Stegmayer Says Demographics Favor Manufactured Housing

The Cavco webcast of January 28 on their 2011 third quarter earnings reports produced reason for hope, solid financials and the proposed acquisition of Palm Harbor. Cavco, based in Phoenix, AZ is one of the three top producers of manufactured and modular homes in the country. President, Chairman and CEO Joe Stegmayer, said that although orders declined, “Still, we managed to improve results significantly compared to the prior year, third quarter.” He estimated total shipments for 2010 at 50,000, the third consecutive year since 1959 that shipments have been this low. Noting that housing is a cyclical business, he gave several positive signs: The first is that the economy is on an upswing. Secondly, “Population demographics are in manufactured housing’s favor, with strong growth in the age groups that represent our largest markets. Third, home buyers are looking at houses they can truly afford, and this trend is expected to continue.” He said the outcome of its proposed buyout of certain of Palm Harbor’s assets will not be known until early March. The first caller asked about lending. Stegmayer said because Freddie and Fannie are still in receivership, no new programs are being offered, nor are existing ones being expanded, but a lot of financing is done through FHA. The second caller asked if FHA loans are helping. Stegmayer said FHA helps where people are buying a home with a personal property loan up to $70,000, not including the land. He added that banks continue to shy away from loans in general. When asked about the fourth quarter, he said he never makes projections, but did note that with the addition of Fleetwood Homes, Cavco now has better geographic dispersion. As to the acquisition of Palm Harbor, Stegmayer said Palm Harbor has a stronger presence in the modular product line.
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