yale.

Other benefits

Just as we brushed past program overhead and all the costs – such as full PITI, energy and maintenance analysis – we also swept past clear victories such a new look at existing program outlines.

For example, we could remind readers that manufactured home owners tend to stay in their homes longer than conventional home owners.  Also, at some point, the loan is paid off. By contrast, there is no end in sight for rent, until one manages to moves out of a subsidized apartment and finally makes a housing purchase.

Nothing's Overnight, but a Longer Term MH Vision is needed

Our industry is not alone in needing a longer-term vision. Corporate America, as one expert I was listening to recently said, is so focused on the next quarter that this investor wondered how many had a serious 5 year business plan?

We need to take a fresh look at ourselves while simultaneously helping tens of millions of Americans, public officials, the mainstream media, investors and non-profits better grasp the many benefits and opportunities of modern manufactured homes.

Common sense as well as the facts favor today's manufactured housing. Almost everything we buy or use comes from a production facility – “a plant.” Even conventional construction is mimicking on-site what we in factory home building do, because much of what they do in so-called "site-building" was actually 'pre-built' in a factory and assemble on location. Increased production of a goods or service tends to keep costs down.

 

“Its a Phenomena!”

Ron Thomas Sr. – Chairman of the Midwest Manufactured Housing Federation (MMHF), Chairman of the Louisville Manufactured Housing Show and award winning founder of Rona Homes – is great at turning a phrase. “Manufactured housing, it's a phenomena!” Thomas passionately proclaims.

Ron Thomas is correct in saying that precisely because MH is “a phenomena,” we need to look at it with new eyes. We need to better grasp all the angles and nuances.

The deeper the open-minded go, the more they understand that old mobile homes are not modern manufactured homes and the more there is to like. Former site-builder Stacey Epperson – who once hated old 'mobile homes', now embraces modern manufactured housing – through her not-for-profit and for-profit efforts.

The just published, exclusive version of a new Foremost Insurance report on manufactured home owners and trends provides even more facts that help MHIndustry pros make the case for a better appreciation and understanding of the value we've brought to millions of Americans.

Subsidized housing is the tip of a huge iceberg. Those billions can clearly be better used.

A trillion dollar annual U.S. housing market is begging manufactured housing pros and investors to step up to the plate!  With over 10,000 seniors retiring daily, with millions making less than they did 5 years ago, today's manufactured homes are poised to shine. We need to see the opportunities and develop the steps needed to make them happen. ##

Download CBPP.org HCV Fact Sheet

L. A. 'Tony' Kovach ManufacturedHomeLivingNews.com | MHProNews.com | Business and Public Marketing & Ads: B2B | B2C Websites, Contract Marketing & Sales Training, Consulting, Speaking: MHC-MD.com | LATonyKovach.com | Office 863-213-4090 Connect on LinkedIN: http://www.linkedin.com/in/latonykovach