Outlook 2001

• Why Manufactured Housing?
  
• Lifestyle
  
• Features and Trends
  
• Industry Profile
  
• Federal Standards and Factory Inspection
  

Why Manufactured Housing?

Better Quality And Cost Control
Increased reliance on factory production has resulted in major changes in the efficiency of housing construction. Builders today routinely use prefabricated wall panels, pre-hung doors, windows, pre-assembled stairs, roof trusses and cabinets. Advantages of factory construction include better control of building and financing costs, more efficient control of inventory and the ability to better control the quality and performance of products. Almost all California homes today include some factory-produced components.

Types Of Factory Homes
A key to understanding today's manufactured home is distinguishing it from other homes that are constructed in a factory. Most factory homes are comprised of three-dimensional modules. These modules are transported to a home site and installed on a state approved foundation or support system. California Law clearly distinguishes among the types of factory-produced homes by the building code to which the home must comply.

Manufactured homes are constructed to comply with the National Manufactured Home Construction and Safety Standards, a uniform building standard administered and enforced by the U.S. Department of Housing and Urban Development. About 97 percent of all factory homes constructed in California each year meet this code.

Factory-built homes, often called modular homes, are constructed to comply with the California Administrative Code. Some factory-built homes employ panelized construction techniques. About three percent of all factory homes produced in California factories each year meet this code.

Mobilehomes are constructed to comply with standards enforced by the State of California prior to June 15, 1976, when the federal preemptive HUD Code became effective. Mobilehomes have not been constructed since this date.

Single Family Residential Construction Costs (Bar Graph)

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Lifestyle

The diversity of today's manufactured home and the amenities available means that there is a home to meet practically any lifestyle. Homes range in size from 700 sq. feet to over 3,000 sq. ft.

The cost of the average new manufactured home sold during 2001 was $52,900 without land. The prices range of new manufactures homes sold during 2000 was $18,295 to $199,500. During 2000, construction costs per square foot for a new manufactured home averaged $42.39 compared to $56.29 per sq. foot for a comparable site-built home.

Single-Site Occupancy
Many manufactured homes are indistinguishable from their site-built counterparts in construction and appearance. In California, over 60 percent of new manufactured homes sold are sited on lots in urban, suburban or rural neighborhoods. Facilitating this opportunity are state laws (Government Code Sections 65852.3 and 65852.4) which allow manufactured homes to be sited on any residential lots, providing the home meets local development standards.

Also, covenants, conditions and restrictions adopted on or after January 1, 1998, cannot forbid the sitting of a manufactured home on a residential lot, the the home can meet the same architectural standards are site-built homes in the neighborhood. (California Civil Code Section 714.5)

Land-Lease Communities
Many California home buyers site their new manufactured homes in planned developments where they typically own the home as personal property and lease a home site from a corporation or partnership responsible for maintaining the community amenities and services, including security, clubhouses, pools, spas, and common areas. There are more than 5,500 manufactured housing communities in California offering a wide variety of lifestyles. Land lease fees in California vary by region but they generally range from $250 to $900 per month.

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Features And Trends

Subdivisions, Planned Developments and Condominiums
A growing number of manufactured home in California are being sold in conventional subdivisions, planned unit developments and condominiums where the land and home are owned and financed as real estate.

Urban In-Fill and Redevelopment
Today's manufactured homes are growing in popularity for local governments and redevelopment agencies for urban in-fill and redevelopment projects. Manufactured housing is attractive for this use die to its cost effectiveness and the ability to design a home compatible with the local neighborhood that will fit in any lot with relative ease.

In trend-setting California, manufactured homes are available with stucco or wood siding; roofs of tile or composition shingles, and dramatic windows. Architectural styling include tradition ranch, cape cod, southwest and Mediterranean. Exteriors can be designed to be compatible with any local neighborhood. Attached garages or carports are available for most homes. Today, a limited number of two-story models are even available.

Interiors can be modest or luxurious. They can feature spacious living rooms with vaulted ceilings, formal dining rooms, kitchens with breakfast nooks, master suites with walk-in closets, dressing areas, and spacious bathrooms with Jacuzzi tubs as well as stall showers.

