Manufactured Housing a solid investment

Clayton Homes is a key factor in Berkshire Hathaway housing sector.

Clayton has been a huge winner for Berkshire since its purchase in 2003 for under $2 billion. Clayton is one of Berkshire’s top 10 subsidiaries by profit and might be in the top five. It isn’t easy to determine how Berkshire’s many operating businesses rank in profits because Berkshire releases little specific profit information on many of its subsidiaries. Clayton could be worth $25 billion or more, Barron’s estimates.

Clayton dominates the manufactured housing business with about a 50% share in an oligopoly that includes the publicly traded Champion Homes and Cavco Industries. The smaller companies each have around 20% of the market, which totals about 100,000 new homes a year.

Wall Street views manufactured housing as a better business than traditional homebuilding because it’s simpler, has only a few big players, and generally doesn’t involve capital-intensive and potentially risky land purchases.

Manufactured homes are affordable for lower-income Americans—often families earning $60,000 a year or less—given a price range of $100,000 to $200,000 per home. That’s before the cost of placing them in manufactured-home communities, where the homes are now more permanent than they once were and generally don’t move once put in place.