Use access key #2 to skip to page content.

HansHauge (94.16)

Why Palm Harbor Homes is Doomed

Recs

4

December 11, 2008 – Comments (7) | RELATED TICKERS: PHHM

 

In a previous life I used to set up and tear down Manufactured homes. Not much of a job, the pay was crap and sometimes we had to literally crawl in said defication whilst unhooking plumbing.

But one thing that stuck with me about that industry is that the target demographic of manufactured homes is someone who can't afford a stick built house. Everyone knows that manufactured homes actually decline in value over time, so it's tricky to get lending.

Recent propaganda from that industry about the value holding ability of these trailer park filling metal slugs is probably worth about the scrap material that they are made from.

Prospective buyers are going to snag up every bank forclosure and idle home sitting on the market before they even think about touching a trailer.

On my way to work there is a Pal Harbor Homes with a luminescent sign that reads "Life is good, we own the bank!" Well, we'll just see about that. With tightened lending standards, plenty of cheap houses on the market (new and used) and people suddenly waking up to realize what it means for something to become a liability which was once was an asset...there is very little hope in it for PHHM.

7 Comments – Post Your Own

#1) On December 11, 2008 at 1:31 PM, TDRH (99.98) wrote:

It is still running in the red on my picks.    I anticipated tighter lending standards crippling this company- I was early. 

 

Report this comment
#2) On December 11, 2008 at 2:35 PM, guiron (< 20) wrote:

I read that at first as Pearl Harbor Homes, which makes a sort of perverse sense.

Report this comment
#3) On December 11, 2008 at 2:48 PM, Gemini846 (91.33) wrote:

How does a company selling MH's get to be publicly traded? Where is this company based out of anyway? My parents live down the street from a trailer park in Palm Harbor, FL which would have been torn down for condos a long time ago if the owner had any sense, but since they don't want to displace any of the park residents.. la dee da.

Report this comment
#4) On December 11, 2008 at 2:55 PM, HansHauge (94.16) wrote:

PEARL HARBOR HOMES!! LOL

I wish I had thought of that cleaver Freudian Slip!

Report this comment
#5) On December 12, 2008 at 8:56 AM, mfdhousing (< 20) wrote:

Im afraid that you have been misinformed about home appreciation/depreciation - But dont feel like your alone. "Many Americans have been victimized by an outdated conception of manufactured homes—one which has been perpetuated in the news media... IN FACT, manufactured homes held up well, even when compared to site-built homes. That this was be the case should not really surprise anyone: since 1999, manufactured homes have been built and installed to standards tougher than any but the most recent codes for site-built structures." (http://www.builtstronger.com/myths.html)

For a point of view from the Lakeland Florida area, where there are more manufactured homes per sq mile than any place else on earth, take a look at this article from LEN BONIFIELD. He tells us "As with all real estate, location and maintenance of the home play a huge role in determining the rate and extent of appreciation. In a community setting, location equates to amenities, location in the state, proximity to rivers, lakes coastlines, etc. In most average communities, homes that are 25 to 30 years old can be found selling for $15,000 to $30,000, when they sold new for under $10,000. It's not much, but it is some, appreciation. A recent newspaper article related a manufactured home for sale for more than $250,000 in Broward County. It is common to see 30-plus-year old homes sell for more than $100,000 in the Fort Myers area." He tells us "If you go to Natalie Estates in Stuart and hundreds of other good communities in Florida, you will find 1970's parks where housing has appreciated greatly. California is another classic example of selling prices several times more than they sold for originally." Read the entire article - Factory-Built Homes Appreciate

Consumers Union also has point of view different than yours http://www.consumersunion.org/pdf/mh/Appreciation.pdf Read it and learn that "average appreciation rates of manufactured homes packaged with owned land are statistically in line with the site built market, and there are few inherent reasons that a home built in a factory should perform differently than one built on site"

"For many years, people have assumed that the value of manufactured homes depreciates. This is not so. Studies conducted at two Universities revealed that the determining factor of appreciation in both types of homes was their location. Maintenance also plays a major role. If a home of any kind is built or setup in a bad neighborhood or area it will probably depreciate no matter what. In a good area or neighborhood they will generally appreciate in value depending on the local housing market and economy. In the case of a manufactured home, if it is setup on a permanent foundation with a concrete pad, blocked properly and anchored properly, with good drainage so water does not sit under the home and if one buys from a reputable dealer who uses good setup people, the home will be no different than a site built home. It would appreciate in value at the same rate as a site built home in the same area. The cost of manufactured homes is significantly lower than the cost of site-built homes. This gives them an instant appreciation between what the home actually cost the homebuyer and what its market value is. In some cases, a multi-section manufactured home has sold for more the second time than the first. Properly setup and well taken care of, you are talking about a fantastic investment potential." (http://www.rebelhome.net/myth.html)

Here are a few more opinions - lifted from the MHI web site:

Manufactured Housing Research Project
University of Michigan, 1993
Dr. Kate Warner and Dr. Robert Johnson

This study is divided into six sections dealing with various questions surrounding manufactured housing: Quality, Costs and Finance, Values, Impacts on Adjacent Property Values, Manufactured Housing and the Senior Population, and Alternative Ownership and Innovative uses. Findings included:

- Manufactured housing quality has become essentially equivalent to that of conventional housing
- Manufactured housing compares favorably with site-built housing as an affordable housing option
- Manufactured housing, like site-built housing, can be viewed as an investment with probabilities of appreciation and equity accumulation
- Manufactured housing has no impact on the appreciation rates of surrounding properties, putting to lie the myths of negative property value impacts.

