Affordable Housing Institute : US

Does the Census mischaracterize people who live in mobile home parks?  A very clever friend of mine (who wishes to remain anonymous on this subject, let’s call him Mr. E) thinks they might.

 

My actual source is much better looking than this.

 

In a previous post, I listed six fundamental attributes that we normally associate with homeownership:

 

1. Unlimited appreciation.  Increases in value wholly owned by the occupant.
2. Right to sell.  The occupant can monetize the property with asking anyone’s consent.
3. Financability.  The property is viable collateral for a loan (critical in new business formation).
4. Controllable occupancy cost.  The owner is protected from arbitrary or unaffordable occupancy price hikes.
5. Improvability.  The occupant can change the building’s configuration, particularly its external aspect.
6. Secure tenure.  The occupant is protected against eviction judicial or economic.

 

Each element is a step up from the previous one.

 

The foregoing ranking goes from most discretionary (first) to most essential (last).  Improvability depends on secure tenure; unlimited appreciation depends on the right to sell, and so on.

 

How do mobile homes score on the homeownership attributes?  Poorly:

 

Not so good from a homeownership perspective

 

1.         Land is rented, not owned.  In most cases, the land is owned by someone else, who can raise the rent at any time, in amounts entirely unrelated to operating cost; thus, when the neighborhood in general appreciates, the one who benefits is not the home owner but the landowner, who can capture it through increased space rent. 

 

2.         Home owners can seldom move their ‘mobiles’.  Even assuming the property could be uprooted (and most can’t), where will it go?  Many existing or new parks will not take older mobile homes (an ironic form of metal NIMBYism), and restrictive zoning means civilization will not take the older property either.  As my anonymous friend comments sardonically, “off to the woods, and primitive living!”

 

A typical single-wide, 1960s’ vintage

 

3.         Physical improvements add no equity value.  The inflexible metal exoskeleton significantly limits the configuration options (relative to stick or brick homes), and with the landowner sitting underneath the appreciation (and potentially charging any incoming owner a higher space rent), in practical terms augmenting the home further reduces its mobility.

 

I would have liked to sell the place …

 

Put these three factors together and you find that virtually every one of the six homeownership attributes can be compromised, or entirely confiscated, by an unscrupulous mobile home park operator. 

 

1. Unlimited appreciation can be eaten by higher space rent.
2. Right to sell can be economically neutered by higher space rent to an incoming tenant.  (Many states have laws prohibiting move-in or move-out fees, but changing the rent on turnover accomplishes much the economic same thing while conforming legally.)
3. Financeability.  I have heard numerous horror stories that, in general, lenders will not refinance an existing mobile home because the aging collateral is not economically recoverable.
4. Controllable occupancy cost.  Clearly absent in any year-to-year space rent situation.
5. Improvability.  Available to some limited degree.
6. Secure tenure.  Only if you can cope with rising space rent.

 

A modern double wide, a vastly improved physical structure

 

The scorecard?  One half out of six.  As I commented in the homeownership attribute post:

 

US counterexamples, as we have seen, are in mobile homes, which sit atop land leased to the home owner by the mobile home park operator.  It should be no surprise, therefore, that some states and localities have adopted anti-eviction laws or relocation benefit requirements, or even rights to buy at negotiated or formula prices.  To do otherwise places the mobile home owners at risk of the cruelest blow of all — being evicted.

 

What might this mean?  As Mr. E observes, “we have long proudly touted rural America’s high homeownership rate“: 69% overall (65% metro/ urban, 75% non-metro).  But now consider:

 

·         America has roughly 20,000,000 rural households (49.9 million people).

·         “America holds roughly 50,000 mobile home parks.”  (Mr. E’s statistic.)

·         At 40 spaces per park, that’s 2,000,000 mobile home households.

 

In other words, 1 in 10 rural American families lives in a mobile home. 

 

Mobile homes as a percentage of the total (from HAC)

 

For a handful of exceptional cases (Briny Breezes and the occasional mobile home co-operative), these home owners rent space in the land on which their property sits.  As I wrote in that previous post:

 

The role of land.  Noteworthy in the foregoing list is the role of land ownership as influencing appreciation, marketability, and improvability.

 

In long-term affordability, as we will see in other posts, land is the key.  Control its price and its use, and you can control, or at least delivery, long-term affordability.

 

 

 

If these mobile home owners are economically renters, the 75% rural homeownership is economically 65%, and as Mr. E commented, “leaving rural America with a self-inflicted rental population.” 

 

A rental population, I may add, that is generally white, older, lower income, and often on a fixed income — in economic serfdom to the mobile home park operator. 

 

 

Why isn’t mobile home affordability a bigger policy issue?

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