Mobile Home Shipments Drop in July

Shipments of manufactured homes fell in July, compared to the same time last year.

The latest report from the Census department says that 4,900 manufactured homes were shipped in July.

Manufactured housing has managed to miss during both of the eras that defined housing in the last decade. Prior to 2008, fewer people bought manufactured homes because more people could qualify for a loan and when they did, they were likely to qualify for a lot of money. The appeal of manufactured housing is often driven by its cost. When cost is less of a hurdle, buyers migrate away from the sector.

Today, manufactured housing sales are being curbed by tight underwriting rules. Fannie and Freddie force lenders to add costs to any loan for a manufactured home. It has never been easy to buy a used home or to get a loan refinanced. Now, with the expectation that any refinance is contingent upon having a loan-to-value of less than 70 percent, only a very small fraction of homes will even qualify.

Another problem is that state of the securitization market for asset-backed securities. Only a few manufactured homes are financed as real property. The majority are written as chattel. They bear high rates of interest and they are generally for 15 years or less. There are very few private buyers for loans of any kind. KeyBank, US Bank, and Warren Buffett are among the few big buyers. They exert an unusual level of leverage in their relationships with originators.