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Are MH parks going to be a thing of the past? - Posted by Bill-NC
Posted by Bill-NC on November 26, 2002 at 11:41:56:
This year lot vacancies are way up in the Wilmington, NC area. From talking to MH dealers, it seems the sale of single wides has dropped to almost nothing. I’m told the reason is the financing rates for a doublewide land home package is so low, the monthly payments are about the same as a buyer would have to make on a singlewide plus the lot rent. This is because interest rates on singlewides are much higher and lot rents have gone up so much. Unless interest rates go back up for land home packages, this trend may not end. My question is, “Is this the trend all over the country or is this just a local problem?” Anyones comments would be welcome!
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I hope so… - Posted by DougO(NM)
Posted by DougO(NM) on November 30, 2002 at 19:11:41:
I just wanted to see if anyone was paying attention! Of course I don’t really hope that Land Lease Communities for Factory Built Housing become a thing of the past…it’s too good a solution to affordability in most areas of the country. As long as there are MH Parks and “Trailer Courts”, there will be opportunities for we few, we happy few, that understand the concept of turning htem into communities. As for building new communities and filling them with new homes financed at 130% of invoice + add-on’s, sold to folks that can’t afford them, I most certainly do hope those days are past. HEre again will be opportunity to buy vacant properties, and fill them up with the repo homes of the aforementioned type deals, bought at wholesale or less. There will continie to be opportunites to make a very good living in this business at least for the remainder of our life times.
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Re: Are MH parks going to be a thing of the past? - Posted by ray@lcorn
Posted by ray@lcorn on November 30, 2002 at 14:42:01:
Bill,
What’s happening in other parts of the Wilmington housing market? Where are apartment vacancies? Is there a general downturn or are the vacancies specific only to mobile home parks?
What about population trends and unemployment/income levels? The reason I ask is because those are the two demographics that drive all real estate types.
I don’t see mobile home parks ever being a thing of the past. The product, which is affordable housing, has too great of a need. Granted there will always be swings in the market as Eric C related below. When traditional single family housing becomes more affordable, mobile home sales suffer, and hence park numbers suffer along with them. Often a result is that the quality of the rent roll deteriorates as parks struggle to maintain occupancy with lesser qualified tenants.
And parks have always been subject to the whims of government actions, be it zoning or other regulation of the only nationally regulated housing type.
The most ruinous act I’ve seen lately is the TX law requiring homes to be financed with land. That one act is going to prove to be the complete undoing of the TX manufactured housing market, historically one of the strongest markets in the country. I predict that it will be either heavily modified or completely repealed once the effect work their way through the state’s economy. For an interesting article about the effects of the TX law, go to http://www.wacotrib.com and search for HB 1869.
That’s the type of misguided legislation that ruins markets. Similar thinking created the real estate meltdown in the late eighties.
Back to your question, I haven’t seen or heard that parks nationwide are in trouble. But all real estate is local, and as such is heavily influenced by local economics. Macro conditions (interest rates, finance criteria, etc.) do affect the performance of real estate properties, but not as directly or immediately as local conditions.
ray
Re: Are MH parks going to be a thing of the past? - Posted by James Buster
Posted by James Buster on November 27, 2002 at 20:28:43:
Single-family homes generally offer municipalities higher developer fees (read: extortion), and more tax revenue because mobiles pay vehicle taxes which bypass local government. Add a reputation, deserved or not, for higher crime, not to mention the supposed undesirability of “those people”, and I’d say that, in the long run, parks that fail for reasons you describe will not be replaced.
Re: Are MH parks going to be a thing of the past? - Posted by Eric C
Posted by Eric C on November 26, 2002 at 13:40:55:
Hi Bill -
I can’t speak to your local area, but situations like this occur around the country on occasion.
During the early stages of the oil crash in Texas, MHs were abandoned everywhere; it didn’t matter whether or not they were located in MH parks or on individually owned lots.
It’s also important to realize that all housing was affected; not just MHs. Lower end housing (apts and houses) experienced major vacancies, starter homes were left unsold and up the food chain it went.
Some years into the downturn, even better (read that as newer) housing developments experienced problems. Purchasers of brand new houses would call to say that “the keys were in the door”.
Where did they go?
Right up the street to a newer, larger, and even less expensive home.
That’s what happens when prices fall; those who can move up.
When interest rates fall, the same thing can happen. People look to improve their situation.
So anytime prices fall you have people moving up to nicer places. And if interest rates fall enough (making things more affordable), you have the same result.
