What happens when investment firms acquire trailer parks
newyorker.com
newyorker.com
"The homes in the park are not as portable as its name implies; they’ve been placed on foundations, and their hitches have been removed."
In my experience, in older parks especially, there is no way to economically move the trailer. Which means you don't really own a "mobile home", you own a slot in the park with a worthless trailer on it. This allows the park to have the negotiating power. I just wanted to point out this key detail to people who may not be aware of the situation.
But the term manufactured home seems odd to me, aren't nearly all new homes nowadays "manufactured"?
Mobile home: Factory built before a certain date in the 1970's (which I've forgotten), with no particular quality standards in place.
Manufactured home: The new name for mobile homes, indicating that they have been factory built to clearly defined standards. Considered depreciating personal property by insurance companies and lenders.
Modular home: Also factory built, but to the same standards as homes built on-site. (These are the prefabs you mention.) Considered real estate, the same as site-built homes, by insurance companies and lenders.
Edit: Wikipedia links to this archived page, which provides more specifics:
https://web.archive.org/web/20120323074714/http://www.mhcomm...
If it costs more to replace a house than it cost to originally construct it I could see the value of the house appreciating.
LOCAL construction costs, and the cost of everything else not easily transported, get pushed up by the RE cost hitting _everyone_ but the land OWNERS.
Complaints of complex, costly regulations are real; but the factors noted seem bigger. AND ... factory-built processes reduce the per/unit cost of regulation by letting regulators approve factory PROCESSES instead of individual homes.
Were that the case, buildings like Fallingwater and the palace at Versailles would only be worth the site value.
But in ordinary usage people use the terms interchangeably.
and, critically, depreciates like one. Which is kind of the opposite of what you want in a house.
"If it has to be pulled by an actual truck (which is what costs the $3,000 or so in the move) then it’s a mobile home. But also remember that there is a component that can only be pulled by a truck in most RV parks, which is called the “park model”. These are like mobile homes, but do not have wheels or axles on them – they arrive on a flatbed truck – and also cost $2,000 or so to move. Since we don’t want our customers to ever leave, we only consider the type of mobile home or park model that requires expensive transport to be worthy of our investment dollars. RVs can be moved for next to nothing, so there’s no barrier and that’s too risky for us."
http://forum.mobilehomeuniversity.com/t/official-difference-...
And a long article on Rolfe from the NYT in 2014:
https://www.nytimes.com/2014/03/16/magazine/the-cold-hard-le...
The trailer was in really rough shape. They were huddling under blankets because heating and insulation were inadequate. And now they had no water.
Two things make me angry about the trailer park situation.
1. people living there who only get poorer from it. They own the portion of the home that decreases in value and rent the part that appreciates. If you're rich, sure. You can afford to own a depreciating asset and forgo the appreciation. But they're poor.
2. By having the lot renter own the trailer, they avoid many of the laws that protect renters with basic livability requirements. And yet those people are still paying rent alongside having to pay maintenance costs for their homes.
In the end at least in my area of the country it's much less expensive to buy a modest home.
https://www.pressdemocrat.com/article/news/fire-survivors-fr...
On the other end of the spectrum, there are communities with HOA rules, well-kept common areas, a clubhouse, etc. My mom lives in one of these. Honestly, it's not a bad place to live. I could totally live there if needed to. I tried to talk her out of buying it based on the economics alone ($400/mo lot rent plus around $60k for the house) but she went ahead with it anyway. It doesn't make financial sense to me, but maybe she sees something about the situation that I don't.
it's that or being homeless. In a trashy RV park, they generally get running water, electricity and a toilet that flushes. Actual homeless people are a step down from that, generally no running water, etc.
Also note, most homeless persons are effectively barred from working. (employers mostly require an address to hire you)
source: me. a formerly homeless person and have lived in the trashy RV parks before.
There's another option of course, which is to buy a piece of land and put a trailer on it. Land's pretty cheap out in "real America."
