Friday, February 19, 2016

Should I be bullish on manufactured homes?

I'm mostly on the sidelines regarding the housing/treasury position until the smoke clears a little more on mortgage expansion.  In the meantime, I noticed that manufactured homes just had their best quarter is quite some time, with unit sales up about 20% over last year.  Could this be the outlet valve for some of the pent up demand for housing?

SAAR, monthly
Manufactured home sales are well below previous norms.  It seems to me that sales could easily double from here, or more.  And, if financing might be able to expand since much of it is outside the traditional bank-held or conventionally securitized mortgage market, maybe manufactured homes get a boost for households without other options.

I might have to look into this.

Comments welcome.


  1. Eyeballing the chart it seems that the massive drop off happened before the recession in 2001. Due to that, and the lack of recovery, I would speculate that there was some regulation (or definition change) around then that made them less desirable.

  2. Yes. I think that 90s surge was part of the 1st wave of what is considered a subprime bubble. The first wave was focused on manufactured homes. I think this actually fits into my broader story. When we factor in the drop in manufactured homes, housing starts were not particularly high in the 2000s. This could explain why prices remained fairly subdued in the 1990s, but shot up in the 2000s. I need to put together a post with manufactured and permanent housing, to see what housing starts look like.

    On the investment thesis, I think you are right. I need to get into the details of that. But, even a doubling of revenues here just gets us back to the bottom of the range any time before 2000.

  3. Here in Silicon Valley, manufactured homes are typically restricted to what are called mobile home parks even though the homes are usually rendered completely immobile once they're put in place. The residents may own the homes but then pay the park owners rent for the lot on which the home sits. Over the years, park owners have sold their properties to residential and commercial real estate developers. And I suspect that communities have been resistant to allowing new parks as people assume the residents of such places are prone to criminal activities.

    1. Thanks for the information. It's an interesting sociological puzzle. In some ways, I would hope that modular homebuilding would transform the industry like automation has transformed other industries. But, there are a mixture of cultural and regulatory obstacles, both local and national.

      And, the market seems variable across the country. In the Midwest, I would expect that many of these homes are purchased and then placed on small, inexpensive rural plots that the homeowners have purchased separately.

    2. Brilliant post. Excellent direction to ponder.

      Yes, most municipalities tend to zone out manufactured housing.

      In fact, even in Williston, North Dakota during the oil boom, local authorities restricted farmers to only 5 trailers per farm, wanting to prevent the trailerization of North Dakota.

      I think manufactured housing is great and should be encouraged, even more I think zoning is the devil.

    3. Skyline Corp. might be my new favorite stock. They look like they would be poised for quite a bounce if manufactured homes see some growth.

  4. Put a call into Skyline and ask them about zoning and housing regulations.

    Something like 13 new million cars a year are sold in USA. Really, a trailer is a more-simple product.

    Sheesh, without zoning and housing regs...