Don’t worry. These things don’t last forever and I have to say that I always make more money during downturns than I do during “boom times”.
Just remember the old saying:“Real Estate is comprised of ten year cycles and people with five year memories”.
Take care,
Eric C
Re: I hope so… - Posted by Mr. C
Posted by Mr. C on November 30, 2002 at 21:38:42:
“As for building new communities and filling them with new homes financed at 130% of invoice + add-on’s, sold to folks that can’t afford them, I most certainly do hope those days are past.”
Not yet.
Hold on a minute… - Posted by Mr. C
Posted by Mr. C on November 30, 2002 at 16:28:21:
The most ruinous act I’ve seen lately is the TX law requiring homes to be financed with land. That one act is going to prove to be the complete undoing of the TX manufactured housing market, historically one of the strongest markets in the country. I predict that it will be either heavily modified or completely repealed once the effect work their way through the state’s economy. For an interesting article about the effects of the TX law, go to http://www.wacotrib.com and search for HB 1869.
I have an arrangement with three chattel lenders, and I can write home-only loans in Texas (or any other state) all day long… as long as the person making the loan doesn’t own the land that it will sit on… in which case it becomes “real property” and that’s what the law is intended to address. It all relates back to the seller-financed promissory note issue… which apparently got out of hand there. From what I can see, this is just catch-up legistation.
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Re: Are MH parks going to be a thing of the past? - Posted by Bill NC
Posted by Bill NC on November 27, 2002 at 21:13:03:
Thanks Eric for your reply. I hope you are right and the situation doesn’t last forever. I would still like to hear from others if the situation I described is happening in other areas of the country or if this is just happening here…Bill
Re: Hold on a minute… - Posted by ray@lcorn
Posted by ray@lcorn on November 30, 2002 at 17:19:27:
Perhaps I misunderstood the way the law works. I haven’t read it, and I don’t do business in TX, so I’ve relied on news accounts of what is happening.
Quoting from the article in the Waco Tribune, “The law says if someone wants to buy a home and place it on land he or she already owns, the land becomes “attached” to the home for lending purposes.” I didn’t mean to imply chattel financing was not available, just not to a buyer that owns the land where the home will be placed. I also understand this applies to a co-signer (such as a parent for their children) who owns the land where the home is to be placed.
This effectively bars a landowner from chattel financing, correct? In rural communities where familiesespecially, this is a real problem.
Perhaps my phrasing was a little too strong as the act being ruinous, but in an situation like TX where the market was already terribly soft, I tend to react strongly to further constraints from government. The same article also quotes a state senator as saying the law has problems…
"HB 1869 “probably went a little too far,” said State Sen. Kip Averitt, R-Waco, who backed the bill while serving in the Texas House… “I think there is the possibility some changes will be made,” Averitt added. “Its intent was to make sure consumers knew what they were getting into when they bought a mobile home. But if we’re restricting consumers from buying homes, something needs to be readdressed.”
I apologize for my confusing choice of words, and appreciate your questioning the intent.
ray
Re: Hold on a minute… - Posted by James Buster
Posted by James Buster on November 30, 2002 at 17:11:37:
>I have an arrangement with three chattel lenders, and I can write home-only loans in Texas (or any other state) all
>day long… as long as the person making the loan doesn’t own the land that it will sit on… in which case it
>becomes “real property” and that’s what the law is intended to address. It all relates back to the seller-financed
>promissory note issue… which apparently got out of hand there.
How do seller-financed notes get “out of hand”? Commercial lenders whining about competition so they get the legislature to help them out?
Re: Hold on a minute… - Posted by Mr. C
Posted by Mr. C on November 30, 2002 at 17:47:45:
I also understand this applies to a co-signer (such as a parent for their children) who owns the land where the home is to be placed.
IF the person who owns the land will be charging you LOT RENT, then you can purchase via chattel financing.
(did I miss any other questions?)
Re: Hold on a minute… - Posted by Mr. C
Posted by Mr. C on November 30, 2002 at 17:34:30:
Have you ever read a computer article in the newspaper, that wasn’t written by a computer person? That’s sort of what happened here.
Every other state in the union (to my knowledge) ties a home to the land THAT YOU OWN as being “real property”. The Texas legistation was just playing catch-up with that.
My personal read on this is that the home is worth more than the land is, or will take longer to pay-off than the person might live (referance the elderly couple in the article), so the lender wanted the land tied to it as security.
We’ll all do the same thing if we were lenders I’m sure.
