Mobile home parks have outperformed virtually all other sectors of real estate in recent years. But that’s only about to accelerate. The net effect of the new America – created by the impact from the pandemic, urban unrest, and the Biden administration – is about to create an environment in which all other sectors of American real estate take a beating and mobile home park revenues and values soar.
New habits of Americans including moving from cities to suburbs and exurbs
The American real estate playing field is changing in a big way. Even before the pandemic, retail was in massive decline with roughly 30% of all shopping centers projected to be insolvent in the years ahead. Meanwhile, office buildings and lodging are taking a beating from the pandemic and new-found love of zoom meetings and working from home. Urban self-storage is a train wreck of declining rents and occupancy and city-dwellers are fleeing and those left behind have no money and nothing to store.
Americans are leaving cities for good. They are pushing out to the suburbs and exurbs in search of safety, serenity, better schools and lower home prices. And these are where 95% of all mobile home parks are located. This migration is putting huge demand on mobile home parks and this is resulting in significantly higher lot rents and occupancy.
The desire for detached dwellings
Now that many Americans are working from home – or simply not going out as much anymore – they need more space. But they also don’t want to be living up against their neighbors. Mobile home parks have always offered no neighbors knocking on walls and ceilings, a yard, parking by your front door, and all the bells and whistles that subdivisions offer yet apartments can’t touch.
But also important is the pricing of that conventional competitor: the single-family stick-built home. Not only are the prices of these homes exploding but lumber prices are way up due to the pandemic and that means that newly-built homes will be even higher. By contrast, mobile homes sell for a fraction of these costs, with a new mobile home set up in a park ranging from $30,000 to $50,000 while stick-built homes are around $200,000+.
The government’s war on rental properties vs. owned homes
The CDC moratorium on evictions has proven one big thing: people who don’t own their home don’t care much about paying rent. Mobile home parks offer the best of both worlds, as the park owner owns the land and the tenant owns their home. In this manner they have “skin in the game”. Meanwhile, apartments are 100% owned by the landlord and 0% by the tenant, so they simply load their stuff in the old pick up truck and take off when the constable brings the eviction (which may not occur again for quite a while). And we doubt that the government will not use this tactic again once this pandemic is over. Their behavior in ignoring the court’s ruling that the CDC order is unconstitutional would support the thought that they intend on using private property owners to house the needy for free in the future.
At the same time, Marcia Fudge and the new team at HUD intend on wreaking havoc on rental property owners (just go on-line and read her agenda). Apartment owners of the future will have to contend with even greater bureaucracy and outrageous removal of their rights, such as a proposed requirement that all rental property must allow Section 8 or face housing discrimination charges. Renting land will be clearly superior to renting apartments as soon as the new administration settles in.
In the James Bond movie “Goldfinger” the protagonist realizes that to increase the price of gold he just has to destroy all the gold in Fort Knox. The internet, the pandemic and the Biden administration are already destroying all other forms of real estate, so all mobile home park owners have to do is simply keep up the status quo and raise their rents as appropriate based on market levels.