The Topic that Nobody Wants to Talk About By Ben Ivry

There are a huge number of news stories online regarding manufactured home communities. Most of them complain about owners raising rents. Others are about properties that are being torn down for redevelopment and displacing residents. Still others illuminate communities that are needing extensive capital improvement and can’t provide reliable utilities until that’s accomplished. The problem is that all these topics share the same grassroots theme. And the media refuses to acknowledge it, because it’s not the narrative that they want you to hear. But it needs to be heard. 

Real estate has two components. The earth and what sits on top of it. While dirt makes the steady foundation for all the other uses, structures can be built or torn down with ease, and what sits on land is in a constant state of flux. Everyone can think of a prime corner that has been farmland, a drive-in theater, and now serves as a Home Depot. In each reiteration, that land takes on a new identity in search of more profitable use. And every piece of property in the U.S. has that freedom of opportunity, as long as zoning allows for it. 

Mobile home parks are no different. In fact, they make for excellent redevelopment parcels. They typically have great road frontage, good locations and are just the right size in acres for a number of competitive uses. They may be parking lots for mobile homes today, but they can easily be a Lowe’s or an apartment complex or a strip center tomorrow. And rezoning is not a problem, as most city governments would love to eradicate each and every manufactured home community from their city limits. 

Which brings me back to the basic problem that nobody wants to talk about. And that’s the simple fact that lower mobile home park lot rents increase the likelihood of both redevelopment and parks not being able to provide basic infrastructure needs. And higher lot rents reduce the risk of redevelopment and utility problems. You can’t have it both ways. And that’s a tough message for the media to swallow. Because it’s hard to get behind a concept and push really hard, when you know that by pushing that button, you selfdestruct the housing for millions of Americans. 

Take the case of Oak Hill Mobile Home Park in Belton, Missouri: https://www.kmbc.com/article/belton-missouri-mobilehome-park-residents-ask-for-help-after-receiving-notice-tomove/40157975 It needs lots of work, and suffered from low lot rents. And now it’s being demolished. How could Oak Hill have been saved from the wrecking ball? Well, higher lot rents would have gone a long way to deter owners from changing its usage. And higher rents would have also allowed for renovation of critical infrastructure systems. But instead, this longtime home to many households goes back into the mix as raw land looking for a new, more profitable, future. Is there no narrative in which mobile home park owners can be publicly shamed and beaten into submission to keep their rents low without running the risk of lowering resident quality of life and creating a pathway to redevelopment? No, there really isn’t. 

There are basic truths in life that cannot be negotiated. And one is that lower rents are not sustainable, and without higher rents mobile home parks come crashing down after years of poor living conditions. Trying to fight this basic tenet is a waste of time. Instead, the media should embrace it and work within those confines. There are many ways to improve the lives of manufactured home community residents, but they all require higher lot rents. And there’s nothing wrong with that. Let’s explore what can be done if you simply accept the natural order of economics. There is a point in lot rents in which there is adequate cash flow to cover basic needs of maintaining infrastructure as well as providing a high enough return to ensure that mobile home parks stay in that exact use category. Once this level is achieved, then lot rents only rise with the rate of inflation, just like every other product in America. The key is to find that point of equilibrium and to better explain to residents why it’s important for their need of a nice place to live and preventing them from being ousted for redevelopment. 

Mobile home park lot rents are ridiculously low in the U.S. The average lot rent is thought to around $300 per month at a time when apartment rents are nearing $2,000. And at a moment when home prices are nearing $400,000. That can’t go on. And the only reason that it exists is because mom and pop owners did not raise them to meet inflation over the decades. Case in point: the average lot rent in the U.S. in 1950 – adjusted for inflation – would be $500 per month in today’s dollars. 

That means that mobile home park residents were not taken advantage of, but were the beneficiaries of below-market housing costs for decades due to the benevolence of mom and pop owners. But that can’t continue forever. The time has come for the rents to go up substantially, and the big beneficiaries of those increases are, once again, the residents who will enjoy a higher quality of life and have a permanent home. 

If manufactured home community rents doubled – which they most definitely will in the years ahead – then they will still amount to one of the greatest bargains in the history of housing. They will provide privacy, a yard, and a sense of community at a price 75% less than apartments. They are the only form of affordable detached housing in the U.S. and their owners should be celebrated, not pelted with stones.

The manufactured home community business has a bright future. Rents will definitely be going up. Old properties will be brought back to life. And those properties that raise rents to necessary levels will be safely out of reach from redevelopment. But it all begins with accepting the simple law of economics. This industry must spread the message to the media and politicians to make residents understand and embrace it. It’s time to discuss the topic that nobody wants to talk about.