The Waco article pretty much explains how things got out of hand… homes on land that the buyers didn’t own (read - no equity loans), no septic systems (god forbid people are actually that stupid)… etc… etc…
People being the people that they are, have just blown the wording of the law out of porportion to it’s intent.
Chattel financing is most definately still available… it’s not as easy to come by as it once was… but it’s still there… Conseco or no.
Re: Hold on a minute… - Posted by Eric C
Posted by Eric C on December 02, 2002 at 11:18:49:
Hi –
Actually, these laws came about through other means.
As an example: the case of the seller financed notes – it was triggered by a transaction involving the relative of a state legislator. Relative was unhappy (perhaps rightly so) and made complaints and accusations – relative responded with new regs.
Overall development in the state has been impacted by new regs requiring more detailed (costly) planning, even for rural parcels), than ever before. More people can say no to you, your development, your ideas.
Texas has had regs allowing MHs to be “tied” to the land for years - the new situation is far more polictically motivated than anything else. What else is new, right?
Here’s the deal:
-
Texas has been changing for some time now. Population, economics, and attitudes are not what they were just 15 years ago. New people bring new ideas and change – both good and bad.
-
There has been a subtle shift toward laws that are designed to give more power (and protection) to the some individuals at the expense of others. The complete overhaul of the Contract for Deed regulations in 1995 are one example and a duty to “mitigate” losses (which reversed a hundred years of case law)for landlords is another.
-
The Texas court system is seriously out of whack. National cases are tried here because of the tremendous awards and the court system – that should tell you something!
Do I need to bring up mold awards in the millions
(for exposure to a substance that has been with us since the dawn of time and whose toxic qualities are almost nil,
… or a certain tire company who’s products were almost never on the vehicles cited as “rollover prone” but which was forced to pay damages anyway,
… or the judge who upheld a request to produce 10 years and millions of pages of corporate docs – all irrelevant to the proceeding, by the way-- in a 72 hour time period.
Want me to go on?
Politics is a messy process. The more voices who clamor to be heard, the less clarity there is to go around.
Simply put, there’s no one in charge here.
Instead of making necessary, but mostly minor, adjustments, politicians are throwing out the tried and true in favor of bold experiments designed to bring about a social agenda – or not. Maybe, they’re just stupid and short-sighted. Doesn’t matter, the damage is just as real.
Don’t get me wrong, Texas is a wonderful place. I was born here and I’ve lived here (off and on) for years. But not all the changes I see are for the best.
I’m a lot more careful where I put my money these days – and I’m putting less and less of it in Texas.
Yours,
Eric C
Re: Hold on a minute… - Posted by Mr. C
Posted by Mr. C on November 30, 2002 at 17:23:19:
Basically, yes.
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Re: Hold on a minute… - Posted by ray@lcorn
Posted by ray@lcorn on November 30, 2002 at 18:41:14:
I don’t think it’s blown out of proportion. There is a difference between allowing owners the option of chattel financing and requiring the land as security.
In most states there is the option of tying the home to the land, but not a requirement. In our state (VA) it’s often advantageous to the owner to do so because the real property tax is usually lower than personal property tax (depending on each county’s taxation policies). My understanding of the TX law is that if the homeowner owns the land he has no choice but to tie the two together. That creates problems when families want to use the farm as a location for the home for a son or daughter, as well as other situations where the land has worth and use other than as a mobile home site. Additional dwellings for farm use, mother-in-law homes, and even rental homes in parks become problems under such a requirement.
In my experience septic tanks are best regulated through the building permit regs, and if there is a problem then the state needs to address it there, not by requiring homes to be tied to the land. That’s killing flies with a sledge hammer. The same effect could have been gained by requiring a Certificate of Occupancy from the local building officials before the lender funds the loan.
If the delivery of services without taxation of the home as a chattel is the problem, then in my humble opinion the politicians need to call a spade a spade and fix the tax code, not dictate financing terms.
I do agree that that particular article likely played up the “poor me” aspect the media is so good with, but the comments of the industry people point out that the added problems from the bill have exacerbated an already soft market.
ray
Re: Hold on a minute… - Posted by Mr. C
Posted by Mr. C on November 30, 2002 at 17:42:53:
This effectively bars a landowner from chattel financing, correct?
Basically, yes… but there is no law or intended law that can prevent you from selling your manufactured home and having the buyer move it to their own lot or land… AS LONG AS you pay-off the underlying loan that ties it to the land it was leined to.