Manufactured homes are sold with major appliances, window coverings and carpeting in a choice of colors included in the price of the home. Optional features such as air conditioning, garage disposals, dishwashers and stereo systems are available.

Homeowner Demographics
More than 1.1 million Californians live in more than 590,000 manufactured homes. Manufactured housing is a significant portion of the California housing stock, representing about seven percent of all new single family homes sold each year, and over 10 percent of all homes sold in California. During 2000, over 60,000 California families purchased a new or existing manufactured home A recent survey of California manufactured homeowners by Foremore Insurance Company revealed that 93 percent are satisfied with their homes and of these, 95 percent plan to remain in their manufactured home or move up to another.

The typical head of household is 59 years of age, is a high school graduate who attended some college and is either retired or employed full time in a technical/administrative or professional/managerial position.

The profile of those who have purchased manufactured homes in the past decade demonstrates that significant changes are occurring in the characteristics of manufactured homeowners. Recent purchasers are younger, more affluent, have larger families, have attended a higher level of education and are less likely to be retired than manufactured homeowners as a whole. Most are sitting their homes on private property as opposed to traditional land-lease communities.

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Industry Profile

Manufacturers
There are eight companies building manufactured homes in eleven plants in California. Manufacturing and retail sales of new homes added over $1 billion to the California economy during 2000. Of the 7,783 manufactured homes constructed during 2000 in California, 7,379 were sited in the state and the remaining were sold to consumers in neighboring states.

Retailers
Under California law, new personal property (non-real estate) manufactured homes must be sold by a retailer licensed by the Department of Housing and Community Development. These professionals must routinely complete certified continuing education programs. Retailers typically control the subcontracting functions related to installing the home on the lot of the home buyer's choice.

Some homes are sold from sales centers owned and operated by the retailer. Others are sold from a model center located at a land-lease community or subdivision. Many retailers will provide a custom manufactured home on a lot already owned by a consumer or help the prospective homeowner find a suitable lot.

Some retailers specialize in the sale of existing manufactured homes. Since few manufactured homes are ever moved once delivered to an original foundation site, manufactured homes, even in land-lease communities, are sold on site and the space lease is transferred to the new homeowner. Sales of existing manufactured homes surpassed 60,000 in 2000.

Manufactured Home Production In California - (Bar Graph)
Sale of Existing Manufactured Homes - (Bar Graph)

Financial Institutions
A number of California financial service companies and their branch offices have loan programs for manufactured homes. These institutions include banks, savings banks, credit unions, mortgage corporations and commercial finance companies. These companies provide all types of consumer, conventional and government-backed financing plans for manufactured homes.

A common method of financing manufactured homes is through a personal property installment loan. This can be arranged through the retailer or by the home buyer directly with a financial institution. Terms range from 15 to 30 years.

Conventional real estate mortgages are also available for manufactured homes when they are affixed to real property. Manufactured homes are eligible for insurance under government-backed programs offered by the Federal Housing Administration (FHA), the Veterans Administration (VA) and the Farm Home Loan Administration (FmHA). Further, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation will buy loans backed by manufactured home real estate.

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Federal Standards And Factory Inspection

All manufactured Homes built since June 15, 1976, must conform to the National Manufactured Home Construction and Safety Standards, a national uniform building code commonly called the "HUD Code." This code is administered by the U.S. Department of Housing and Urban Development.

The HUD code regulates home design and construction, durability, fire resistance, energy efficiency, and the installation and performance of heating, plumbing, air conditioning, thermal and electrical systems.

The HUD Code mandates that each factory adopt an approved quality control program. This includes a system for testing and inspecting each home constructed. This inspection system covers review of the blueprint of the home and the construction of the home as is moves through the factory. The U.S. government enforces the HUD Code through a contract with the National Conference of States on Building Codes and Standards. Third-party engineering companies perform in-plant inspections. A final inspection of the home occurs when the state or local government issues a mandatory certificate of occupancy, which is an inspection of the installation of the home.

The construction of all manufactured homes is backed by a one-year written warranty.

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