Manufactured housing sales decline

by Becky Gillette

Published: July 31,2000

A decline in sales for manufactured housing has led to consolidations in retail outlets and the closing of one of two manufacturing lines at Fleetwood Homes of Mississippi in Lexington in Holmes County.

About 50 workers were laid off during the most recent downsizing at Fleetwood Homes. More employees were laid off earlier in the year.

Interest rate increases combined with a decrease in lenders are being blamed for a decline in sales activity for manufactured housing.

Jennifer Hall, executive director of the Mississippi Manufactured Housing Association, said it isn’t unusual for the industry to go through cycles of booms followed by declines.

“Usually every seven to 10 years what happens is you have a lot of retailers who open lots,” Hall said. “Manufacturers expand their plants and then, all of a sudden, you have more homes in the market than the consumers are actually buying. Right now you’re seeing a lot of people downsizing because we had so many homes on the market, and so many people in the manufactured housing industry.”

Currently there is a trend towards consolidation of sell centers. A retailer who may have had three or four locations in a 60-mile radius will bring all their inventory into one sell center.

Manufacturers are also consolidating, and may scale back from having plants in several states to having manufacturing facilities in only one state.

The total number of mobile home lenders has also declined. Hall said some new lenders got involved in financing the homes, and then pulled out after a couple of years, affecting the market tremendously.

“We have had a lot of changes in our industry in the past year, and because of that a lot of the investors in manufactured housing believe their risk is higher,” she said. “So they have pulled back. That has certainly affected our market, as well.”

Across the country there has been about a 30% decline in manufactured housing shipments to retailers. Hall attributes that to a combination of downsizing by manufacturers and less orders being made. The number of floor plans being produced has also declined.

“You aren’t going to see retailers right now build up an overhead,” Hall said. “They probably aren’t going to have as many on their lot as normal. I do think we are going to go through six to 12 months more of downsizing, and then I think you’ll see a turnaround.”

Higher interest rates affect all housing, not just manufactured housing. But manufactured housing may be harder hit by interest rate increases since many customers are lower-income families. Higher interest rates may price lower income families out of being able to purchase a home.

“When you have higher payments because interest rates are higher, that person will probably continue to rent,” Hall said. “Unfortunately, that person is unable to build up any equity by renting.”

The market for manufactured housing also faces challenges from zoning. There are still many cities in Mississippi that zone out manufactured housing.

“We continually fight those zoning battles,” Hall said. “There are many cities which discriminate and do not allow manufactured housing just because it is factory built. That is really sad especially in these small rural towns and even in the larger towns. Mississippi being a rural state, manufactured housing is the only thing many people can afford. And there is a lot of infill in cities where a manufactured home would certainly enhance that area.”

Manufactured housing is still having to overcome perceptions of it being temporary housing only to be used until the owner can afford something better. But Hall says today’s manufactured home is built better than in the past and has an average life expectancy of 55 years. Multi-sectioned mobile homes are becoming increasingly popular as they allow variety in floor plans and have a feel similar to a conventional home.

“More and more people are turning to multi-sectioned manufactured homes,” Hall said. “When I first came on board, we were only selling about 40% multi-section homes. That has now been increased to 60%. It can be two, three or even four sections. Also, it used to be that manufactured homes were a transitional home. Now we’re seeing that this more often is someone’s permanent home.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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