Housing Double Dip Appears To Be Underway

Stephane Fitch, 07.07.10, 01:30 PM EDT

Home values slide again in 2010, with few exceptions.

In Pictures: Cities Where Housing Did Well And Poorly This Spring

The final figures for the U.S. housing market's performance thus far in 2010 won't be officially released for several weeks. But a review of the best preliminary data available indicates that the recovery in home values that began in early 2009 has stalled. A second dip is clearly under way in some places, if not across the entire U.S.

Zillow.com, a Seattle-based real estate data provider, is preparing to release figures for May and expects them to show a 1.7% decline in home values nationally through the first five months. The pain is spread unevenly across the landscape, with home values in cities like San Diego, Los Angeles and Boston rising 2% to 4% while prices in Las Vegas, Miami and elsewhere tumbled 6% to 7%.

 

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OCALA, Fla., June 10 /PRNewswire-FirstCall/ -- Today Nobility Homes, Inc. (Nasdaq: NOBH) announced sales and earnings results for its second quarter ended May 1, 2010.  Sales for the second quarter of 2010 were up 55% to $3,708,529 as compared to $2,388,817 recorded in second quarter of 2009.  Loss from operations for the second quarter of 2010 was $236,928 versus loss of $884,242 in the same period a year ago.  Net loss after taxes was $202,029 as compared to loss of $506,440 for the same period last year.  The net loss after taxes of $202,029 for the second quarter of 2010 came after deducting $194,825 in non-cash losses for our investment in two retirement community limited partnerships and included a tax benefit of $162,267.  Loss for the second quarter of 2010 was ($0.05) per share compared to loss of ($0.12) per share last year.

For the first six months of fiscal 2010, sales were up 18% to $7,001,403 as compared to sales of $5,950,299 in the first six months of 2009.  Loss from operations for the first six months of 2010 was $648,521 versus loss of $1,404,065 in the first six months of 2009.  Net loss after taxes was $539,374 compared to loss of $629,588 for the same six month period last year.  The net loss after taxes of $539,374 for the first six months of 2010 came after deducting $450,049 in non-cash losses for our investment in two retirement community limited partnerships.  Loss for the first six months of 2010 was ($0.13) per share compared to loss of ($0.15) per share last year.

Nobility's financial position during first quarter of 2010 remains strong with cash and cash equivalents, short and long-term investments of $10,016,133 and no outstanding debt.  Working capital is $25,229,899 and our ratio of current assets to current liabilities is 22.1:1.  Stockholders' equity is $40,867,915 and the book value per share of common stock is $10.08.  The Company's Board of Directors has authorized the purchase of up to 200,000 shares of the Company's stock in the open market.

Terry Trexler, President stated, "Sales and operations for the second quarter of 2010, were adversely impacted by our country's severe economic uncertainty and the low manufactured housing shipments in Florida, plus the overall decline in Florida and the nation's housing market.  Industry shipments in Florida for the period November 2009 through April 2010 were up approximately 13% from the same period last year.  Lack of retail and wholesale financing, increasing unemployment and home foreclosures, slow sales of existing site-built homes, very low consumer confidence and a poor economic outlook for the U.S. economy are just a few of the challenges  our country,  our industry, and the Company faced.

Management understands that during these very challenging economic times, maintaining the Company's strong financial position is vital for future growth and success.  Because of deteriorating business conditions and the lack of any clarity that today's economic challenges will improve significantly, the Company will continue to evaluate Prestige's fourteen retail model centers in Florida, along with all expenses within the Company and react in a manner consistent with maintaining our financial position.

Although the overall housing picture, financial market and economy have declined significantly this past year and the immediate outlook for the manufactured housing industry in Florida and the nation is uncertain, the long-term demographic trends still favor future growth in the Florida market area we serve. Job formation, immigration growth and migration trends, plus consumers returning to more affordable housing should favor Florida. Management remains convinced that our specific geographic market is one of the best long-term growth areas in the country and, because of the financial operating leverage inherent in the Company, we expect to out-perform the industry.  For fiscal 2010, the country must experience a better economy with less uncertainty, improved sales in the existing home market, declining unemployment, continued low interest rates, improving credit markets, increased consumer confidence and more retail financing for the demand of our affordable homes to improve.

