Sales of Manufactured Homes Continue to Plunge

Lack of Marketing, Falling Prices of Site-Built Homes Play Crippling Role

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They average about half the cost of a regular house, yet "manufactured housing" -- called mobile homes in the 1970s -- is on the downswing amid the downturn.

According to MHI, a trade group representing the factory-built-housing industry, in 2003, there were 130,937 units sold; in 2010, only 50,046 units were sold. Thayer Long, president of MHI, however, said manufactured housing as a percentage of new single-family houses is up slightly from 11.7% in 2009 to 13.5% in 2010.

Andy Gallagher, executive director of West Virginia Housing Institute, blames a lack of industrywide marketing. "MHI went through a big discussion recently, but the manufacturers defeated the proposal because they believed it would drive up the prices," he said. "We need to attract political leaders, get them into the lots, help them understand that our industry is not about the old tinny mobile homes of the '70s but about spacious and affordable living."

One problem has been that with falling prices on site-built homes, the perceived price gap is lessening. According to Mr. Long, in 2009, manufactured homes were available at $41 a square foot and site-built homes at $83 a square foot.

Who's buying? Mr. Long said the industry has a specific market with which it is very popular.

"We have the 55-years-and-older market, the retiree market. We've also done well on the entry-level market and particularly the rural market. Then there are the millennials -- these people are coming into home-buying age [25 to 34] and are more discerning and educated consumers" who look to buy rather than rent.

Some manufacturers have targeted other demographics and seem to have bucked the trend. Joe Stegmayer, president-CEO of Cavco Industries, a Phoenix-based marketer, reported a $1.6 million profit last quarter.

"We made an effort to reduce overheads, increase market shares and have also been doing some heavy marketing," said Mr. Stegmayer. "With our advertising, we've tried to go for a number of different niches rather than universal campaigns. We're trying to address the immigrant population, the baby boomers, the echo boomers. The echo boomers are potential first-time home buyers ... we want them to know they can have a place of their own."

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