I have been harassed by the woke media for nearly 20 years for my quote that a "mobile home parks is like a Waffle House where the customers are chained to their booths". This stemmed from my explanation of why mobile home parks are a safer investment than a restaurant to a new reporter from Bloomberg. Obviously, mobile home park residents are not physically chained to their homes. But they don't move because of something much larger than a metal constraint: raw economics. There's simply nothing else they can possibly ever find in the world of housing as affordable as where their mobile home park. So even with rising lot rents, mobile home park residents stay put as mobile home parks cost around 75% less than apartment or single-family home options. And now my analogy relates to a much larger group. The entire population of the United States seems to be "chained to their booths" due to economic factors, as revealed in a new article in the New York Times.
The reasons that all Americans are now "chained to their booths"
The interest rate on a standard 30-year mortgage has effectively doubled, from around 3% to over 6%. This odyssey began in Q1 of 2022 when Jerome Powell decided to raise interest rates to 40-year highs to reduce the inflation created by the failed Biden administration. The bulk of your mortgage payment is interest, so by doubling the mortgage interest rate you effectively have doubled your total mortgage payment. As a result, nobody in the U.S. can afford to sell their house and move or they will find their cost of housing to be twice as much – you can't swap an existing 3% mortgage for a 6% new one.
The lowest rate of population movement since measurement began
As proof that Americans are all now "chained to their booths" you simply have to look at the population movement numbers for the U.S. population – they are the lowest since the concept of measurement began over a half-century ago. Americans today can't buy a bigger home, downsize to a smaller home, or even change jobs if it requires a move. Effectively everyone is stuck right where they are.
The impact on the mobile home park industry
Now that those who live in single-family homes and condos have the same economic "chains" as mobile home park residents do – and can't move as a result – the impact of this phenomenon won't be felt until interest rates start to decline. While mobile home park residents will continue to stay because there is nothing even remotely as inexpensive regardless of interest rate movement, those with single-family homes and condos will pack up quickly. Literally as soon as mortgage rates drop, the dam will break and Americans will finally be able to change locations without financial penalty. This should cause a massive population migration overnight, perhaps the largest in history. So where will they all go?
The Winners
The "population migration" boom will have some definite winners including:
- States which are gaining jobs and industries thanks to tariffs, such as Alabama and the Southeast. Automobile manufacturing is one big component of this.
- Suburbs and exurbs that have strong school districts and upscale retail and dining options.
- Areas of the U.S. with superior weather, which is mostly in the south.
- States which make an effort to attract businesses and residents, such as Texas.
The Losers
The "Great Migration" will also have some losers including:
- Regions that have created hostile laws and living conditions, such as California.
- States that have a culture that is unfriendly for business, such as New York.
- Areas that have extremely cold and difficult winters, such as New England.
Conclusion
After four years of build-up, the migration in the U.S. will be an enormous megatrend as soon as mortgage rates decline. Smart park buyers are paying careful attention to ensuring that they are in areas that will benefit from the "Great Migration" and not on the wrong end of this shift.