The Future of Manufactured Housing
Harvard University Joint Center for Housing Studies, 1997
Kimberley Vermeer and Josephine Louis


The Harvard Joint Center report is essentially a survey of previous academic studies of manufactured housing. It draws from earlier Joint Center studies, particularly Residential Property Value and Mobile/Manufactured Homes: A Case Study of Belmont, New Hampshire," which is Thomas Nutt-Powell’s 1986 examination of property value impacts of manufactured housing, as well as the Manufactured Housing Research Project abstracted above. The Future of Manufactured Housing points out some areas that the industry needs to address (many of them dealt with in the Manufactured Housing Improvement Act, such as installation) and the conclusions that it draws are generally very favorable for the industry.

The Impact of Manufactured Housing on Adjacent Site-Built
Residential Properties in North Carolina
East Carolina University, 1997
Dr. Richard Stephenson and Dr. Guoqiang Shen.

The first examination of property value impacts of manufactured housing that draws on real-world spatial relationships via GIS data, The Impact of Manufactured Housing on Adjacent Site-Built Residential Properties in North Carolina dispels the twin myths that manufactured housing automatically depreciates and drags down surrounding property values. The most telling findings were:

- Manufactured homes with a fixed foundation or listed as real property appreciated at comparable rates to site-built residential properties
- There is no clear negative correlation between the overall appreciation rate of site-built residential properties and the presence of manufactured housing in close proximity

Manufactured Home Life, Existing Housing Stock Through 1997
Iowa State University, May 1998
Dr. Carol B. Meeks

An update to an earlier study conducted when Dr. Meeks was with the University of Georgia, this study takes a more comprehensive look at the manufactured housing stock to determine the life expectancy of manufactured homes. Manufactured Home Life, Existing Housing Stock Through 1997 finds that the life expectancy of manufactured homes is comparable to the life expectancy of new site-built homes.

Code Comparison Study - MHCSS vs. CABO One- and Two-Family
Dwelling and Model Energy Codes
University of Illinois at Urbana-Champaign School of Architecture, January 1998
Jeffrey Gordon and William B. Rose

Compares the applicable requirements of standards for construction of a home built to the federal Manufactured Home Construction and Safety Standards (HUD Code) with the CABO One- and Two-Family Dwelling Code and Model Energy Code. The comparison concludes that while in some areas the HUD Code requirements are more restrictive, and in other areas the CABO code are, on balance the two codes are comparable, resulting in houses that perform similarly.

Identification and Measurement of Zoning Barriers Related to Manufactured Housing:
A Location and Accessibility Analysis East Carolina University, 1999
Dr. Richard Stephenson and Dr. Guoqiang Shen

The 1999 ECU Study examines what impact zoning has on manufactured housing placement and it’s proximity to "positive" versus "negative" public facilities. For the purposes of the study, "positive" facilities included environmental, health and emergency rescue services; cultural, recreational and education services; and auto, food, shopping and other business services. "Negative" facilities include landfill and solid waste sites and other similar uses. Findings include:

- Manufactured housing is located farther from "positive" community facilities, which is especially significant in the area of life safety services
- Manufactured housing is located closer to "negative" public facilities such as landfills and solid waste facilities
- Zoning districts where manufactured housing is a permitted use have a higher percentage likelihood of being located in flood zones
The general conclusion is that many of the negative perceptions of manufactured housing are in fact self-fulfilling prophecies perpetuated in part by the limited placement opportunities created through local government zoning actions.

The Impact of Manufactured Housing on Adjacent Site Built
Residential Properties in Two Alabama Counties
Auburn University - Montgomery, 2000
Charles E Hegji and Linda Mitchell

This study used property valuations from Montgomery and Lee Counties in Alabama to assess the impact of proximity to manufactured housing on site-built property value. Using a methodology similar to that use by East Carolina University in their earlier study, including a spatial analysis using GIS, the Auburn University - Montgomery study concluded that:

- The appreciation rates of individual manufactured homes in both counties were comparable to those of site-built properties
- Proximity to manufactured housing did not appear to be a significant determinant of property values of site-built residential housing (www.manufacturedhousing.org/)

"The appreciation in value of manufactured homes comes back to the old real estate axiom -- location, location, location. When properly sited and maintained, manufactured homes will appreciate at the same rate as other homes in surrounding neighborhoods" (http://www.mhao.org/myths.asp)

Report this comment
#6) On December 12, 2008 at 10:40 AM, HansHauge (94.16) wrote:

LOL - mfdhousing

If they are such a great investment, why are banks hesitant to lend on a manufactured home?

I see that you have done a great deal of research there, but let's be honest here, what you have posted is the equivelant of asking the church chior if god exists.

All of your links are from people with a direct interest in the manufactured home industry.

Here's a nice manufactured home in Seattle, Washington....and look! It's only 21k!

Notice the nice truck there that is worth more than the trailer.

http://www.realtor.com/search/listingdetail.aspx?srcnt=1&fhcnt=60&loc=seattle%2c+wa&usrloc=seattle%2c+wa&typ=8&sid=b19d3ef965564351908c00c74c9342c2&lid=1103206694&lsn=1

Here is another fun example. I was browsing on Zillow just now and I found another nice trailer selling for 24k, while it's Zestimate was 222k. Geez, it seems like the trailer was worth only about 1/10th of a real house.

http://www.zillow.com/homedetails/charts/38610672_zpid,5years_chartDuration

The real kicker is that this lovely "home" is on locust way in the lovely town of "Brothel" ( I can make fun of this town because I used to live there).

 

Report this comment
#7) On December 19, 2008 at 5:08 PM, HansHauge (94.16) wrote:

Score one for the Viking....

Report this comment

Featured Broker Partners