The Company invested as a limited partner in two new Florida retirement manufactured home communities in fiscal year 2008.  Although these investments will report non-cash losses in the initial fill-up stage, management believes that the new attractive and affordable manufactured home communities for senior citizens will be a growth area for Florida in the future."

Nobility Homes, Inc. has specialized for 43 years in the design and production of quality, affordable manufactured homes at its plant located in central Florida.  With fourteen Company retail sales centers, a finance company joint venture, an insurance subsidiary, and an investment in two new affordable retirement manufactured home communities, Nobility is the only vertically integrated manufactured home company headquartered in Florida.

MANAGEMENT WILL NOT HOLD A CONFERENCE CALL.  IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT TERRY OR TOM TREXLER @ 800-476-6624 EXT 221 OR TERRY@NOBILITYHOMES.COM OR TOM@NOBILITYHOMES.COM

Certain statements in this report are forward-looking statements within the meaning of the federal securities laws, including our statement that working capital requirements will be met with internal sources.  Although Nobility believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause actual results to differ materially from expectations.  These risks and uncertainties include, but are not limited to, competitive pricing pressures at both the wholesale and retail levels, increasing material costs, continued excess retail inventory, increase in repossessions, changes in market demand, changes in interest rates, availability of financing for retail and wholesale purchasers, consumer confidence, adverse weather conditions that reduce sales at retail centers, the risk of manufacturing plant shutdowns due to storms or other factors, the impact of marketing and cost-management programs, reliance on the Florida economy, impact of labor shortage, impact of materials shortage, increasing labor cost, cyclical nature of the manufactured housing industry, impact of rising fuel costs, catastrophic events impacting insurance costs, availability of insurance coverage for various risks to Nobility, market demographics, management's ability to attract and retain executive officers and key personnel, increased global tensions, market disruptions resulting from terrorist or other attack and any armed conflict involving the United States and the impact of inflation.

SOURCE Nobility Homes, Inc.

FREEHOLD, N.J., June 4 /PRNewswire-FirstCall/ -- UMH Properties, Inc. (NYSE Amex: UMH) announced today the acquisition of the Sunny Acres and Suburban Estates manufactured housing communities located in Pennsylvania for a total purchase price of $13,200,000. With this closing, UMH owns 30 communities containing approximately 7,200 home-sites.

These all-age family communities total 407 sites. Sunny Acres, located in Somerset, is a 53 acre, 207-site property that is 97% occupied. Suburban Estates, located in Greensburg, is a 35 acre, 200-site property that is 95% occupied.

Samuel A. Landy, President, stated, "We are very pleased to announce these acquisitions. These two high-quality, well-occupied communities are in close proximity to our other Western Pennsylvania assets. Over the years, these communities have performed very well and they are an excellent fit to our existing portfolio. Pennsylvania is a very attractive state and we are optimistic about the continued long-term prospects for these properties."

UMH, a publicly-owned REIT, owns and operates thirty manufactured home communities located in New Jersey, New York, Pennsylvania, Ohio and Tennessee. In addition, the Company owns a portfolio of REIT securities.

SOURCE UMH Properties, Inc.
Contact: Susan M. Jordan, +1-732-577-9997

A Title I loan is a FHA-insured home improvement loan which can be used several purposes: for the alteration, repair, or improvement of an existing single family structure; preservation of an historic residential structure listed or eligible to be listed on the National Register of Historic places; or alteration, repair or improvement of an existing manufactured home (HUD Code) and/or mobile home classified as personal property or real estate.  

It is not to be confused with the more familiar FHA Title II home financing program which is used for conventional homes, and for HUD code homes on fee simple homesites in a land-home package.  Limited lenders are currently participating in the program, but all that may change, and not too soon for an industry who’s pending demise has been largely in part to the lack of viable home financing options at reasonable terms.

A manufactured home (HUD Code) to be financed may be placed on a homesite in a Land Lease Community (LLCommunity) or may be placed on a fee simple homesite or in a condominium or cooperative (shares ownership by residents) community. 

A Title I loan can also be used to finance the purchase of a new or used manufactured home on an installment contract. Loans for purchase of a manufactured home are available up to $69,679 for the home only (on an approved leased homesite) and $92,904 for the home and lot combined (both these are indexed yearly). 

