Mariwyn Evans writes about commercial real estate for REALTOR® Magazine. You can reach her at firstname.lastname@example.org.
Challenging Times Require Mobility
Mobile home sales tide one real estate brokerage over until middle-income retirees get off the fence and start buying again.
October 1, 2008
The blue-collar retirees who once formed the core of Gregg Leiss’ Carson Valley, Nev., market, have been scarce for the last couple of years. The valley, at the base of the Sierra Nevada Mountains, has traditionally attracted older buyers, many from the Sacramento area, who want to stay close to family while avoiding the tax-hungry California cost of living.
But in recent times, "We’ve become entangled enough with California that its roller-coaster ride in home values is our roller-coaster ride," says Leiss.
Yet despite the economic slowdown, Leiss, who launched Verus Realty with his father, Garry Leiss, in 2001, is getting ready to open a new headquarters office this fall.
"People will think we’re brave or crazy for expanding right now," he admits.
Crazy he’s not. Instead, he was farsighted enough to see the slowdown coming and to adapt to changing market conditions by offering cost-conscious buyers an affordable substitute for single-family homes—mobile homes.
Starting two years ago, Leiss encouraged his sales associates to return to school and obtain the license necessary to sell mobile homes, also called manufactured housing. Now about a third of his associates hold the license, which enables them to handle transactions in which the client buys the mobile home but not the parcel of land on which the unit sits. According to the Manufactured Housing Institute, most other states also require real estate licensees to hold a separate license if they sell existing mobile homes on leased land.
Leiss says mobile home sales accounted for more than 40 percent of his brokerage’s 72 transaction sides in 2007 and 35 percent of its sides in the first half of 2008, up from less than 10 percent before the slowdown.
The move into mobile homes has enabled his 25 associates to stay busy through the slowdown, although the dollar value of their business is down. The price range for mobile homes is $30,000 to $100,000, while the median price for single-family homes in the area is about $290,000.
"We used to all sell half-million dollar homes, but now we’re selling $75,000 mobiles," he says.
Still, it won’t be much longer before the lucrative home sale market returns, Leiss believes. By early 2009, the pent-up demand from baby boomers who want to retire to his market area will be too strong to stay latent. When that demand hits, inventories will disappear rapidly because the slowdown has left the area with too few builders to replenish supply, so home prices will post healthy gains, he predicts. And with his new office, his company will be well positioned to benefit.
"The visibility and PR that goes along with opening our new office will position the company to gain market share when the traditional home market begins to turn around in 2009," he says. Leiss projects a 50 percent increase in volume for his company in 2009.
"It’s fairly easy to be optimistic," he says. "We still have the draw of being a beautiful place with good tax structure for retirees. It’s just getting through the current situation."
And with his company’s move into mobile homes, he’s given his associates a basis to stay busy and solvent until recovery time comes.