History is the “study of past events”. And when you connect the dots to the past you can see trends that influence the future. In this final installment in our four-part series titled “Literary Lessons Learned” we’re going to review some interesting parallels between the current economy in the U.S. and the past, and see what future trends can be predicted from past events. You’ve heard the old adage “history repeats itself” and that’s definitely true – the key is understanding what those cycles are and how to profit from them.
Webster's Dictionary defines history as the study of past events and there's a lot to be learned from history to get us off on the right foot today. This is Frank Rolfe from Mobile Home Park Mastery Podcast series. I'm on the fourth of a four hour part series called Literary Lessons Learned. We're going to be talking about history and history books and what there is to learn about mobile home parks from those history books.The first general theme of a lot of history is that history repeats itself. And I think we are seeing that right now in the mobile home park business is that mobile home parks are on the path to be actually cool and hip again. They weren't always what they are today. Back in the 1950s, the demographics of those who lived in mobile home parks was higher than those who lived in stick built houses. If you lived in a mobile home park, you typically had a higher education and higher income than those who lived in frame and brick houses which is, of course, the complete reverse of how it is today. But, again, things change over time.
In the 1960s, Elvis Presley lived in a mobile home park in not one, but two movies. It Happened at the World's Fair in 1963 and again in Speedway in 1968. But what many people don't know is, he also lived in a mobile home in the '60s about 10 miles from his house called Graceland, in Memphis. He had a little congregation of mobile homes out on a farm he had. And his wife, later wrote that she had more fun in the mobile home than she ever had in Graceland. So if the King could be living in mobile homes, perhaps, they might be cool again. What about those shows on tiny homes on HGTV? Those people look seemingly happy, they seem pretty affluent. They like the product, they like the idea of living small, living within their means. They also like the fact of all the unusual designs and thought that goes into utilizing every square inch of a tiny home.
There's a tiny home development right now going up in Austin, in fact. It's very unique, it's very unusual. It's very expensive. It's going to cost around one hundred thousand dollars per lot to build it. But if you're spending that kind of money, you have to imagine the market consumer testing is showing people want to live in a mobile home product. RVs or cars are leading the way, maybe that's why tiny home shows are doing so well. Tiny homes are a derivative of the recreational vehicle industry and the RVs have such great marketing, such great publicity, they've done so well in promoting their image, hopefully mobile homes and mobile home parks will follow behind that. Course the media hasn't helped much, movies like M&M, TV shows like Trailer Park Boys. Seemingly every time mobile home parks make it into the news, it's always in a bad way. And you can't blame the stations for doing that because they're just trying to get an audience to watch.
And for the average American and all the stereotypes the media has created, the mere mention of mobile home park brings nothing but thoughts of sex and violence, so people all want to tune in. But, of course, it has nothing to do with reality. And ultimately in history, people always seem to come right back to the original truth. And I think the truth they'll ultimately find is that mobile home parks do have certain advantages. They are a little hip, they are a little different. They are a little contrarian. For someone who's bored with their life and bored with traditional apartment and housing fare, who's tired of nothing but shows with Joanna Gaines where you rip out all the walls in the house, paint everything off white and put in a couple fake potted plants, they may look at that and say, "Well, I'm ready for something that's actually new and different." And that may then segue them in to the mobile home park arena.
So if history does repeat itself, what does it mean? It means in the decades ahead, maybe, a major movie star will once again live in a mobile home park. Wait a minute, they already do. Hilary Duff, Pam Anderson, even Sean Penn at one time, all live, or have lived, in mobile home parks. In fact, the list is even greater than that. There's many, many movie stars out there who have lived at one time, either in their childhood or even in their Hollywood days, in a mobile home park. So hopefully, things will repeat itself. The truth will come out and people will again embrace the mobile home park as a unique, different style of living.
Another thing you learn from history is that economies rise and then they fall. This has been true of almost every developed nation since the beginning of time. And that trajectory is right now changing for the American economy. We're becoming, every day, more and more like England. I was an economics major at Stanford and so we studied such things. And I'll never forget the class I had that went over exactly how the American economy was in many ways mirroring, even back then, back in the '80s, the same way that England had matured. So what happens when an economy matures? Well, things change, they slow. Also our birth rate in the US is down substantially, much again like England. So what happens is, if you're not rapidly growing, well, then, what are you doing? Well, you're typically shrinking. And that perhaps, is why affordable housing is becoming such a big challenge in the US, it's simply because incomes are going down. People's expectations are declining.
