Job Losses Hurt Mobile Home Sales

December 27, 2004
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Editor's note: This is the first in a two-part series on the manufactured housing industry.

Housing

Yearly

Year

Sales

Change

2003

5,362

-20.1%

2002

6,713

-13.9%

2001

7,805

-22.2%

2000

10,033

-14.9%

1999

11,792

+0.1%

1998

11,676

+3.5%

1997

11,286

-0.7%

1996

11,368

+8.0%

1995

10,522

+7.9%

1994

9,750

+8.2%

1993

9,013

+0.5%

1992

8,972

+8.1%

1991

8,301

NA

OKEMOS — Makers of auto parts and office furniture aren't the only manufacturers that have suffered through years of lower sales and decreased revenue. Companies that produce manufactured homes for sale in Michigan have felt their share of the pain as well.

Sales of manufactured housing in the state peaked in 1999 when 11,792 new homes were sold to Michigan residents. But in 2003, the most recent year of recorded annual sales, only 5,362 new homes were sold in the state — a freefall of 54.5 percent from 1999. In fact, sales of new manufactured homes have tumbled for four straight years after steadily climbing for seven of the eight previous years.

And it's not a coincidence that sales began to fall when the state's economy started to head south and then went overseas.

"The rest of the economy in the U.S. has prospered and we haven't turned the corner yet. And I think that our industry's performance is a reflection of that," said Bob Eppleheimer, housing director for the Michigan Manufactured Housing Association.

"Plus, there was a situation with a couple of major chattel lenders that were engaged in the industry in the 1990s. They were fighting each other competitively for market share and they probably were not watching the credit quality of the people they were lending to. So once the economy took a downturn, we got an over-supply of nonperforming loans and court repossessions," he added.

Eppleheimer said Michigan wasn't the only state where the industry got hit with that double whammy. But, he noted, manufacturers have begun their recovery in other states and sales of manufactured homes are on the upswing in almost every other state.

"We're starting to come back a little bit, but it's nothing to get excited about," he said.

New home sales for 2004 won't be known until February. But with manufacturing jobs in Michigan hitting an all-time low in August — falling below 700,000 for the first time since the state began keeping count — it's unlikely total sales will rise much above the 2003 figure.

"It's affordable housing — it's filling that niche. Those are some of the first families that get impacted during a downturn," said Eppleheimer from his office in Okemos.

In the Midwest, the average cost of a new manufactured home is $53,000. In Michigan, the average buyer of a new manufactured home is 54 years old and has a full-time job that pays $28,000 annually — a salary that doesn't have a safety net.

"Whether it's somebody going from a substantial number of overtime hours, or the spouse who had a full-time job that is now part-time, or a part-time job that is now gone, those folks are in the position where one interruption can make a huge difference whether they can stay in the home that they're in," he said.

"It's been a pretty tough ride for them based on the economy."

A few state lawmakers took a shot at owners of manufactured homes recently, stopping short of calling them tax cheats, during the debate in Lansing about adding them to the property tax roll.

Nextweek: Eppleheimer talks about the tax issue    

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