A lot of my buddies growing up lived in mobile homes but none of them lived in trailer parks. If you can afford to buy a lot (but not yet build your dream house) it could make financial sense to get a basic model and plop it there while you save up for the next few years. You might at least beat renting.
I have pretty fond memories of living there.
I got my first bike from a really, really nice single mom who noticed that I didn't have one. I mean, it was a crappy garage sale find that was rusted and had weird 1970s-stylee handle bars, but she got it specifically for me.
I actually live in a relatively low-income area now. I just like the general "realness" of working class people and don't much care if people look down at me when I tell them where I live.
Housing prices are skyrocketing in my area and there are stories on the news about investment firms buying up homes and putting them up for rent. What's to stop these well financed institutions from buying up more and more real estate and forcing more people into renting?
Nothing and they are already are doing it.
Blackrock raised billions during COVID on the idea that once the evictions kick off, lots of homeowners will lose their homes and those tenants with black marks will have to pay more and more to rent.
Every person abusing the COVID moratorium just to screw over the "landlord" who owns one property is just one more nail in the US clusterfuck coffin.
Edit: it's Blackstone.
Here in Norway, businesses are entitled to financial aid if their income has been affected by COVID.
Meanwhile, the real-estate market is white hot at he moment, while the rental market is slow/stagnating. People with money want to purchase, while poor people can't afford to rent.
Turns out, rental companies and investors have speculated that if they just keep their rental units vacant, instead of lowering rent and attracting new tenants, they can apply for financial aid. win/win for them - they can sit on appreciating assets, without having to deal with wear/tear, administration, etc. on their units. All while getting bailed out by the gov.
And once small landlords/owners can't cover their costs due to broke tenants going for months/years without being able to pay their rent, no doubt there are investors and REPE firms lined up to buy those units.
Just another transformation of wealth.
I think there is a lot of hate directed to BlackRock, which is really meant to be directed at Blackstone. BlackRock is an absolutely huge financial company, to be sure, but is soley in the business of ETFs and asset management, which aren't exactly abusive or extractive.
And no it doesn't help that the names are so ridiculously similar.
Edit: just learned that BlackRock started as an asset management arm within Blackstone, and the similarity was intentional. I think the operations have diverged enough since then that there's a worthwhile distinction between the two.
I also wonder how many of these real estate firms are backed by Chinese investors too.
In many areas of the country it is illegal to build anything but a single-family home. To people familiar with supply & demand this should be an obvious problem.
Land is in extreme abundance and multi-tenant properties are almost always built and owned by corporations.
In theory, a manufactured home community could also be a co-op, and setting one up would be less capital-intensive than building multi-family homes.
It is worth noting that so far as land-use is concerned, MHCs are significantly denser than typical single-family home neighborhoods (even older, denser ones) due to the small lot and home size, absence of two-vehicle garages, etc. They are comparable to the lower end of multi-family housing density due to the parking lots those are typically surrounded with, though of course multi-family housing that has good access to public transit can be much denser.
The density is good because it's valuable to be near other things, and density is the only thing that allows more proximity?
Maybe it would help to realize Japan, Korea, and California are all mountainous and prosperous. Mountains helped force good land use (though lately stupidity in California has been beating it).
The intuition behind the LVT is that increases in the value of land, in urban areas, are mostly driven by a growing local economy; therefore the community should benefit from them. Increases in the value of structures, OTOH, mostly come from investments by the property owner.
There's a fascinating book (well, if you have any interest in economics) about the LVT, from 1879, by Henry George: http://www.henrygeorge.org/pcontents.htm
At first, I considered a few mobile homes, but I soon learned to ignore them. The houses themselves were cheap, but the association fees were outrageous. I ended up getting a town home instead, which was valued much higher but the monthly payments ended up being comparable thanks to the much lower association fees. I have more property rights, more of that money goes into equity, I get a much bigger and nicer home, and I don't have to worry as much about tornadoes, derechos, and other nasty Iowan weather so much.
With the prevalence of town homes and cheap housing here, I don't know how trailer parks keep their residents.
The real issue is government limitations on the supply of housing (height, min parking, setbacks, etc).