You've got complete changes just in the makeup of who is an American. I'm a Baby Boomer, those born between 1946 and 1964 fall into that group. We are the biggest group in the United States, but, of course, we're all getting old. Ten thousand Baby Boomers are retiring every day and that changes the makeup of how we, as a nation, work. We have ten thousand people who were working who no longer are working. Meanwhile, we've got the general drag of those ten thousand per day on such programs as Social Security and Medicare, and many other items. And it's perfectly natural for economies to slow, and then sometimes speed up again. Look at all those nations who were ahead of the United States back in the olden days. How did Christopher Columbus come here? Who were the early explorers? They were countries like Spain. Well, how's Spain doing today? It's not really a booming economy, but at one time, it was among the top economies in the world.
So again, you can learn from history that economies do change, they're just like a plant. They grow, and then sometimes they slow down, and you have to acknowledge that and work around that fact. What that tells you about the mobile home park business in America is, we are perfectly positioned for this new chapter in the history where incomes don't rise very much, we have a lot more people wanting to downsize and reduce their cost of living. And every mega trend in the US all goes to that one simple sweet spot, and that is, affordable housing. Whether it's people downsizing or people whose incomes are diminishing, they all need a place to live and they all need a place they can afford.
You may have seen recently that the US mortgage is now averaging over three hundred thousand dollars in the United States. Think how insane that is. At the same time that 50% of every job created in the United States since 2007 pays fifteen dollars an hour or less, how in the world could we have housing that makes any sense at more than three hundred thousand mortgaged. That means around a four hundred thousand dollar price point. Course it doesn't make any sense and we all know that. And that's why affordable housing is probably the biggest challenge in America going forward. But in our opinion, that also means it's probably the biggest opportunity.
A final thought for you is morality is a constant throughout all world history. So what happens is, you've got, regardless of what religion you are, the general concept of right and wrong. I think we're pretty much all born with that, so it's an innate skill. We all know what you're supposed to do and what you're not supposed to do. But sometimes history gets it wrong. Sometimes nations go out and do things which, frankly, are not very moral and it doesn't make things then right. If you do things that are not moral, that doesn't make those things moral. It simply means that there's a general lack of morality out there.
So everything in the world really has to revolve around this basic theory of right from wrong. And you're seeing that in a very, very large way right now in the mobile home park industry. Owners are trying harder than ever before to produce the best product that they can. They're trying very hard to professionally manage the parks, people are pouring money back in to the capital infrastructure. People are trying to provide a better quality of life for the residents, they're trying to give them all kinds of new amenities and different features, trying to bring a sense of morality to the industry.
So what happened? Well, the industry lost its way because a lot of the Moms and Pops who built these mobile home parks, they had the best of intentions, but over time they just lost their energy. And in many cases, they also lost their financials because they never raised the rent up with inflation. So over time, they were capital poor and couldn't make the necessary changes. A lot of people think that's okay because, hey, the rents were low, but that's not okay. In almost every state in the United States, we have basically very firm laws against that theory that's called slumlording, which means you have to provide basic services in housing, there isn't a Plan B. Yet many park owners could not do that because they did not have the money to pay those giant bills for capital repair.
That's changing now. You have new people entering the industry, people who understand you have to reinject capital, you have to fix roads and do all the things necessary to provide a good quality of life. And on top of that, they want to provide a great sense of community. Time Magazine wrote an article a couple of years ago called The Home of the Future. They raved about the mobile home park as a product saying that it was the gated communities of the less affluent. It's not always the less affluent, but we are definitely like gated communities. We're very high density subdivisions. And when you have people who all live and work in close proximity, it's very, very important that you build relationships between them, and that's the general concept that we all call sense of community. And that's something that I've never seen park owners trying harder to accommodate.
Course the other part of that is, park owners also feel the need to do this to justify increases in the rents, because, again, without higher rents, you cannot have any capital improvements. Also without higher rents, you can't even have mobile home parks. With apartment rents now a thousand dollars a month more than mobile home rents, what happens is, a lot of mobile home parks are being torn down to build apartments. Of course, that's only logical. So how can you have higher rents and feel good about it? Well, you can always feel good about higher rents if it (A) saves the community, but (B) is part of the overarching plan of providing a better quality of life. If residents are very happy to pay those higher rents, what it means is that they get professional management and a nicer place to live.
So morality is really a very strong force in the mobile home park business, always has been since I've been in it, but it only gets stronger every day. And I think that's great because it further aligns it with history and it puts it in its right position in history. You see, I'm really into history. I love reading books about history, again, because I think it helps me see the future more clearly. And if you have never read any books, I suggest you really go down to the bookstore, the library, get a book or two on world history, or even American history, and study it. Because you'll see the same trends over and over, and again, these are trends that really tie back well to business, to real estate and most specifically to the mobile home park business.
This is Frank Rolfe of Mobile Home Park Mastery podcast series. Hope you enjoyed these four segments on Literary Lessons Learned. And I'll be back again next week.