Mobile Homes

Like many Americans, Bob and Maude Tache of East Lake, Ohio, sold their house and moved south to Florida when they retired. The Taches settled about 25 minutes’ drive from Clearwater Beach. But instead of purchasing an apartment or a house, they took up residence in a community called Serendipity, made up almost entirely of doublewide mobile homes. The community is tight-knit and boasts a large number of activities for its mostly retired residents. “Pinochle, bridge, horseshoes, bocce ball, and they have their dances; they bring in an outside band for those,” Mrs. Tache said.

After using a portion of the equity from their home in Ohio to purchase a share in the community, the Taches now live at Serendipity at very low expense. “We feel like we have easy living at $126 a month,” Mrs. Tache said.

The Taches are among the approximately eleven million Americans who live in mobile home communities. As an affordable alternative to conventional housing, mobile homes attract retirees, young families, and other people on fixed or low incomes. But despite their ubiquity, mobile home parks are perhaps the most contentious housing phenomenon in America. Parks often become the target of hostile community councils and zoning boards. In December 2003, the Jackson, Mississippi, city council proposed to eliminate mobile homes and other pre-manufactured buildings within Jackson to make room for the development of more valuable real estate. In the Florida Keys, the Marathon city council recently entertained a dispute over whether or not to allow the refurbishment of mobile home parks throughout the city. In Bonita Springs, Florida, growth in both population and incomes is pushing mobile homes out of the community, and the city refuses to zone for new ones. And the Nampa, Idaho, city council recently voted to remove singlewide mobile homes from the north end of the town, much to the dismay of opponents who claimed the decision would negatively affect the low-income residents of the homes.

The Stigmatization of Mobile Home Living

Local lawmakers echo public opinion when they attack mobile home communities. “It stems back from the old days when they truly were trailer parks and did not attract the best kind of residents,” said Bruce Savage, Vice President of Public Affairs at the Manufactured Housing Institute in Washington, DC. “It continues to fester in people’s minds that these are less than desirable things to have in your community.”

According to John McIlwain, Senior Resident Fellow for Housing at the Urban Land Institute, this stigma “comes from a combination of fear and discrimination.” The stigma attached to mobile home communities and their residents reflects social norms about appropriate housing. “People discriminate against people with less money, who have houses that don’t look like theirs,” McIlwain said. This attitude translates into concerns about the property values of traditional housing units that border mobile home communities. “It’s generally perceived to be a public nuisance rather than a way to house people, and in this country we don’t like lower-income people living in our neighborhoods. There’s a fundamental fear most homeowners have that something will happen to lower the value of their home,” McIlwain said.

As if the distaste of local governments and residents were not enough, most mobile home residents own or, with the help of a loan, are on the way to owning their homes, but do not own the land on which the homes sit. This situation leaves the homeowners vulnerable to displacement as cities expand outward. In Duluth, Georgia, 96 families face eviction from the Chattahoochee Mobile Home Park, where a developer wants to build a town home community and commercial development. “It’s hard because we don’t have the money to move,” Juan Martinez, a resident of the community, told the Gwinnett Daily Post. More than 100 residents of Crest Mobile Home Park in Crescent Springs, Ohio, will begin relocation soon to make way for an outdoor lifestyle mall. In Germantown, Maryland, residents of the 60 homes in Cider Barrel Mobile Home Court were booted out in November: the site of their park will become a 300-apartment complex development. With limited resources, displaced mobile home park dwellers are often forced into substandard housing. Others relocate their mobile homes to the periphery of cities and towns or further into rural areas, at relatively great expense.

“We hear manufactured home community owners say, ‘It’s hard for me to reject an $8 million offer from Wal Mart to buy this property, despite my loyalty to the residents,’” Savage said. “With the trend towards sprawl, a lot of areas that were traditionally outside the urban environment are now being absorbed into those urban environments, and that would include areas that were traditionally logical places to put mobile home parks.”

The widespread perception–right or wrong–that mobile home residents consume more public resources than they make up for through taxes also fosters local hostility to mobile home parks.

“There’s no question that [the city] would rather see us developed into a nice neighborhood and develop $150- to $200,000 homes, because it would increase the revenue for the city,” said Bart Stephens, an investor in a nineteen-acre mobile home community in Smyrna, Georgia, twenty miles from downtown Atlanta. “I wouldn’t be surprised if the neighbors felt the same way, because it might increase their property value.”

“Communities are concerned because they’re afraid that mobile home parks aren’t going to pay their share of the costs, that the taxes on the park and the homes aren’t going to be enough to offset the costs for police, fire, and schools,” McIlwain said. “A lot of those calculations are false, but nevertheless it’s a pressure that people face.”

Making Mobile Home Parks Profitable

But mobile home parks are definitely generating healthy profits for at least one group: park management. The business of mobile home park management is among the most profitable uses of property for landowners.

About 85 percent of community owners are mom-and-pop operations, managing only one community with 100 or fewer home sites. Bart Stephens is one such owner.

“In the future we could sell out to a developer, but we don’t want to do that now. The land is a good investment–we want to continue to let it appreciate,” Stephens said. For Stephens, part of the attraction of mobile home park management is the low level of work it requires. “I think that the amount of management this takes is one unique thing about mobile home parks,” he said. Most managers are responsible only for the upkeep of the park’s land, leaving the responsibility of maintaining the homes themselves to the residents. “It’s really a kind of hassle-free way to get the cash flow out of land.”

For larger communities–sites of 200 or more homes–a different dynamic is spurring interest and investment. The management of these properties has undergone a wave of professionalization since the 1980s. In the 1990s, real estate investment trusts (REITs) took an interest in mobile home parks and began to buy larger-scale properties, intending to improve the profitability of the parks by achieving economies of scale in their management. A number of REITs that specialized in mobile home park properties gained the attention of Wall Street and issued stock for public trade.

One such company is Affordable Residential Communities, Incorporated (ARC), a REIT that manages 40,000 homesites on more than 200 properties in 25 states. ARC plans to issue an initial public offering in the near future. Large corporate managers like ARC are able to offer residents services that smaller managers cannot provide. ARC boasts “an integrated array of products and services, ranging from community management, retail sales centers, a network of financing partnerships, commercial and personal insurance, ancillary services and more,” according to its website.

This professionalization often raises the standard of living available to park residents.

“REITs are very savvy marketers–they understand that you’ve got to make these properties attractive alternatives,” Bruce Savage said. “You raise the bar when the REITs come in. The REITs want to maintain the aesthetic standards, they bring in amenities that make the communities attractive to a broader audience.” This broader audience includes low- to moderate-income individuals and families who seek affordable housing, but who may in the past have considered mobile homes what John McIlwain calls, “the housing of last resort.” Residents of professionally operated communities run a much lower risk of displacement due to development, and attention to aesthetic standards makes these properties more acceptable to the outside community.

A New Kind of Affordable Housing

Despite the dynamism in the management industry, the number of communities seems to have peaked, and development pressures will likely lead to its decline in the coming years. “It’s getting harder to find new mobile home parks,” McIlwain said. New mobile homes are rarely destined for parks, but instead are most often placed individually on private property. “There is a lot of local resistance to building mobile home parks. Zoning codes won’t allow for it in a mid-scale, suburban community.”

Mobile homes are giving way to a new kind of manufactured housing: the permanently stationary manufactured home. These houses range from singular units to multi-module pre-fabricated homes that look like stick-built homes. Eighty percent of new manufactured homes are multi-section homes, made of two or more components joined together by one roof. These homes escape the perception of transience attached to mobile homes: unlike mobile homes, they are easily placed on private property and in developments. Because they are often indistinguishable from stick-built housing, “you really have to think of manufactured housing just as housing,” McIlwain said.

Most multi-section manufactured homes are more expensive than mobile homes but cheaper than stick-built homes of similar size. But manufactured homes are just regular housing in the minds of the finance community, which makes all the difference to low-income buyers seeking loans. “The way the financing system is set up, you can get a far lower interest rate [on a manufactured home] than on a mobile home. Mobile homes are financed more like automobiles, for a shorter period of time with a higher interest rate,” McIlwain said. What’s more, with proper maintenance and siting, newer manufactured homes tend to appreciate like traditional housing. Mobile homes, on the other hand, depreciate. Their owners do not gain home equity over time like other homeowners do.

New forms of manufactured housing are gaining the support of federal lawmakers. The United States Senate created the Senate Manufactured Housing Caucus in 1998 to promote manufactured housing as a solution to the nation’s affordable housing shortage. The Bush administration’s proposed American Dream Down Payment Act includes language that specifically designates federal down payment assistance for manufactured housing.

The newer forms of manufactured housing seem likely to inherit the mobile home park communities as older mobile homes deteriorate. In the Taches’ community, manufactured housing is already beginning to replace older mobile homes.

“They’ve brought in four brand-new homes that are really beautiful,” Mrs. Tache said. “As the smaller ones deteriorate, they’re going to be taken out, and these new ones will be brought in. It’s going to make the park look really nice.”

As manufactured housing becomes ever less distinguishable from traditional housing, Bruce Savage is optimistic that manufactured housing will offer an affordable alternative to stick-built housing.

“There is a logical role for communities to offer an alternative for people that cannot fit in to the more traditional real estate market from a socioeconomic standpoint,” Savage said. “With this growing housing affordability gap creeping across the nation, it’s truly one of the ways that we can bring affordable housing to people.”