Re: Manufactured Housing
To the Editor:
I applaud the depth and quality of your manufactured housing coverage in the July 2005 issue. The series, however, fell short on the issue of home placement, a market element that significantly impacts the home's basic security and its potential to appreciate in value.
In 2003, Consumers Union research concluded that "ownership of land" is the greatest single factor influencing manufactured-housing appreciation. For the roughly 5 million owners of manufactured homes who also own their land in fee, this is good news. But for the nearly 4 million homeowners living in the country's 50,000 manufactured-housing communities, it is not so good. In short, homeowners who rent the land from an investor/landlord in these communities (commonly known as "parks") are subject to three basic risks: excessive rent increases, failing infrastructure and displacement due to "change of use" park closures.
Further, with the homeowner's (and thus the lender's) tenuous relationship to the land, conventional residential lenders do not have the security they expect in a residential market. That is in large measure why the vital liquidity and decent rates that Fannie Mae and Freddie Mac provide the site-built/fee simple market are absent from the "home in park" market. This absence leads to serious liquidity cycles, expensive credit and house price fluctuations. Until homeowners enjoy long-term security by owning the land beneath their homes and have access to decent and reliable home-purchase financing, strong asset performance will remain elusive.
The fedgazette was correct in reporting that nonprofits are largely absent from the sector; however, there are a few practitioners in the trenches. The New Hampshire Community Loan Fund is the principal architect of a statewide system that is rebuilding the manufactured-housing community segment on two basic principles: Homeowners ought to have long-term control of the land beneath their homes, and they ought to have access to conventional residential financing. After 22 years, 72 (or 15 percent) of the state's communities are now resident-owned. Each of the 3,500 homeowners in resident-owned communities (ROCs) owns a share in a democratically controlled, independent co-op.
With the land now secure for these 72 ROCs, single-family mortgage lending has a safe and secure footing. Three lenders now exclusively serve the ROC market in New Hampshire. A recent University of New Hampshire study shows that homes in ROCs are selling faster and for more money per square foot than those in investor-owned communities. ROC turnover rates and monthly lot fees are lower on average too.
It is remarkable that in 2004, 52 percent of financed purchases in ROCs involved loans that matched the loans available to site-built/fee simple home buyers.
Resident ownership, combined with single-family financing products, is beginning to produce outcomes associated with traditional land ownership. It is one state's efforts to rebuild communities to better reflect the fullness of the American dream of homeownership. Training for practitioners in other states is now available through the Meredith Institute, a program of the New Hampshire Community Loan Fund.
With New Hampshire as one nonprofit example, resources are beginning to flow to nonprofits that are beginning to engage in this housing sector. The Ford Foundation has helped the Corporation for Enterprise Development launch a multiyear program to promote an array of homeowner-centered manufactured-housing strategies. We expect many more promising nonprofit-led examples to follow.
Paul Bradley
Vice President
New Hampshire Community Loan Fund
Concord, N.H.
Re: Pipe Dreams
To the Editor:
After reading the water articles in the September fedgazette, I offer an example from our small Montana town. We have approximately 800 residents and approximately 340 water bills. As mentioned in the article, our water infrastructure simply got old. After too many years of cheap water, here is where we are now (after some grants and a large sewer loan).
Base water rate: $15.00 per month, $2.60 per thousand after the first 2,000 gallons. Base sewer rate: $24.50 per month, $3.38 per thousand gallons on top of that (based on winter average use).
Basically, that's $40 per month before you use a drop, easily over $200 in the summer if you like green grass! Most residents understand why, but nobody likes the high rates. We may be lucky to be where we are-many small towns in our area are just now discovering the high cost of upgrading the system.
I just wanted to comment that the article was like déjà vu for a town that has gone from water for almost nothing to water that costs more than we ever thought it would. Maybe saving for future problems is a good idea.
Mike Moore
Stockmens Bank
Cascade, Mont.
