Wednesday, May 10, 2006

Warren Buffett on Manufactured Housing

"The manufactured housing business has an interesting history. Volume is lower now than it was 30 or 40 years ago—and quality is higher. Some years back then, 1 out of 5 houses built was a manufactured home. Last year 130,000 manufactured homes were constructed (ex FEMA-related construction), or around 6% or 7% of total home construction. You can install a manufactured home for $45 per square foot. There’s a lot of resistance to manufactured housing via restrictive zoning laws in many locations, spurred by local builders. But in many areas, developers are building entire subdivisions of manufactured homes." said Warren Buffett.

"Some day, the industry will deliver 200,000 units per year, but not in the next year or two. The industry has to think through how to finance its sales so that, after 5 to 10 years, the buyer has an asset that’s worth more than the loan that’s financed it. It can’t just make loans and sell them to Wall Street. Clayton could be the biggest homebuilder in the U.S. in a few years." said Warren Buffett.

Berkshire Hathaway Annual General Meeting May 6, 2006

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