Why The Migration Away From Big Urban Markets Is A Big Deal For Park Owners

One of the big news stories in the U.S. – which gets little coverage in mainstream media outlets since most of them are based in New York City – is the simple fact that people are leaving American cities in a big way to gain a higher quality of life in suburbs and exurbs. Titled “The Great Migration” by some groups,it’s a reversal of the period in U.S. history, starting in the 1920s, when Americans flocked to move to the “big city” from smaller towns across the country, followed by recent trends of both young and old to abandon the safety of outlying areas and move into the city center to be near the “action”. And the net effect of this new exodus megatrend is very favorable for mobile home park owners for a number of reasons.

A quantum change in what are considered hot markets

Here’s an article on MSN regarding the top ten hottest housing markets in the U.S. , which may shock you. Here’s the Top Ten housing markets according to the article:

      1) Indianapolis, Indiana
      2) Boise, Idaho
      3) Albuquerque, New Mexico
      4) Richmond, Virginia
      5) Raleigh, North Carolina
      6) Sacramento, California
      7) Las Vegas, Nevada
      8) Cincinnati, Ohio
      9) Dayton, Ohio
    10) Grand Rapids, Michigan

Of course, all of these types of articles are based on their own unique data points, and in this case it’s based on how few days a home sits on the market. However, regardless of the data set, you would never have seen these markets on any top ten list prior to the pandemic and the urban unrest of 2020.Why this is important is because the bulk of mobile home parks in the U.S. are exactly in these “flyover” markets and not in the “old” hot list of urban centers like New York City, Boston, San Francisco, etc.

Virtually all mobile home parks are in suburbs and exurbs.

Of the roughly 44,000 mobile home parks in the U.S., only a tiny fraction are in big city urban areas. Instead, you find mobile home parks encircling big cities, but always on the fringes of the metro. As the American population rushes to these farther-out locations, it increases the demand while the supply remains relatively static. The bottom line is that home prices in suburbs and exurbs are soaring, and this is putting positive pressure on mobile home park rents and demand. Some of our properties receive upwards of 100 calls per week from people seeking affordable detached housing options. We’ve never seen anything like the current levels of demand. There are many suburbs in the U.S. where homes are sold in bidding wars and you can’t find a single “for sale” sign in a yard.

A beneficial shift in power among real estate asset classes

A seismic shift from cities to suburbs and exurbs will also usher in a valuation bloodbath for those real estate sectors that investors have always preferred; namely office, lodging, retail and apartments. Since the mobile home park industry has struggled for decades for respectability, this is a major point. Mobile home parks have outperformed all other asset classes during the pandemic, and now stand to be the great beneficiary of megatrends it helped to create going forward. It goes without saying that a collapse in what were formerly the “respectable” forms of real estate, and a boom in mobile home parks, will elevate the industry enormously and make “trailer parks” even more attractive to lenders and appraisers.

Conclusion

As Americans move out of cities and into suburbs and exurbs, this will be one of the most significant megatrends to hit the mobile home park industry in decades. It came out of nowhere, and there was no advance notice or predictions, but mobile home park owners are certainly happy with the way this is shaping up.

Frank Rolfe
Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with around 20,000 lots spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate.