The History of Mobile Home Parks: From Desperate to Desirable
America’s first mobile home parks were the product of financial desperation. People who were beaten down by the Great Depression turned to the only housing solutions they could find. Some of them resorted to living in makeshift camping trailers parked in lots on the outskirts of cities and towns. These “trailer parks” quickly became associated with the worst aspects of hard times.
In the decades that followed, mobile home parks fought against negative public perceptions. Zoning laws prevented MHP development in desirable areas, and lending restrictions made it difficult for individuals to buy high-quality manufactured housing. It wasn’t until recent years that the reputation of mobile home communities began to change.
The Current State: A Solution for the Affordable Housing Crisis
Today, mobile home parks are a permanent home for millions of people who see the advantages of living in well-maintained communities that are just as clean and safe as traditional housing, yet much cheaper.
The shift in attitude has been so dramatic that by 2020, more than 20 million Americans — almost six percent of the country’s total population — had chosen to live in a mobile home.
The rising popularity of mobile homes comes at the same time that America is experiencing a crisis-level shortage of affordable housing. High costs are discouraging developers from building low-cost housing units, pushing them instead to build new, high-rent properties or renovate old buildings to accommodate higher-income renters. About 4 million low-rent units were lost nationwide over the last decade, and some estimates say that the country needs as many as 7 million new affordable housing units to meet existing demand.
The Future Depends on Responsible Mobile Home Park Ownership
Mobile homes are becoming an even more attractive option as housing prices skyrocket. On average, a mobile home costs 75% less than a site-built home, and the average cost to rent a space in an MHP is 50% or less than an apartment in the same neighborhood.
Large investment firms are well aware of the potential and are pouring tons of money into the acquisition of MHPs. But these communities won’t continue to be an attractive housing solution if owners don’t behave responsibly. Some of these firms are buying MHPs, raising rents, and then failing to improve or maintain them.
When owners don’t invest in the upkeep of the parks they own, eventually the useful life of the infrastructure will run out and they will become run-down, ugly places where nobody wants to live. This leads to MHPs being closed down or redeveloped into something else, resulting in a portion of America’s affordable housing disappearing forever.
The sustainability of affordable housing depends on MHP investment firms like 52TEN that are willing to spend significant amounts of capital upgrading the infrastructure, fixing the things the previous owner didn’t want to, and providing a higher quality of life for residents.
Good owners are constantly updating their park — even below ground — essentially turning parks that are a half-century old into brand new parks.
These improvements aren’t cheap, and they’ll inevitably lead to rent increases. But they’ll also keep the park running well for decades — or even a half century — to come. If owners don’t make these kinds of improvements, MHPs are going to disappear one by one, adding more fuel to the housing crisis.
Mobile homes have long been a way for Americans to live affordably. Even though they were initially a last resort for the very poor, they’ve become an attractive alternative for more than 1 in 20 Americans today. Keeping existing MHPs from being redeveloped is a critical component to solving the affordable housing crisis. As long as responsible owners like 52TEN keep doing the right thing, this affordable housing solution will remain sustainable for the future.
This content is the perspective of the author and is not intended to be relied upon as a forecast, recommendation or investment advice, and is not an offer or solicitation to buy any securities or to adopt any investment strategy. The information and opinions contained in this content are derived from experience, historic data, and other sources deemed to be reliable, are as of the date of this content, and may change as subsequent conditions vary.