A Sign of the Housing Market’s Strength

2. A Sign of the Housing Market’s Strength • Although some may question the strength of the US housing market, it’s a good sign when the total number of manufactured/mobile homes shipped during 2016 increased 15%, or 81,169, over 2015’s total of 70.5 million. • The growth in the market continued into January and February 2017, with shipments of 7.8 and 7.3 million, respectively, compared to 5.9 million and 6.1 million shipments, respectively, during January and February 2016. • From 2014 through 2016, every month recorded a double-digit increase in shipments of new manufactured homes, except for June, which had a 7.0% decrease.

3. A Home for Every Budget • With single-family home prices and apartment rents increasing and inventory limited, more people are turning to manufactured homes as an affordable alternative. This has been particularly true in California because of its strong apartment markets. • The population of adults 55+ is forecast to increase 26% from 2016 to 2031, which will be a significant driver for the manufactured homes industry, which is why shipments numbers have increased in retirement states in the Southeast and Southwest US. • Southeastern and southwestern states with prime markets for manufactured homes had significant increases in shipments from 2014 through 2016, with Georgia, +722 units; South Carolina, +526 units; and Florida, +499 units, having the largest increases.

4. Increasing Prices Reveal Value • With increasing demand for manufactured homes, the average sale price has been increasing since 2014. August is typically the month with the highest average price, and it has increased from $67,100 for August 2014 to $74,200 for August 2016. • The demand for manufactured homes in the South has also moved the average-price needle, increasing from a high of $68,500 for September 2015 to $71,600 just 11 months later for August 2016. • Since manufactured homes are particularly popular in California, the average price has also been increasing, from $84,400 at the end of 2015 to $89,200 at the end of 2016.

5. The Production / Shipment Equation • Manufactured-home production tends to take place in or near the states where most are shipped and sold, which is why production is concentrated in the Middle Atlantic, East North Central, South Atlantic, East and West South Central and Pacific regions. • The South Atlantic states, with the largest total shipments for 2016, recorded an increase in their share of single-section homes, from 35.9% for 2015 to 38.0% for 2016, but a decrease in multiple-section homes, from 64.1% to 62.0%, respectively. • Despite the affordability of manufactured homes, in southern rural states where many are shipped, only approximately one was purchased for every three single-family home permits during 2015.

6. Industry Insights • The manufactured housing industry is encouraged by a new bill introduced during March 2017 in the US House of Representatives, which would remove some regulations for manufactured home financing while retaining important federal consumer protections. • Two of the most popular design features showcased at the 2017 Manufactured Housing Show were bathrooms with glass-enclosed showers and modern-farmhouse designs with “living wood” details on countertops, walls and sliding doorways. • According to Cavco Industries’ (one of the largest manufactured-home builders) June 2016 Investor Presentation, the industry is beginning to overcome many recent business challenges, as consumer confidence and employment improves.

7. Advertising Strategies • TV is the ad medium to showcase the new features of manufactured homes and build local name awareness for dealers, but dealers may also find it valuable to invest ad dollars in direct mail to target adults 50+, complementing their TV ad messages. • Young adults who are attracted to the small- or tiny-house movement are prime targets for manufactured homes. Promote the larger footprints and upscale amenities versus tiny homes and the savings will allow them to travel without dragging their home with them. • Dealers can also use TV in combination with direct mail to market a manufactured home as an excellent choice for a second or vacation home to Generation X members, who now have the incomes to afford and value the benefits of a vacation home.

8. New Media Strategies • A primary pain point for many prospects is a negative perspective of the communities where they are located. Invite and incentivize a past customer to become a “brand ambassador,” writing a blog and/or uploading videos of their community and its lifestyle. • With the manufactured homes industry having suffered during the past because of “predator” financing, today’s dealers should provide their target audiences with detailed information about financing in a blog or a series of articles posted to social media. • Promote a free picnic or similar event with refreshments, live music and other attractions on social media, inviting past customers (and possibly incentivizing them to bring referrals) and all social media followers to help them become better acquainted with the product.