Housing could be high quality and relatively cheap. From first principles, a 3 bed 2 bath apartment could easily be <$500/mo in any expanded metro area of the US, if you were allowed to build.
Allowing more competition for low cost housing would solve almost all of the systemic issues in this article.
But as other posters have mentioned, the US promotes the opposite - home ownership as a wealth building tool.
Housing is a cost, we should work to reduce it.
The Park is about 90 acres. Article claims about 400 homes on site. Much laments the living conditions and abusive corporate ownership.
Why do the concerned not facilitate affordable ownership, instead leaving it up to investment firms to provide the service (badly)?
Under 2 miles away is a >150 acre parcel available for $6,000,000. Divided by 600, that’s $10,000 per quarter-acre; paid $100/mo, rent-to-own style, it’s bought outright in 10 years (or earlier as cash flow allows).
Seems a very solvable problem for a budding social-minded entrepreneur.
Or some form of creative financing. Change the game; 1/4 acre lots for $10,000 are just sitting there waiting for someone to make 600 happen all at once.
It’s doable. Those pining for better treatment and cheaper options should step up and make it happen.
You may need a sewer system or, if you install septic tanks, you'll have to go to half-acre lots. You'll have to file a plat in the Recorder's Office, so you can sell lots. You can't do that without planning commission approval.You'll need a surveyor.
Whether the roads are public or private, they still require the same public standards, because fire trucks have to drive on them and, because the county may have to acquire them to maintain so they'll want them to meet a certain standard.
All of these costs have to be paid upfront.
There's more but you soon begin to realize that you can't get 600 lots on 150 acres nor will your costs be limited to $6MM.
Your reasonable complaints do raise the point that zoning laws drive the cost of housing out of reach of the poor. Having infrastructure beyond mere sewage, electric, and a gravel road is of course desirable, yet what is gained if residents can’t afford it? At what point, and how, does reality collide with objective costs of good intentions?
And yes, 150 acres divided by 600 lots is 0.25 acres per lot - plenty of room for a single-wide and share of infrastructure.
The manufactured home itself depreciates in value like a car or RV, so even if you don’t get fucked by your landlord, you get fucked on depreciation. At least in an apartment you don’t pay for maintenance or depreciation!
That's basically the Buy Here Pay Here(TM) car lot business model.
I mean, yeah, family-owned trailer parks have been "under-utilized" for decades, and you're pretty spot on in what is involved in properly "utilizing" them. However, there's a human side to it as well.
Plus, there's a plot twist where Republicans introduce bills in a state to enhance tenants' rights.
They also said "and you will be happy", which was an order.
Resident-Owned Communities seem by far to be the best answer here, and I encourage folks to read up on it and see what you can do to help if you're so inclined: https://rocusa.org/ is one such nonprofit, but there are several.
Interest rates need to rise, and soon.
This is a net positive - It frees up more valuable real estate in urban centers for working-age citizens to utilize, and extracts capital from the property for retirement-age citizens to finance their retirement.
In this way, housing has been a stable and reliable investment for many for some time, and in a way that's beneficial to society as a whole. Quite different to what we're seeing here, an evolving dynamic which also threatens this model and puts people's retirement prospects in peril.
there's also the oft-mentioned japanese view that homes are a depreciating asset, though land values remain quite high, so the asset class is still modestly investible, iirc.
I’m a Brit but we have this bad here at the moment. A house next to ours came on the market just last week, it wasn’t even listed inline yet but on day one the estate agent had a long list of people registered with them viewing the property all day and got four offers. It’s those people living in my area competing for property driving up house prices.
However, that is not really a good description of the property investment the OP was referring to.
The OP was describing the situation where one individual owns many properties for the sake of investment.
It is that scenario it is the investor demand for properties that is driving up the property price making them unaffordable.
What's worse is this situation is self-inflating.
As a property investor with a handful of properties, you're in a good position to go to the bank, get a further loan to buy yet another property.
That then drives up the property price, which drives up value of your existing property assets, which then allows you to get an additional loan for yet another property.
