Manufactured Homes

Investors are buying trailer parks

Clackamas River Community Coop

Clackamas River Community Coop, a resident-owned and managed manufactured home park in Oregon.

An article from the Financial Times, 7 February 2020, is intriguing:

Why big investors are buying up American trailer parksAmid an affordable housing crisis, residents are battling private equity and others over mobile homes” by Rana Foroohar.

The words “trailer park” aren’t used in America any more — at least not in polite company. Manufactured housing is the preferred term for the snug and relatively inexpensive prefabricated spaces that represent “home sweet home” for the roughly 22 million Americans now living in them around the country.  Many of us know only the stereotypes: rows of dilapidated white rectangles occupied by the poor and owned by grumpy landlords only a bit wealthier than their tenants…

Manufactured housing is no longer about mobility but about affordability. These homes look pretty much like your typical ranch house but might cost half the price. This makes manufactured housing a hot commodity… Over the past decade, the cost of shelter has risen sharply compared with everything else — housing prices contributed a record 81 per cent to core inflation in summer 2017 and remain responsible for “the lion’s share” of all inflation in the US, according to a recent Cornell University study [on the un-sustainability of housing cost inflation.]

The result is an affordable housing crisis in much of America …  Last year, Harvard’s Joint Center for Housing Studies reported that 47 per cent of people who rent in America are “cost-burdened”, meaning they spend more than 30 per cent of their income on housing. That proportion increases to 83 per cent when looking specifically at low-income renter households…

Mobile-home parks are attractive to investors because of the reliable annual rate of return they provide: 4 per cent or more. This is about double the average US real estate investment trust return… The sector is also booming, with shipments of new manufactured housing units rising consistently since 2009…

While this article warns about the “predatory practices” of large investment firms, the interest of investors in manufactured home parks is a strong indicator that such parks have entered a new era of improved quality and a demand that is expected to grow. They are also attractive to a wide range of people — from retired teachers and social workers to new immigrants and younger people who need more space than they can afford in places where the jobs are. Most residents in these communities earn less than $50,000 a year.

The article also includes two excellent case studies of manufactured home parks—one cooperatively owned by its residents and the other owned by a non-local owner who operates a real estate investment trust. The differences are striking and emphasize the advantages of resident owned and operated communities—perfect for cohousing.

 

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