Why Warren Buffett Has Invested Billions in Manufactured Homes (and You Should too)

What value would a storied investor and leader of Berkshire Hathaway see in the manufactured home industry that we all miss? He saw an opportunity in a market that had bottomed-out prior to 2001 and had not fully risen to its potential when he purchased a popular manufactured home builder, Clayton Homes, in 2003. Just to gain a picture of the market trend, view the chart below (data provided by the U.S. Census Bureau):

Since the market had bottomed out yet not fully recovered at the time of his acquisition, Buffet saw an opportunity to invest in a company and market segment that he knew would yield returns. 11 years later, standard production processes have evolved by leaps and bounds. Our manufacturing technologies and material quality are more advanced than ever, yet, manufactured home sales prices are comparable to where they were in 2001 (accounting for inflation) vastly lower than they were in the bull market of 2007. As the economy recovers, there is always risk. But consider the big picture market trend: manufactured home sales prices have increased 109% over the past 20 years. Where will they be in the next 20?

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