This also means, people without that collateral backing have a much harder time getting their first property and when they do they pay a much higher price.
That bubble will continue to grow while interest rates remains low.
I also agree that interest rates need to rise, but there unfortunately doesn't seem to be any political or monetary will for that to happen.
I mean, NZ is crazy unaffordable and foreigners can’t own real estate there from what I gather. It’s purely organic demand driving up prices.
That mostly doesn't happen because sid countries don't generally have California style zoning (though their byzantine permitting and regulatory compliance processes are just as good as CA or NYC's when it comes to raising construction costs).
I mean Singapore offers many incentives to purchase and their housing market is nuts with the government always trying to keep prices from exploding.
'A video of the speech went viral, prompting an Australian writer, Chloe Angyal, to publish a piece for the Web site Feministing titled “Marry Me, Zach Wahls.” In 2013, Angyal and Wahls met in New York; they are now engaged.'
There is a sleep pod that is shared by two people.
One person works during the day while the other person is put into some sort of hibernation and they swap places at midnight.
1. Yeah, I made an opinionated omission there. Sue me :D
2. That last part (the country’s largest sources of affordable housing) is even more damning than the rest. :( In a country that big, and that rich, with a frontier ethos like that, how the f*k does anyone think this is acceptable?
Of course trailer parks are (hopefully) always among the most affordable housing options.
However, living in one should be a choice of the individual, and the fact that there is a notable population in these places tells me that these are not exactly free choices à la "I shall live frugally" but rather a systemic problem.
So: "acceptable that trailer parks are more than a mere curiosity of vanishing proportion in the story of housing in the US in 2021."
Sure, if you have free labor. I’d guess 99%+ of houses were built by a paid crew, so uh, it does not cost just 40k for a house. It costs $200/sq ft to build a house (in a midsize metro area of 3 million), without buying land.
That doesn't seem like a useful framing of the problem.
Yes. Believe it or not, there are lot of people (especially people in positions of authority/power) that believe this type of scarcity drives labor, ambition, society, etc.. forward. I mean just look at the current discussion about minimum wage and/or stimulus checks.
But with real estate, I kind of agree with you, It can be a little far fetched to extend that mentality to housing scarcity. Housing scarcity is just because current owners want to have the value kept in real estate increasing. Hard to do when there's no scarcity. Only wannabe owners complain about housing prices.
If nothing else, can you actually imagine a politician celebrating houses going down in price? Picture yourself walking up to a podium and announcing that the average 3 bed 2 bath in San Jose is now only $200,000, and what a fantastic achievement this is and how it will help people who have struggled to afford a home. What reaction do you get?
Homeowners would be crying for blood because, whether they care to admit it or not, when it comes time to sell they want 2+ other people working their asses off and saving every penny they can to just _barely_ be able to put in a bid.
I _am_ a homeowner, albeit of a cheap house, but I'd love to see prices fall because I wouldn't mind a second one. A spot on a couple acres near Portland might be nice, and some of them don't look too bad...
This is a big part of the problem imho - its a treadmill that you can't get off. With an ageing population that all own houses and getting generally more conservative, I can't see it changing any time soon. It strikes me as odd that everything is getting cheaper except houses - and you may say its land, but if thats the case apartments should be getting cheaper.
Facebook couple: "If we go for the cheap round-the-world holiday we can bid 3.3 instead of 3.2"
and on it goes.
The politicians themselves are benefitting from the situation. So why would they change it?
Article from the guardian about US Senators investments https://www.theguardian.com/us-news/2019/sep/19/us-senators-...
Investment portfolios of some Indian politicians. I'm not familiar with the politics of India. https://economictimes.indiatimes.com/wealth/plan/what-do-pol...
In general, wealthy of all stripes are invested in real estate to some degree. "Land - they're not making any more of it"
Man, this is just... gross. I realize mortgage bond trading has been a ~$100 trillion dollar windfall since the mighty 80's under Volker (and Liars Poker), but the "little effort to maintain" just cries foul.
https://www.palmcanyonmobileclub.com
Granted, these are marketed toward retirees, which is why they are in Palm Springs, but it nonetheless shows that with a little investment in design and materials (which doesn't have to be very expensive), the format of manufactured homes can be separated from their historical associations with low quality.
