Some interesting things came out of last week’s convening of the Manufactured Housing Consensus Committee, but perhaps the most interesting was the background conversation on how oil exploration in the Upper Midwest is driving an insatiable demand for new manufactured homes.
An engineer at one of the largest corporate manufacturers in the Midwest and the owner of a smaller firm in Nevada both told me the same story last week.
“We cannot come close to make enough homes for Williston,” said the Midwesterner. “People are lining up to buy every home we can ship.”
I had a similar conversation with a city planner in Billings, Montana. Even Billings is booming because of Bakken, because its one of the more hospitable places for families. It had good schools and cultural resources.
The discovery of the Bakken Oil formation – a subsurface deposit originally described in 1951 but only significant with the advent of hydraulic rock fracturing – means that many people need homes in small towns in rural North Dakota, South Dakota, Montana, and Saskatchewan. Ground zero for production is in Williston, North Dakota. Census found that there were about fifteen thousand people living in Williston in 2010. That number may be changing quickly, however. It is hard to comprehend the scope of Bakken. One estimate suggests that it may contain 25 billion barrels of oil. If that is correct, then Bakken is as large as Prudhoe Bay.
One of the advantages of the manufactured housing system is its ability to construct homes quickly. Even a small-sized factory can turn out ten homes in one day. Indeed, perhaps the main obstacle to putting homes on the ground is shipping. If shipping was not so expensive, more factories could make deliveries.
Some manufacturers were reporting that the level of demand is so much greater than supply that many homes are being subdivided into four separate living units.
Oddly, data from the 2011 Home Mortgage Disclosure Act database is entirely inconsistent with these accounts. The HMDA says that only 76 mortgages for manufactured homes were made in Williams County, North Dakota. The data from 2010 is hardly different: HMDA says that 73 loans were made for manufactured housing units. Then again, this kind of inconsistency is actually not surprising: small banks can often evade reporting requirements. Moreover, the need to include chattel loans is itself of some debate. Staff at the Federal Reserve, which co-supervises the HMDA program along with the FFIEC, will regularly provide differing answers about the makeup of manufactured financing. Some insist the data only includes homes classified as real property, whereas others will say that the standard is dependent on how the home is used. If it is used as a “habitation,” they will comment, then it should be in HMDA. Lastly, home finance is different than home purchase. Some buyers are undoubtedly using cash.
By contrast, Census data on shipments from the Midwest and West paint a more consistent picture. In the Midwest, shipments of single-wides have increased 73 percent in the last two years. The Midwest is exceptional. In the South, shipments have actually declined 11.5 percent since 2010.
The picture clarifies when you go straight to data from the Manufactured Housing Institute. MHI breaks down shipments by state and year. This is where the true nature of the explosion in demand in the Dakotas can be seen. MHI reports 1,867 shipments to North Dakota in 2011. In 2009, by contrast, there were only 261 deliveries. That amounts to an increase of 615 percent. There is probably no place in the country – for either manufactured housing or stick-built homes – where demand has changed so rapidly.