Industry Outlook 2005 - Manufactured Homes
As housing prices soar, a new generation of manufactured homes is becoming a competitive alternative to traditional homes.
Even in communities with better amenities, however, manufactured homes traditionally have depreciated in value like cars. No longer. Today, Joann Bowers says, she could sell her home for $95,000 to $100,000 -- even though, as in most manufactured home developments, the Bowers don't even own the land on which their home sits.
Further south, in Key West, where traditional home prices have increased faster than in any other part of the state, examples are even more striking. Rebekah Lukomski, a Realtor, bought a manufactured home for $111,000 two years ago and is putting it on the market for $270,000. In Bay Point Key, Lukomski was selling another manufactured home -- a two-bedroom, two-bath model manufactured in 2003 -- for $400,000. "You get a lot with a mobile home," she says.
You get enough, at least, to make manufactured housing an increasingly competitive alternative to traditional site-built homes, whose prices have soared in recent years. Bob Blatz, president of American Land Lease, a Clearwater firm that owns the Blue Heron development and 17 others in Florida, says new manufactured homes average between $110,000 and $185,000. At that price, he says, retirees will pay an average of 20% less for a home in a manufactured home community than they would pay for the same sized home in The Villages, a wildly popular site-built retirement community in central Florida.
With 11,000 manufactured home sales in 2003, Florida is second only to Texas, which had 11,700, according to the U.S. Census Bureau. Florida surpassed North Carolina for the No. 2 spot in 2003.
Jacobsen Homes, which has been manufacturing homes in Safety Harbor since 1959, has witnessed the popularity first-hand. In November, it had a backlog of more than 1,000 homes. "People are swamping us," says Dennis Schrader, the company's president.
Factors other than price have helped manufactured housing's appeal as an alternative. For one, many manufacturers have moved upscale, offering touches like stainless steel appliances, Corian countertops, Jacuzzi tubs and custom cabinets. Nor do developers skimp on amenities. American Land Lease has built most of its communities around golf courses and/or waterfronts. Developments typically include clubhouses, pools, spas, tennis courts, marinas and internet stations. Homes have driveways, garages and screened-in porches.
"People arrive and go through the community and ask, 'Where are the manufactured homes?' " says Blatz.
In addition, the homes themselves are better built and safer. In 1994, in response to devastation caused by Hurricane Andrew, the U.S. Department of Housing and Urban Development, which regulates the industry, forced manufacturers of factory-built homes to beef up quality.
Among the changes: Before 1994, the average manufactured home needed only 10 anchors to secure it to the foundation; today there must be 65. HUD requires walls to be secured to the roof with 58 straps; before Andrew only 10 straps were required. Manufactured homes in Florida must be built to withstand winds between 100 and 130 mph; they only had to withstand 90 mph winds before Andrew.
HUD inspectors visit manufacturers regularly. "We have to have everything
approved down to the hinges," says Schrader.
The effect of the new codes was clear in the aftermath of last summer's hurricanes. Hurricane Charley destroyed some 12,000 manufactured homes in Charlotte County, but all 550 of the manufactured homes built in the county after 1994 survived, says Bill Turney, assistant executive director of the Florida Manufactured Housing Association.
Florida-based manufacturers and developers are seeing the results in their bottom lines. At American Land Lease, third-quarter 2004 revenue was up 12% from a year earlier to $7.2 million. Annual revenue for 2003 was up 36% to $65.2 million, with profit rising 51% to $8.8 million.
Blatz says he expects sales to increase by 10% statewide this year over 2004, with 2005 revenue from property operations expected to grow by 7% to 8% over 2004's results.
While manufactured housing has come a long way, owners of manufactured homes still have to deal sometimes with the residue of the old "mobile home" reputation. At Blue Heron, residents "get upset when people say we're living in trailers," Joann Bowers says. "We're not living in trailers."