Show BUSINESS t t th MOBILE MontLE HOME nOME MARKETS BRIGHTEN After experiencing one of the worst periods in its history the market for mobile home manufacturers has shown considerable improvement improvement improvement im im- im- im provement this year During the proceeding two years shipments of manufactured housing as mobile homes are frequently called came close to the disaster level with a 11 42 percent plunge in 1974 followed by a 34 percent decline during 1975 Thus far in 1976 however prospects have become much brighter and the leading producers in this industry should register annual gains in both revenue and net income Important too 13 Ls the fat that the strengthening economic climate favors certain other lines in which mobile homemakers homemakers home homemakers makers compete CAUSES OF SLIPPAGE Through 1973 1173 th the tho term longer-term trend of shipments had been upward Then the mobile home manufacturers manufacturers' began to feel the adverse effects of the Arab oil embargo and the consequent shrinkage in economic activity Repossession rates moved substantially higher Adding to the woes the fall fall- off fall ff in units shipped was accompanied by spotty availability olf of loans and more costly money rates coupled with increasing unemployment Operating rates in fact moved off so that some of the weaker sisters in inthe inthe the industry were we're were forced to drop out And because of th the climb in inthe inthe inthe the number of repossessions some internal industry y rivalry arose with older units com tom Competing competing with the new ones for fewer available buyers SOME HEARTENING BENEFITS Some financing provisions were liberalized last December and this could benefit benefits I the in in- Loan ceilings ceilings' under under- insured HUD programs program were hiked liked from to 12 and 0 t from to for fOl single and double widths respectively Another definite plus for th the field is the increasing market share of width double-width uni Is The J higher ghe value of these is helping to lift the dollar volume of the industry's sales Since double double- width units are becoming more popular because of of th the e a increased increased increased in in- creased amount of living space provided it is expected they will claim a a steadily larger share of the market CHANGE IN CLIMATES CLIMATE Brighter in 1976 h have ve brought about a favorable change in the operational climate Volume of sJ shipments shipments' has been outpacing the y year year- year year-v ear ear- earI I earlier showing Informed forecasts for 1976 are in the vicinity of units If this this this' annual rate should be it will fall short of the ter mark reached in 1973 but it v ill v rill still represent a healthy 1 1 over units While many people a are re 4 distressed by the soaring c co Is of residential buildings and ands t available land it must be a ad- ad adr d- d dv d v r milted milled that these are a plus plus factor for the makers of cd I r manufactured housing unit uni units t During Durin such a period of ire imf 2 lathe as we have hav been movi moving I l through it is understandable that both mobile homes and site-built site homes have risen sharply The price differential however is still considerable 1 a between manufactured and andl conventi conventional nal housing Even though there have been attempts attempts at at- tempts made to construct no- no frill conventional homes there I Ihas has not been much success and i even such bargain houses are not cheap enough to compete j l' l with manufactured housing So the inflation that has beset real estate prices should be a a i considerable boon to makers of mobile homes for some time lime to 4 come Already manufactured housing units account for nearly 95 percent of new single family houses selling at less than and approximately 70 10 1 percent of those selling under Jj Everything ng considered the mobile mobile- mobilehome home industry wt which ch was on the rocks in 1974 and r 1975 now appears to be headed i j t t I back toward smoother waters it a J The Res Research Department of I Babson's Reports is currently e 1 advising the retention of tJ this s k I type of security in investors' investors portfolios because of the favorable outlook for makers of manufactured housing over the near term i Ai |