A minimum credit score of 500 is needed for a 5.0% down payment, although lenders are free to establish higher scores if necessary to secure better loan performance.  Scores under 500 require a minimum 10% down payment.  Loan amortization may be for up to 20 years for home only or 25 years in land-home combination.  Interest rates and credit terms are determined by each lender, and are not set by FHA.  Maximum loan limits are determined by a fixed formula based on actual home and installation costs for new homes, and by a formal appraisal from an appraiser who is qualified to use the national NADA appraisal system or the equivalent.

The release of the long awaited  FHA Title I Mortgagee Letter, designed to complete the implementation of the Title I program improvements approved by Congress in the Housing and Economic Recovery Act of 2008 (HERA), was announced by Federal Housing Commissioner David Stevens at the June 2, 2010 manufactured housing industry finance summit meeting. The Mortgagee Letter, to be issued on June 2, 2010, will, according to HUD, pave the way for the development of guidelines by GNMA for the securitization of manufactured housing obligations and the qualification of finance institutions to provide FHA-insured Title I loans.

The June 2, 2010 Mortgagee Letter clarifies and amends portions of a prior Title 1 Mortgagee Letter issued by FHA on April 14, 2009.   That document began the process for implementing the Title I HERA reforms authorized by Congress and signed into law by President Bush in July 2008, including higher transaction limits, but did not address all of the issues raised by that legislation, which effectively allowed GNMA to continue its moratorium on the securitization of manufactured housing obligations and the qualification of new Title I lenders.

While information from FHA in late 2009 indicated that GNMA would require time-consuming follow-up rulemaking by FHA on the remaining HERA-based issues as a pre-condition to action that would ultimately lift the GNMA manufactured housing moratorium, it now appears, from comments at the finance summit meeting by HUD, FHA and GNMA officials, that GNMA is willing to set new Title I guidelines and begin the process for the qualification of lenders, based upon the two FHA Title I Mortgagee Letters.

Is this the final step?

Nope, but we are moving along towards it.  GNMA’s eliminating of the moratorium on new lenders may be the last.  Let’s hope it doesn’t take as long for GNMA to complete their review as it did for the original legislation to be fully implemented (from President Bush’s signing in July 2008 to June 2010 an incredibly long period of 23 months)

What’s next?

Perhaps some serious consideration by community owenrs, investors, retailers, and other entrepreneurs in expanding existing LLCommunities, and building some new ones in markets where housing prices still un-reachable by many, the market demand is high, job growth is positive, median household incomes are equal to or above those required to purchase new and used homes, and manufactured home living is socially acceptable (don’t forget this one). 

Where are they? 

A future article will provide some insights into methods for narrowing down markets where the development of new communities may be indicated.

Using this newly revised home financing program for HUD code homes in LLCommunities in conjunction with the FHA 207m Loan Guarantee program for rehab of existing communities and development of new ones, we may see some new life breathed into our languishing manufactured housing industry.

Or am I just dreaming?

At the present time, there are only two reported lenders who are approved by GNMA for the purchase of FHA Title I home loans, and are active in the marketplace. With the June 2, 2010 final rulemaking letter, it is anticipated after reveiw, GNMA will lift the moratorium and many more lenders will apply for and be granted approvals.  When this happens, it is expected that the number of FHA Title I lenders will increase dramatically, and loan rates and terms will be much more competitive than provided for by current lenders.

Some of the less obvious, but important features of the newly revised program are the continuing availability of used home financing by new home buyers, and the ability for lenders and community owners to re-finance some of their self financed home inventories which have been used over the last 8 to 10 years to fill their vacant homesites.

With an adequate source of resale financing by new home buyers under the revised FHA Title I program, lowering used home pricing to offset bad financing underwriting rules which have been one of the only sources of financing a used home sale, will be decreased and so called “used home depreciation” may be an item from the past.

Note: Much of the credit for behind the scenes encouragment for this action goes to several state associations, and our national MHI with the strong technical support of MHARR under Danny Ghorbani. 

That’s all I’m saying.

Edward Hicks is a nationally known community development consultant,  licensed R.E. Broker, and Mortgage Broker located in the Tampa Bay Florida area.  He has over 45 years experience as a m/h retailer, manufacturer, community developer, and is a specialist in assisting developers with the use of the FHA 207m and 221(d)4 loan guarantee programs, for community acquisition and rehabilitation and new development.  He may be reached at (813) 661-5901 or by e-mail at Easteddie@aol.com

Phoenix-based Cavco Industries is helping create a market for campers who don't want to pitch a tent, tow an RV, or buy or rent a pricey cabin.

