Monday, July 25, 2011


They average about half the cost of a regular house, yet "manufactured housing" -- called mobile homes or trailers in the 1970s -- is on the downswing amid the downturn. 

Single Wide Manufactured Home

According to MHI, a trade group representing the factory-built-housing industry, in 2003, there were 130,937 units sold; in 2010, only 50,046 units were sold. Thayer Long, president of MHI, however, said manufactured housing as a percentage of new single-family houses is up slightly from 11.7% in 2009 to 13.5% in 2010.  Compared to this, modular housing is an "also ran." 

Andy Gallagher, executive director of West Virginia Housing Institute, blames a lack of industrywide marketing. "MHI went through a big discussion recently, but the manufacturers defeated the proposal because they believed it would drive up the prices," he said. "We need to attract political leaders, get them into the lots, help them understand that our industry is not about the old tinny mobile homes of the '70s but about spacious and affordable living." 

Lack of industry-wide marketing is also to blame for the poor acceptance of modular homes with the new home buyers.  The less we do, the more we are going to be confused with manufactured homes.  DUH!

One problem has been that with falling prices on site-built homes, the perceived price gap is lessening. According to Mr. Long, in 2009, manufactured homes were available at $41 a square foot and site-built homes at $83 a square foot. 

Who's buying? Mr. Long said the industry has a specific market with which it is very popular.

"We have the 55-years-and-older market, the retiree market. We've also done well on the entry-level market and particularly the rural market. Then there are the millennials -- these people are coming into home-buying age [25 to 34] and are more discerning and educated consumers" who look to buy rather than rent.

Some manufacturers have targeted other demographics and seem to have bucked the trend. Joe Stegmayer, president-CEO of Cavco Industries, a Phoenix-based marketer, reported a $1.6 million profit last quarter.  Cavco, through their Fleetwood Homes division, recently purchased Palm Harbor Homes, a manufactured housing company and its real modular home division, Nationwide Homes.

"We made an effort to reduce overheads, increase market shares and have also been doing some heavy marketing," said Mr. Stegmayer. "With our advertising, we've tried to go for a number of different niches rather than universal campaigns. We're trying to address the immigrant population, the baby boomers, the echo boomers. The echo boomers are potential first-time home buyers ... we want them to know they can have a place of their own."


William said...

I am confused. Cavco boss says...."With our advertising, we've tried to go for a number of different niches rather than universal campaigns. We're trying to address the immigrant population, the baby boomers, the echo boomers". Seems to me like he still has a universal approach to Cavco's advertising. About the only good market out there he has omitted is the senior housing market. Seniors are one of the most viable markets today as SENIORS HAVE MONEY TO SPEND ON SMALLER HOMES. Mods are a great fit for the senior market.

Anonymous said...

Hey William, read the article. It says in it that they already own the senior market.

William said...

Oh really Anonymous. DID YOU READ THE ARTICLE CAREFULLY? It was Thayer Long, lacky for the MHI, who made the statement about the retiree market. Cavco's Stegmayer said NOTHING about the senior market.

John Haddad said...

One of the other big reasons the wobbly box market has declined is no one wants to have a mobile home estate in their back yard. The cost to develop a park has also gone up.