Big Modular Home in California

Our client has completed a Bainbridge model from Genesis Homes (part of Champion Homes Inc) in Tehachapi, CA (outside of LA). All of these pictures are the rear view of the property (The pictures were taken last winter). This client chose to build the home on a walk-out basement foundation because of the slope of the site.

The basement added more than 2,000 s.f to the already 3,100 s.f. that is on the main floor.

From this view you can see that owner chose to build a large deck off the main level.

Here is a copy of the home's floor plan

Manufactured home shipments up slightly in May

ARLINGTON, Va. -- The Manufactured Housing Institute's Flash Report indicates 10,984 HUD-Code manufactured homes were shipped in May 2005, compared with 10,587 in May 2004. Shipments of single-section homes led in May, up 11.0 percent year-over-year; multi-section shipments were up 1.6 percent over the same period. The overall shipment increase was 3.7 percent.

The shipments estimate is based on reports from 153 plants out of an estimated 200 operating plants, representing 77 percent of anticipated production.

1.6% for multi-sections doesn't seem like a lot. I wonder what the modular shipments looked like in May?

UCLA's Anderson Real Estate Report Is Out Today

The much anticipated UCLA Anderson Forecast is out this morning. The article at RISMedia here says the CA market is "overheated and due for a correction." The article goes on to say that there is no way that the state's housing economy can continue at its previous pace.

Slowing is Starting

"San Diego County, for example, the median price of a home reached $488,000 in May, up 7.5 percent from May of last year. That's the smallest year-over-year gain, in percentages, in five years." I think this cooling trend will continue.

I was having lunch with a local stockbroker who said something interesting, "if you are constantly talking about a housing bubble than the bubble will never happen." He is right. What he is saying is that the market is anticipating this cooling period and so the bubble will never happen. Interesting thought on his part.

Factory Fresh

An article in today's Odessa, TX American newspaper here had another great article about manufactured housing. Most of the article was related to California and California Senate Bill 2827 which would allow a manufactured home in any R-1 zoned lot in the state.

The problem I have with this is not the fact that they would allow manufactured homes in neighborhoods that traditionally don't have them. The problems I have are, one, how are you ever going to finance it? And two, if you pay cash and place it on the lot anyway, how in the world are you going to ever sell it?

Forget what the dealers are telling you. Lenders are not in love with manufactured homes. The easiest way to kill a MH loan is: Where are the comparables? Better have at least 3 sales of MH within 1-3 miles! And if you decide to put that nice big triple wide on the lot, make sure all of your comps are triples also. Good luck!

MH dealers would do their clients a huge favor and steer them towards a modular home. It's a little more expensive but there are no financing problems.

FHA Loan Limits Nearly $313,000 in California

FHA has raised the maximum loan limits to $312,895 for many California counties. FHA is becoming the only financing option for many manufactured home buyers. FHA has always been the financing option for affordable housing and I think they will be the major financing option for the industry.

Many dealers do not like FHA financing because of the additional requirements FHA places on them. The biggest one is the foundation system. In most cases a dealer would prefer to use a simple post and pier foundation. FHA requires a permanent foundation that is designed by an engineer and inspected by an approved FHA foundation inspector before they will approve the borrower's loan. This foundation can add more than $4,000 to the cost of the home.

Financing for manufactured homes is contininuing to be more difficult. Conventional (Fannie Mae and Freddie Mac) as well as sub prime lenders all look at manufactured housing in a very poor light. Fannie and Freddie want to finance safe (low LTV, high FICOs) loans. They don't want to be the affordable housing source. Recently, Ameriquest Mortgage (and its wholesale lender, Argent) decided to pull out of lending on MH properites. They did this with no warning and they left a lot of customers clamoring for alternatives that don't exist.

When it comes to financing manufactured homes for the affordable housing market, FHA is the only way to go.

Assembly Required

A great article in the LA times here (reg. req'd) about the state's modular home industry. In 2004, 42,000 modular homes were constructed. California only had a small percentage of those homes.

Modular homes are coming to California and they are a great solutions to the state's housing crisis.

Why won't more manufacturers convert their HUD factories to modular?

With the MH industry still in its 4+ years doldrums it makes sense to convert those factories building HUD-coded homes and have them start making modulars. This recent article (read here) on builderonline.com is telling a great story about the problems facing the factory-built housing space. I know for a fact the modular home factories in the west cannot meet their current demand. Clients are waiting more than 6 months for the delivery of their home. With construction time now pushing 9 months, modular is losing its time-saving feature. Fleetwood should seriously consider "flipping" 1-2 west coast plants to modulars. That would sure help the company