The company's main business is making manufactured homes, but it has developed a small but steadily growing niche of making small recreational cabins or lodges that can be purchased for about $35,000 and up, or rented at affordable prices.

Cavco is even producing a solar version and recently installed what it claims to be the first solar-powered park-model cabin that can be operated off an electrical grid at a KOA campground.

Officials with Kampgrounds of America, the world's largest camping company, credit the little units with expanding its customer base, bringing in more minorities and "jump-starting" a new camping segment that wants an affordable camping experience with some comfort.

"They opened up camping to an entirely new market for us. There's a level of camper out there who wants the comfort and is willing to pay for it," KOA spokesman Mike Gast said.

Jim Rogers, president and CEO of KOA, predicts that the commercial-campground industry will become more aggressive over the next five to 10 years in buying units like these.

The 400-square-foot lodges that Cavco makes for KOA are rented for $75 to $150 a night and come with bathrooms and full-service kitchens, and can sleep four to six people. "We call it Marriott camping," Rogers said.

KOA and Cavco came together about eight years ago. The 48-year-old KOA, headquartered in Billings, Mont., had been renting smaller "Kabins" and "Kottages" for several decades to give customers alternatives to tents and RVs. But most of those units don't have bathrooms and kitchens. KOA found them to be expensive to maintain and buy.

And for about the past dozen years, 45-year-old Cavco had been making smaller 400-square-foot versions of its manufactured homes as second homes. They are called park models because they designed for RV parks, such as those spread throughout central and east Mesa and Apache Junction that are popular with winter visitors.

Cavco proposed the idea of making more rustic-looking park models for camping. For several years, the two companies tested various materials and the durability of the homes.

Gast said of a typical Cavco lodge: "It looks like it belongs in a campground. It either has cedar or log sides. It comes in on wheels. You add a porch, and all of a sudden you've got a cabin in the woods."

The company bought 250 last year and expects to buy an additional 300 this year, he said.

The lodges have proven to be popular with customers.

"We can't get enough of them fast enough," Rogers said of the lodges. "That's the future of camping in the U.S. It's looking very good for Cavco Industries as a result of the popularity."

The bulk of KOA's business is renting tent or RV spaces, and only about 15 percent is its lodging business, Gast said. But rentals of the Kabins, Kottages and now lodges have been growing because they offer affordable vacations at a variety of locations.

"We found out last year that camping is hotter than we thought. We had our best summer in 48 years. We did a lot of surveys, and it was the affordability and the desire for a quality affordable vacation close to home that really rang true to customers," Gast said.

Rogers said Cavco is KOA's main supplier but it hasn't been able to buy all its lodges from Cavco because of the cost of freighting them from a plant in Goodyear.

Cavco hopes to resolve that issue by starting production at a Fleetwood Enterprises plant at Rocky Mount, Va., that Cavco acquired last year.

Cavco and other makers of manufactured homes have been struggling during the recession because would-be buyers are having trouble getting financing. Cavco last year lost $3.37 million, after making a profit of almost $500,000 the year before.

Cavco sells about 750 to 1,000 park models a year, and about half of those are recreational types such as the KOA lodges, said Tim Gage, a Cavco vice president.

"The rental market is kind of an up-and-coming market," he said, and has been expanding every year for the past five yeas.

Cavco has been going to RV-industry conventions and seminars to promote the recreational units. Now, it is pushing into solar-powered units for remote campgrounds or campsites that don't have electrical connections.

Its first "off grid" park-model cabin was installed at a KOA campground in Herkimer, N.Y., to be used as a rental cabin and to showcase green-living practices.

It has solar panels on its roof that can produce two kilowatts of power. It also has a backup propane generator, bamboo floors, axles and tires made of recycled materials, recycled-lumber composite decks, and energy-efficient heating and cooling. Even its furniture was made from recycled milk jugs and recycled hickory wood.

Last year, Cavco delivered its first solar-powered park model to Sacred Rocks Reserve and RV Park near San Diego but that one is connected to an electrical grid.

"One reason for solar is to stay ahead of the game of what everyone else is doing," Gage said.

Reach the reporter at betty .beard@arizonarepublic.com or 602-444-8667.