Clayton Homes - Is the Industry in Jeopardy?

So as a new investor in the industry I am thinking about what can go wrong in the industry. I read this article about what happened to Clayton Homes:

Is there a concern that the government is going to step in and shut down these manufacturers of these homes or at least penalize them which will cause a trickle-down effect?

Am I thinking about this wrong?


The Atlantic’s article is as stupid as if I wrote an article on brain surgery by calling and interviewing the receptionist at the local hospital. But there are still some glimmers of fact in there: Clayton does build mobile homes and the dealership business is terrible in most markets. But the bigger issue is that the mobile home park industry has no ties to the retail mobile home industry – they build homes and we rent land. Since the homes never move and never die, our occupancy is not based on current dealer sales, but rather the collective sum of all dealer sales over the past 50 years. For example, in a 100 space park with 90 lots occupied since 1990, the sales since 1990 are of no importance, just as a built-out subdivision would have no ties to future single-family home sales. That being said, the big trend going forward is for park owners to fill their vacant lots by actually bringing in the mobile homes themselves. Since park owners can buy their homes factory direct, it still erodes the importance of the dealership model. In a nutshell, being a mobile home retail dealer is probably a dead-end sector, but don’t confuse that with the health of the mobile home park industry, which is the point that The Atlantic missed. Mobile home sales have been in total free-fall since 2000, and during the same period mobile home occupancy and rents have risen strongly. And even mobile home retail sales have bottomed and climbed for the past two years – being nearly 10% ahead of last year in 2015 to date.

For a more accurate, current view of the industry, check out this article in the Wall Street Journal