Fleetwood Enterprises Inc. (NYSE: FLE) manufactures motor and mobile homes, as well as other types of manufactured housing. The market has not been kind to the company for the past several years, as gas prices and other costs continue to escalate.

Nevertheless, Fleetwood has been actively rearranging itself, cutting excess manufacturing capacity, selling off unwanted assets, producing more fuel-efficient motor homes and RV trailers. These steps have made a difference in the 2Q FY 2008 results that company recently posted.

For starters, the company actually posted operating income this quarter, $4.4 million -- quite a change from last year's 2Q operating loss of $15.2 million. This quarter's operating income was offset by $3 million in write-downs, leading to a $1.2 million net loss, or $0.02 per share for the quarter, a big improvement over a net loss of $20.4 million or $0.32 per share in 2Q FY 2007.

In what truly is an example of the law of unintended consequences, the subprime mortgage mess may actually benefit RV and manufactured home maker Fleetwood Enterprises Inc. (NYSE: FLE), CEO Elden Smith suggested. The reasoning is that as mortgages for those with more modest creditworthiness become more difficult to obtain, consumers will take a look at manufactured housing which can often be financed through the manufacturer. Manufactured housing costs less and carries a lower monthly payment.

Fleetwood could use some good news. The company released 1QFY 2008 numbers last week that were not encouraging. Revenues were down 4%, not surprising since gas prices were up by a whole lot more and most of Fleetwood's business centers around its RV Group. The company generated $6 million in income for the quarter, which would be good news if $5.3 million of this money had not come from selling an unused production facility. In actual fact, losses at the company widened during the quarter from $400,000 net loss in 1Q 2007 to a net loss of $2.3 million in 1Q 2008. For the past several quarters, Fleetwood has been selling off company assets to help offset operating losses.

Fleetwood Enterprises is trying to manufacture smaller, more fuel-efficient RV models, which have generated some interest among RV dealers. But the dealers are reluctant to stock up any inventory while demand for RVs is still so soft. Folding trailer sales were down 10% by volume. This news is in keeping with survey results that show fewer Americans are taking camping trips to national parks and other federally managed outdoor locations. Also, there are fewer trailer parks in the prime retirement states of Arizona, Florida and California, as municipalities turn the land over to developers to generate more tax revenue. Fleetwood CEO Elden Smith did not offer any guidance for FY 2008 figures, but don't look for Fleetwood's problems to be solved anytime in the immediate future. The stock closed at $8.91, down $0.49 on Friday.

When it comes to the real estate market, yes, things may get worse before they get better. And getting better will take time.

Having posted two stories about the housing "bubble" several things have been ringing loud and clear in the comments -- of which there have been plenty. I objected to the term in my original post, Housing Truth from Main Street, because I do not like the reference to the stock market bubble and I felt that the term was too freely used and becoming a cliche. Since then, readers have corrected me by the dozen.

But it seems that it is not just prognosticators of headlines and Wall Street attention-grabbers that have adopted the term but the general public, academics and the broader housing industry. So, if not by fact then certainly by usage and acceptance by the public, I stand corrected. There appears to be a bubble whether I like the term, believe it, or not. Not everywhere, and not to the same degree, but enough to affect the market and get people's passions stirred up and their financial statements out of balance.

Comments my posts received support my notion that there is great variation in the degree of the problem based on geographic location. In a my follow-up story, Housing bubble, debt bubble or same thing? another issue that was reinforced is that there may be a need for housing, but demand is price driven. Personal debt and national debt have reached crisis proportions at many different levels and this is broadly felt by many people and affects how much they can afford.

I summarized this premise while responding to comments in a prior post: "How much trouble we shall soon see. I have stated there is a real need for more housing. This is true, but need and affordability does not always coincide so demand is affected and in turn pricing and current value are affected."