“Mobile home parks are the hottest sector of real estate right now, due to the endless decline in the U.S. economy.”
The site points out that thousands of baby boomers are retiring each day, and that they will receive around fourteen thousand dollars a year in Social Security income:
“Mobile home parks are the only segment of real estate that grows stronger as the economy weakens.”"
PDS: A potential (or actual):
inverse-correlation...
How interesting!
It never ceases to amaze & depress me simultaneously.
That security guy probably could use that food more than the dumpster.
There's been a large rise in people living in campers in California due to high rents.
The US is a vast country with a vast population and its economy has been geared towards high end services. Those with the relevant education are able to thrive while those without education or wealth get cast aside. Urban centers thrive in this economy while rural ones fade away and decay; most people don’t want/ can’t move to where the opportunities are.
There’s also a multitude of socio political issues. From the relative independence of States to set social benefits policies, to the phenomenon of convincing people to vote against their own interests when race or culture war is involved.
Somehow SV just decided to not bother with that at all.
California has such a mild climate, that you can build a house out of ticky-tacky, skip the insulation, and people won't care because they have a lemon tree growing in their yard.
Nowadays code won't allow you to skip insulation (or solar), but with earthquakes and high land prices you still aren't getting stone or brick homes.
Structural stone and brick homes aren't really a thing in the US that much any more.
Beyond seismic issues, when it comes to insulation and efficiency and air/water leaks, homes built using bricks and stone are terrible, because those materials are very difficult to seal.
Most newer homes that have brick or stone exteriors use it only for aesthetics, and do not rely on it for structural integrity or resistance to the environment. Their actual skeletons are wood frames, and the weather resistance is provided by layers of materials over that.
You can build incredibly sturdy homes with wood - not ticky-tacky at all.
https://www.energy.gov/energysaver/energy-efficient-home-des...
With RHNA (and state law attempts like SB50) this may be starting to change, but the people responsible for the economic success are not the ones with the political power to fix housing policy.
Most of these issues stem from bad housing policy and incumbents restraining supply.
Genuine question - when you're in the bay, do you spend time in any of the following: Pac Heights / Presidio Heights / Seacliff / Woodside / St. Helena / West Palo Alto / Stanford's Campus / Saratoga?
I think the reason you have the perception that you do is that the bay area is one of the least tourist-friendly locations in the world, frankly because the class you talk about loathes outsiders.
EDIT: A great microcosm of this is Sand Hill Road. Looks like less than nothing from the street, but it's home to some of the most expensive and nicest office real estate in the world. Apple HW stands out as another great example.
Given that the rent in many trailer parks comparable with an NYC apartment, it stands to reason that most people are there by choice.
For that matter, world abject poverty has been largely eradicated. Increasing customer productivity (both individual and aggregate) increases customer buying power - favorable to capitalism.
What worries me however is how there are more and more laws and regulation to not let people crash and burn - like forcing people to have health insurance. Stupid code for building houses - etc
EDIT: and I'm not being sarcastic. I admire how by taking the correct decision to apparently sacrifice the poor, we have made the pie bigger for everyone including the poor (unfortunately, as noted by a comment below about Des Moines, building code is quickly changing that)
>most homes built in Des Moines will be required to have a full basement, a single-car garage, and a driveway. Minimum lot sizes for single-family houses will range from 7,500 to 10,000 square feet. Building codes meant to guarantee residents’ safety will now decree their comfort
https://www.bloomberg.com/news/articles/2019-08-02/with-zoni...
The nation continues on its "high variance" trajectory because it is structurally incapable of acting democratically. Two of the four major deliberative bodies are anti-democratic. The Senate is elected in extreme disproportion and the Supreme Court is ridiculous 9 unelected seniors deciding outcomes for an entire country.
