Mobile Home Park Mastery: Episode 345

Analyzing Shipment Data

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Many people track how many mobile homes are sold in the U.S. and are only focused on the total number that are shipped each month. But the more important information for park owners is found in where those homes go. In this Mobile Home Park Mastery podcast we’re going to derive some meaningful conclusions from the 2023 manufacturing data.

Episode 345: Analyzing Shipment Data Transcript

They've been tracking manufactured housing for decades now, as far as number of units manufactured and shipped, they do this to see how healthy the manufacturing part of the industry truly is. All your manufacturers, like Clayton, Fleetwood, they all provide how many units they ship, and they even say where they go, but they're mostly focused from a manufacturing perspective, just on raw number of units that go out the door. What's more interesting for Mobile Home Park owners is to take that data and try and make some logical conclusions that relate to the Mobile Home Park industry. This is Frank Rolfe, Mobile Home Park Mastery Podcast. We're gonna talk about the shipping data from last year and what it means. So here are the stats from 2023. This is a list of the top 10 states that homes were shipped to. Number one, Texas. Number two, Louisiana.

Number three, Alabama. Number four, Florida. Number five, Mississippi. Number six, North Carolina number seven, South Carolina. Number eight, Georgia. Number nine, Michigan, and number 10, Kentucky. We also know that the year of 2023 was not particularly good for mobile home manufacturing. Stats were somewhat down, but mobile home manufacturing has always been extremely weak. It's been lousy since about the year 1999, 2000 when they had the great chattel collapse they had just brought out in the late '90s the concept of a zero down 30 year mortgage. No documentation needed concept similar to what happened to the US Stick-built housing market in the 2007, 2008 great recession. So when it turned out the people had bought all these mobile homes on 30 year money with no income documentation, then you can imagine what happened. With zero down, they had no skin in the game and they had a massive amount of defaults, and the industry fell from about 400,000 units manufactured down to about 60,000 units.

It's still been waffling in misery ever since, but there is some observations that we as park owners can take from the manufacturer's data that might help us make our decisions. The first thing is from the states I just named to you. You probably noticed that nine out of 10 are southern. Only Michigan stands as the only northern state that made the top 10 list. Right off the bat that's interesting because it tells you that most of the homes are going to the southern states and no longer to the Northern states, and it's not always been that way. If you look at manufacturing data from years earlier and decades earlier, you see it was the reverse. So what is causing this change? Why are mobile homes now going more South than North? Well, the first thing you would have to say is, well, the population also tends to be going more South than North.

You probably read articles recently on this general migration of America. Are they leaving northern states because of the weather? Are they leaving because of the political climate? I don't know the answer to that. I'm not a pollster. I can't tell you why they're moving, but it is a fact that people are moving. We have a general population pattern, which is now going to the South. How do I know this? Well, I've read articles recently politically on the fact that the Southern states are picking up more representation than the Northern states, and it's got people a little freaking out. Now, another reason you may see more homes going to the South than the North is that the Northern states require what they called HUD installation standards. And the southern states typically do not. These are some crazy rules brought about by bureaucrats years ago, which state that a mobile home going into a HUD installation state is required to sit on a concrete slab or piers or concrete runners, and it makes no sense because the homes that sit on the land just on ABS plastic pads with concrete bricks holding them up in the air, those homes have no ill effect.

There's no difference between that and the home on the concrete basin, with the only exception being that you have to re-level the home more frequently, which is very inexpensive. Now in the HUD states to put the home on this great concrete menagerie costs about 10 or $20,000. Typically, the home loan is in current rate's gonna be somewhere in the teens. So that means the cost of the customer of this $20,000 concrete creation is costing them an interest alone, two or $3,000 a year when it only costs about $300 to re-level a home, and you only do it maybe once every three to five years. You can see it was not based on any science or logic or even common sense when HUD brought out this rule, but since they adopted it and refused to abolish it, it's forcing home consumers to be unable to afford new mobile homes in the North as while they can afford them down in the South.

You can also tell from this direction of the population where the homes are going, it shows you signs of economic resilience in the South. Texas, which came in first has always been an excellent state as far as job creation. No one can argue that. Dallas, Austin, San Antonio and Houston always pinned the meter as far as economic productivity and new relocations of large corporations. But even states such as Alabama, which came in three, are doing a terrific job of rebuilding their economy while people were not paying attention. Alabama re-engineered itself initially as the automotive manufacturing the new automobile manufacturing capital of America, and convinced many of those manufacturing plants in Mexico from different automobile brands such as Mercedes to relocate those plants to Alabama. Other southern states have also followed due course. South Carolina, North Carolina particularly, have done a fantastic job of rebuilding and strengthening their economies, and that's part of the reason you're seeing that net migration, but also part of the reason you're seeing people able to buy new mobile homes that are relatively expensive.

It also lets you know since new mobile homes are expensive, that home prices are definitely escalating in the South, you can't sell a $70,000 new mobile home in an area where stick bolt homes cost $70,000. No one would buy that. But as economies have changed in the South and supply and demand has changed, home prices have risen and risen substantially. In places like Alabama if you look at their stats, you'll see that the average price of the home there is now higher than in some of the Northern states. But what's the big takeaway from all of this? What can we tell as far as what's going on? Well, the big takeaway to me is it truly, it appears the South is rising again economically from a housing perspective, population movement, it's seen a renewed energy that it has not seen in half a century.

Now, how long will it go and is it just a fad? No, I don't think so. I think that people politically are liking some of the policies more in the South. I know people are enjoying the warmer weather in the South, and as a result, you're just seeing a lot of people who are deciding to make a move, a substantial move from wherever they live to more of these states. But I see that as a long-term trend. What it will mean is that mobile home parks in those states will gradually rise in value as more people move there. As more jobs are created as housing prices go up, so will go up a lot rents in those states, and many of those states. Currently in the past, you've had some of the lowest lot rents in the nation. Mississippi, for example, which ranked number five in home manufacturing receipts, has been known to have lot rents as low as a $100 a month. It's mindbogglingly low. As those go up, let's say those go from a $100 to $200, that's a 100% increase, and still it's such an incredibly ridiculously low figure that tends to make me think there'll be a lot of money created down in those southern states. Markets, parks that have not well been examined in the past will suddenly get back in people's radar screens as being very good productive investments with the great future. This is Frank Rolfe, Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.