In 27 retail sales locations across the South and toward the mid-Atlantic, Regional Homes Senior Vice President of Operations Charles Stricklin is witnessing a trend among homebuyers: There are more of them, and they want to move in today.
“It’s just been escalating, particularly over the last two years,” Stricklin said. Regional Homes, based in Flowood, Miss., runs the majority of its retail home sales operations in the state, though they also have locations in Alabama, Florida, Louisiana, and North Carolina.
The organization employs about 200 people, and last year they moved about 2,500 homes.
“The whole year in 2020 just continued to improve, improve, and improve in sales. No one thing happened that blew us up; it’s just been consistent growth,” he said.
Actually, each of the last three years has proven to be new record-sales years for Regional Homes. Sales in 2020 were up 10% from the prior year, Stricklin said. And while the buyers are aplenty, the most notable change in recent years has been the diversity of the buyer and their willingness to take advantage of the current financing terms.
“I’ve been in the business 33 years, and I’ve been in this market from Texas to Florida, too, and what I see happening here, now, it’s more of an increased ability to purchase driving this,” he said. “The rates are very amicable for buyers today. The lower payment allows a customer to buy when they might not have been able or willing before, and those who are more firmly in the market are in a position to buy more house.
“A customer with strong credit and a good down payment can get a rate on a 23-year chattel loan at about 5%,” Stricklin said. “If you had that same really strong customer three years ago, you could get a 7 or 7.5% rate, and that makes a big difference in your monthly.” According to Stricklin, it is similar with a customer who has some debt, or doesn’t have as good credit, or as solid of a down payment; the rate three years ago would have been 12%, now it’s 9%.
Up to the Challenge
Of course, operating conditions in 2020 and early 2021 have been less than favorable, with coronavirus precautions putting a strain on production and the myriad of unique considerations needed for meeting with potential buyers.
“But we’ve got good partners in manufacturing, and we’ve bought in volume to try to counter that aspect,” Stricklin said of the extended backlog. “We still have to wait longer than we want, but because of those relationships, I feel like we’re able to do better than many retailers can from order to delivery.”
Backlogs and wait times were growing well before the pandemic, too. This compelled Regional Homes founder and President Heath Jenkins in 2018 to become a minority investor and part-owner in Hamilton Homes in Alabama, thus securing a regional segment of the production pipeline. For years, Regional Homes has also done business with Cappaert, Champion, Deer Valley, and Winston Homes to keep a wide array of offerings available for their manufactured home buyers.
What Are Homebuyers in the South Asking?
Stricklin said a majority of Regional Homes’ sales are single-section homes, often entry-level homes for first-time homebuyers, with a mix of empty nesters as well. Most buyers have land waiting, so land-home financing is about 20% of the business, with chattel lending making up the remainder.
“Kitchens and master bathrooms still sell homes, and family space would be the next consideration,” Stricklin said. “Those are the driving factors for most of our customers.
“We have one of the best and educated teams in the country when it comes to providing a variety of financing options and putting the buyers into the right house,” Stricklin said.
Many first-time buyers in the area were gifted or inherited land, such as split parcels that can be used as a downpayment. And the minimal zoning and regulatory climate in most of the small towns and rural areas of the South make it easier to place a manufactured home.
Regional Homes gets many of its entry-level homes from Hamilton, Cappaert, and Champion’s facility in Benton, Ky. Stricklin said buyers in the Florida Panhandle and the newly opened markets in North Carolina are more likely to ask for multi-section or modular homes. Regional Homes buys those homes from Deer Valley, Winston, and Champion’s facility in Dresden, Tenn., to satisfy that demand.
“We have plenty of customers who want what they want, and they’re willing to pay for it,” he said. “They’re looking for a last-purchase home with some higher-end materials. Deer Valley buyers are nearly all what you might call a custom home buyer, which is 5 to 8% of our sales, but it’s growing, and it’s largely because of those interest rates.”
In fact, the higher-end Deer Valley, Winston, and Champion homes begin to hit a price-point that almost competes with the site-built market. Regional Homes offers diversified product lines to meet customers’ wants and desires in each market, and the number of markets continues to grow.
“We’re happy to have expanded our footprint,” Stricklin said. “We’ve worked hard. This year, 2021, will be our first full year with North Carolina, one location, and we added three locations in Louisiana last year.”