It was set up this way intentionally, to entrench and structurally favor wealthy Southern slaveholders and established Northern merchants that traded on their commodities.
1. https://www.npr.org/sections/ed/2016/12/12/504867570/how-inv...
Oh indeed, and you're salty about it because you know that you're losing because you simply cannot deliver equivalent results.
dang, if you're reading this, I'll take my smack on the nose with a rolled-up newspaper now.
The entire failed national pandemic response is due to the perverse incentives of our system.
Five hundred thousand Americans (and counting) are dead because we couldn't close the economy for a couple months and pay people to stay home.
It's still a global superpower for a reason, and that reason is not "communism will totally work this time"
It's not just the communist countries like Vietnam and Cuba, even capitalist countries with newly minted leftist leadership like South Korea, have weathered this crisis with orders of magnitude less loss.
The systems for rending economic value from the value of human life are deeply entrenched here. Always have been[1]. That we can divorce the success of firms from the success of the people providing the value on the ground doing the work is a testament to it.
It doesn't make us awesome, it makes us abhorrent. The people that you claim "soar" are not randomly distributed, they are frequently born into favorable economic situations that allow them to develop the talents that make them super rich. In our lifetimes those islands of stability have degraded entirely in the service of ensuring the super rich can get even richer.
1. https://www.nytimes.com/interactive/2019/08/14/magazine/1619...
In non-cultural areas, letting people "soar" is just the result of whitewashed bribery through campaign finance and lobbying.
Of course, there's less safety nets, less benefits but for educated people who are part of the upper middle class (doctors, teachers, engineers, etc...), the increase in salary is such that it really makes no sense from an economic standpoint to stay in France.
I'd say it's better only for working class to lower middle class.
That really doesn't represent reality.
The majority of federal spending goes to transfer payments:
>...The federal government spent $2.87 trillion on transfers to individuals in 2017, accounting for 72.2 percent of federal spending.
https://www.concordcoalition.org/issue-brief/troubling-trend...
One estimate is that about 22% of state government is spent on public welfare:
>...Another 22 percent of expenditures went toward public welfare. Public welfare includes spending on means-tested programs, such as Medicaid, Temporary Assistance for Needy Families, and Supplemental Security Income.
https://www.urban.org/policy-centers/cross-center-initiative...
The people of the US also give a great deal of money to charity:
>...The United States has been the most generous country in the world over the past decade.
>That’s the conclusion of the World Giving Index, a ranking that measured how likely residents of 128 countries were to practice acts of generosity.
https://www.marketwatch.com/story/the-us-is-the-most-generou...
>...Americans give around 3 percent of our collective income to charity — more than the citizens of any other country. Better yet, these are individual Americans, not the government, who are generating the lion’s share of the contributions.
https://www.thetimesherald.com/story/opinion/columnists/2017...
It's not about middle class. In other rich countries, everyone, incl. the lower class, can afford to live in apartments, and doesn't have to resort to living in trailers.
The US has huge problems with regulation that prevent new housing creation. A lot of that has it's origin in segregation:
https://www.epi.org/publication/the-color-of-law-a-forgotten...
This applies to cities and suburbs. For example in lost of NYC and SF, most buildings would be "illegal" if they were built today.
If you can't change "supply" a "free market" that relies on balancing supply and demand won't balance. It's crazy. And a building issues in US politics.
Do you mean the same crime ridden inner cities slums ?
That doesn't appear to be true: https://www.dol.gov/agencies/whd/minimum-wage/history/chart. Additionally many states have their own higher minimum wages.
> in general wages have not remotely kept up with increases in productivity and revenues.
Isn't this because of globalization?
> There's a lot of paranoia about possible negative impacts of wage increases, but it's been tested in many municipalities at this point with no major issues, and virtually every other western country has a much higher minimum than us.
I don't think this is true? I'm pretty sure when we raise wages, jobs move overseas except for those jobs that are fundamentally local (fast-food employees, agricultural workers, construction, sanitation, etc). I'm not opposed to raising wages, but I think we also need to keep jobs from flowing overseas.