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JULY 2014 20 THE JOURNAL The New Face of Affordable Housing BY FRANK ROLFE COMMUNITY CONSULTANT The recent articles in the New York Times and Bloomberg News suggest that affordable housing, in relation to manufactured home communities, is all about flat roof trailers and dead end streets. While there is definitely a product type that meets that description, affordable housing today also includes some extremely upscale offerings that are as attractive as any single-family home subdivi- sion. Even in our portfolio of 100 communities, 50% of those properties rival those of UMH and SUN – and we consider ourselves in the "afford- able housing business". Newer manufactured homes look great I have written in the past on the manufactur- ers' success in making the manufactured home aesthetically pleasing. The current combination of vinyl siding, shingled roof, and tasteful color combinations has come a long way in making the homes have the same streetscape as traditional stick-built housing. This improvement in ap- pearance has opened the door to attracting a wider range of customers, many of which would not have considered manufactured home com- munity living in the days of the old round roofs. Our community called Squaw Creek in Marion, Iowa looks as nice as any subdivision, and is next to a golf driving range and directly across the street from a new shopping center. Prices for manufactured homes are still very low per square foot For those looking at buying a brand new home, there is no argument that the lowest price per square foot always belongs to the manufac- tured home. And it's quite a difference. While traditional stick-built housing starts at around $100 per square foot, a factory-direct manufac- tured home costs around $25 per square foot – that's 75% less! For price-conscious buyers who demand new housing, even our upper-end offer- ings are affordable housing at its finest. One of the comments from those who buy the Legacy Home models that we have in many of our com- munities is that they don't know how they can build them that well at that low a price. The effect of 2007 For many Americans, the plunge of the mort- gage market in 2007 signaled an end to their abil- ity to buy a stick-built home. When zero down, no income documentation loans were in vogue, anybody could aspire to – and purchase – a cus- tom home at all price points. During this period, we once had a customer who was in the process of being evicted from one of our communities, go across the highway and buy a $250,000 custom home. It was complete insanity. But the return to traditional mortgage underwriting require- ments, and the establishment of Dodd-Frank, has forced millions of consumers to seek their American Dream of home ownership inside a manufactured home community. The challenge for American affordability grows in all segments The decline in the U.S. economy has been across the board, affecting the corporate execu- tive as well as the mail-room clerk. While min- imum wage is the backstop for those at the bottom of the pyramid, there can be complete free-fall for those at the top. We have many cus- tomers who have had their household income drop in half – or worse. Gone are the days of the McMansion for many individuals, and they must now embark on a search for affordable housing. A recent New York Times article quoted U.S. Housing Secretary Shaun Donovan declaring this is "the worst rental affordability crisis that this country has ever known." This is true through all earnings segments. Using the barometer of hous- ing cost staying within 30% of gross income, there are 90 major cities that no longer have suf- ficient affordable housing. In Los Angeles, for example, housing costs 47% of median income – and that's for the upper end as well as the lower. This is certainly going to cause a ripple effect that makes the top-line manufactured home commu- nities re-classified as affordable housing, when compared to the other housing options. In our community in Glenn Heights, Texas (a suburb of Dallas) we have people get excited when they see a double-wide at $800 per month, because it's significantly less than the mortgage on their $200,000 brick home. Demographic challenges There are 10,000 baby boomers (those born between 1946 and 1964) retiring per day in the U.S. This is the largest segment of our popula- tion. And these folks will receive average social security checks of only $14,400 per year. In ad- dition, these retirees have virtually no savings, and those that do average only $84,000 in total assets besides their homes which, at 1% CD rates, yield a whopping $840 per year. So how are we going to house this gigantic population sector? Manufactured home communities are the logical answer. In our community called Rex Aire in Arnold, Missouri, we have predominantly baby boomers living a great lifestyle at a low cost. The pride of ownership is substantial, and our phone rings off the hook with new retirees look- ing for an opportunity at downsizing. Conclusion The manufactured home community business is constantly evolving with demand. And that demand is for affordable housing at all price points. From 5-star to 1-star, the name of the game is providing the American Dream at price they can afford. Whether they're driving a Jaguar or a Pontiac, there's a manufactured home com- munity to meet every taste and price point. Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 15th largest community owner in the United States, with more than 10,000 lots in 17 states in the Great Plains and Midwest. His books and courses on community acqui- sitions and management are the top-selling ones in the in- dustry. To learn more about Frank's views on the manufactured home community industry visit www.Mo- bileHomeUniversity.com. T J