Shop Talk with Midwest ‘Street Dealer’ Retailers
The manufactured home professionals who operate home centers, or “street dealerships,” are among the first in the business to get new product, as well as field questions from consumers on the latest home solutions.
With that in mind, MHInsider conversed with retailers from each state represented at the Louisville Manufactured Housing Show to learn more about what customers want. What types of amenities are capturing their attention?
Frazeysburg, Ohio Dealership on the Rise
Evan Atkinson has been in the industry for 35 years and operates Clayton Homes of Frazeysburg in Frazeysburg, Ohio, one of the top home sales centers in the Midwest.
“The future is really, really bright for manufactured housing,” Atkinson said. “It makes a ton of sense, and it always has. It just makes more now than ever.”
From the height of the industry in the late ’90s, the state of Ohio sold about 6,700 homes. It plunged to 550 homes by 2009, and has recovered to be in the neighborhood of 2,000 homes for 2018.
“We’re experiencing a phenomenal amount of interest and traffic coming in the store, with customers who are very receptive to the product, almost to the point that they’re shocked. You didn’t have that 20 years ago in the industry,” Atkinson said. “It was all the affordability niche at that time, and we still do that today, but homes are completely different.”
What happened in between? The rough economic conditions pushed about two-thirds of the retailers out of business, which means retailers who remain are reaping the benefits of that renewed interest in the factory-built product.
What Do Ohio Customers Want?
Customers are intrigued by the interior amenity and livability that modern manufactured home floor plans offer.
“They’re surprised by the interiors of the homes. We have an opportunity to improve the exteriors to a great extent still. But people walk in to open and welcoming floor plans that they can see themselves living in.
“I credit that to Clayton Homes,” Atkinson added. “Their interior design folks are really in tune with what the market is craving.”
So, the farmhouse look is a major focus. The big kitchen island, white cabinets, designed lighting, ceramic tile in large showers, and the continuation of the distressed look are trending.
“Rather than mounted coat hooks, for instance, we’re using this distressed plumbing fixture that comes out of the wall and caps off for hanging a coat or hat,” Atkinson said.
Atkinson said his home center sells Clayton and Adventure Homes product. He continues to see 65 percent of customers asking for a single-section home. However, he envisions the share of multi-section sales on a continued steady increase.
That said, about 30 percent of home sales are for community living, while the other 70 percent are destined for private land.
“One of the things that the whole Clayton organization is focused on is providing a homeowner a better life, with EnergySmart features,” he said. “That’s a big feature, that we’re building a home that will reduce expenses on a month-to-month basis.”
What to Expect for 2019 Homes Sales
Atkinson said he was in line to move about 110 homes for 2018, with as much as 25 percent growth in 2019. But there are obstacles.
“Where we are right now is up that climb into growth mode, and I believe the next few years are the ‘haymaking’ time,” he said. “We’re going to be able to help a lot more customers than we would have in previous markets.”
Freddie Mac and Fannie Mae continuing to make progress in the development of a secondary market for chattel home loans is a primary factor on the minds of most retailers, he said. And being able to work more on exteriors will help, too.
“If we can figure out a way to create more interesting curb appeal for a good price, that would be the final element that would cinch the deal,” Atkinson said.
Business is Booming in Kentucky
Amie Hacker, with Parkplace Homes in London, Ky., is a leading retailer and president of the board of directors for the Kentucky Manufactured Housing Institute. She said her business is coming off consecutive record years, and that she anticipates about 5 percent growth in home sales for 2019.
Parkplace had 148 homes sales in 2017, and was nearing 160 last year.
“I think we’re right in line with what much of the state is doing, performing well and growing steadily,” Hacker said.
About 60 percent of the time, the Parkplace customer in eastern Kentucky and portions of northern Tennessee is looking for what is referred to as a “no-change house.”
“They can add an EnergyStar package, a dishwasher and a dormer above the entry door,” Hacker said. “On the exterior, they can choose colors for the vinyl siding and shutters. But the square footage is something that won’t change unless you add something on-site. But it’s product you can get into to go from an apartment to a home. It really is the true meaning of affordable housing in the business today.”
So, fewer options means a more streamlined building process that provides a lot of square footage for the price. They sell a lot of Tru Homes through Clayton, as well as Champion and Fleetwood product. The Clayton brand homes come from the Appalachia, Maynardville and Rutledge plants in Tennessee.
The entry-level customer is balanced out by the high-end customer, with little to talk about in the middle of the market. Customers looking for higher-end multi-section homes have the greater number of options, but typically come in knowing what they want.
The High-end Home Sales Options Customers Want
“We’re getting more and more of the folks who are looking for the customization that gets you into something that looks more like site-built housing,” Hacker said. “If you draw a floorplan, we can build it.
“We’re seeing more on the multi-section homes, and those are going to buyers with land or looking to buy land,” she said. “The single-section homes we sell are going into communities.”
Stainless steel appliances, crown and baseboard molding, 9-foot ceilings, recessed tray ceilings, upgraded faucets and double shower heads are all a huge draw for the more customized multi-section homes.
“These are all architectural elements that people are seeing in $250,000, site-built houses that now they can get in the multi-section manufactured home that’s $150,000,” she said. “If you’re buying a site-built home at that price, it’s a small and older home probably in a less than favorable neighborhood.
“With ours, you’re going to get double the square footage and all the options you want,” Hacker added. “The 5/12 roof pitch, residential look. It’s a brand new home with all those amenities in place.”
Selling Homes for Open Land in Southern Illinois
Michael Xanders of Mt. Vernon Dream Homes in southwestern Illinois sells homes to people with land within 100 miles of his retail operation. Only a couple of homes each year go into a community, he said.
About 70 percent of his home sales are from multi-section homes.
“The last couple years we’ve seen some increase in sales of multi-section homes, but we’ve always leaned a little bit that way because of where we are and our customer make-up,” Xanders said.
“Open floor plans remain the biggest seller. People really seem to like that feel,” he said. “We’re usually selling a three-bedroom, two-bath home, between 1,600 and 1,800 square foot. People are asking for finished drywall, which is in about 80 percent of what we sell.”
An Eye on Illinois Preferences in Amenities, Materials
Like other retailers, Xanders sees customers who gravitate toward the large shower, stainless steel appliances, white cabinets and gray wall colors.
“And laminate flooring,” he said. “People don’t want as much carpet anymore.”
Mt. Vernon Dream Homes sells homes from Champion Homes of Dresden, Tru Homes, Fleetwood, Giles and Deer Valley. Champion Homes of Dresden has been picking up, too, Xanders said.
“Next year is the million dollar question,” he said. “We’ve really picked up lately, but it’s hard to say what’s going to happen in 2019, with consumer confidence and the stock market being a little unpredictable.
“I think we’ll probably be flat, or maybe a little bit down.”
Part of the problem is a bottleneck on the delivery and setup end of the business. Mt. Vernon Dream Homes in the fall had 20 sold homes on the lot, with about another 40 homes on the way from the plant.
“The guys we have going are good, and they have a couple crews, but it’s hard for transporters and installers to keep up,” Xanders said. “We could sell a lot more homes if we had that part of the transaction solved. It would be like opening the floodgates.”
Meeting the Demands of Multiple Markets
Little Valley Homes has retail centers in Cadillac, Mich., and the Detroit metro area, catering to the needs of very different customers.
“Cadillac has a good majority of vacation and retirement customers. They are primarily private land deals. And, we sell a good amount in both the manufactured and modular product,” said Bobbie Meehan, operations manager for Little Valley Homes. “The Belleville location sells to the private land buyer as well, with larger and higher-priced homes, often with customization for added closets, cabinets, drawers and a larger pantry, for instance.”
The northern Michigan customer has an eye toward the single-section or small multi-section home. That customer wants to keep things simple. The preference is for vinyl over gypsum wallboard because it’s more easily cleaned, Meehan said. Exterior trends are toward moss/olive or gray siding, with dark chocolate or gray cabinets.
“Most go with black appliances and putting in a 60-inch shower in the master bathroom,” Meehan said. “And linoleum through the home versus carpet is another growing trend.”
Customers Come with Cash in Hand, or Pre-Approvals
Another growing element for Cadillac-area customers is to skip financing in the home sales process.
“There are many cash buyers, and they keep their home and site work fairly simple,” Meehan said.
Buyers in the Detroit area, at the Belleville showroom, more often look for modular product. This is because of zoning restrictions on manufactured housing within city limits.
“We have a majority of financed buyers, and we’re seeing more lenders getting involved in home and construction projects,” Meehan said. “In fact, a majority of our buyers are coming to the table already pre-approved with a mortgage company.”
Nearly all customers want a large walk-in shower, and are ready to give up the tub. The amenities most desired at the Belleville location bear similarities to site-built construction.
“This is nearly always a full drywall home. A majority of our buyers purchase the 7/12 roof pitch. And many with walk-up attics, which provides storage space without going into the additional cost of a basement,” Meehan said. “Many want the exterior to have bump-outs or dormers. And we’re still finding dark chocolate cabinets to be popular. Although, 50 percent of the buyers are moving toward lighter colors.”
Indiana Business Shifts to Community Sales Centers
Few street retailers remain in Indiana. That being the case, much of the high-volume business the state sees has shifted to the community sales center.
Adriane DeRose is the community manager for Roselake Estates. She also runs the Carefree Homes retail operation from the community in Pendleton, Ind., about 25 minutes north of Indianapolis.
“The open concept is still something we’re seeing people ask for. The customers want kitchen islands, too, and China sinks and fiberglass tubs,” DeRose said.
Though the community does few rentals, inquiries for rentals have been high. And there’s as much interest in purchasing a pre-owned home as there is in the new homes coming into the community.
“The pre-owned market is just about as strong as the new market, if not stronger right now for us,” DeRose said. “And I’m seeing customers with better credit profiles recently, too, since midsummer.”
DeRose anticipates 2019 will match, if not be a bit better, than home sales from last year.