The Federal government does some things well – but one of the big exceptions is sponsoring initiatives to aid in the American need for affordable housing. Over and over they put up unnecessary hurdles to reduce the ability of the average consumer to buy a mobile home. But the latest push for energy efficiency in mobile homes may be the dumbest yet. In this Mobile Home Park Mastery podcast we’re going to discuss this latest HUD initiative and why it will only serve to destroy the access to affordable housing for millions of Americans.
Episode 232: Dumb And Dumber Transcript
Like millions of Americans, I really enjoyed the 1994 film, Dumb and Dumber, but I'm really not enjoying the mobile home edition. This is Frank Rolfe, the Mobile Home Park Mastery podcast. We're gonna talk about some decisions that the government has made and is making right as we speak which would seem to mirror the concept of Dumb and Dumber. Let me start off first with a story. One time my daughter wanted a cat, but I have cat allergies. I came up with a perfect solution, I decided we would get an outdoor cat. We would put out bowls of food and water. I would build it its own little dog house in which it would have heat in the winter. I had a very, very nicely landscaped yard with a big old fence around it to hold off any predators. The cat would have an absolutely idyllic life. So I called up the local Humane Society and said, "Hi, I would like to purchase a cat." And they said, "Oh, and where will the cat live?" I said, "Well, the cat will live outdoors." And they said, "Well, then you can't. We will not let you have a cat." It seemed strange to me, since last time I checked cats from the beginning were an outdoor thing, but the woman was adamant, "No, we would never let a cat to live outdoors."
So I said, "Well, then I'll make you a deal. Are you gonna destroy any cats today?" And she said, "Yes, sadly, we must destroy cats on a regular basis. We can't find enough good homes for them." I said, "Okay, fine. Well, the cat that you're gonna destroy today, give it to me." She said, "No." I said, "Why not?" "Well, because a cat would rather be dead than to live in your yard." That really seemed really dumb to me. It didn't make a lot of sense, obviously. But that's what happens when you let bureaucrats make decisions for you. They don't always get it. They don't always act in your best interest. And sadly, that's what's been happening for years now with the federal government and mobile homes. How do I know this? Well, let's look at some of the dumb things from the past. Some of these HUD installation standards in the states that allow them make no economic sense. When you put a slab or piers or runners underneath a new mobile home, all you're gaining is that that home will sink less with frost heave. And that means you won't have to pay to level it as frequently.
Well, news flash, leveling a mobile home is relatively inexpensive, a few hundred dollars, but that pad you put under the home can cost $10,000 to $20,000 to pour. Do we see a problem here? If you're gonna tell me that, "Oh well, if it has a concrete pad underneath you won't have to level that home, but maybe once every, I don't know, 10 years even, and if you didn't you might have to level it, I don't know, maybe once every three years." So what does that save you? Well, about $600. Do you know what the interest is on $10,000 or $20,000? The interest is about twice the amount of the savings annually. It makes no sense. Just like the cat. And then you have the fact that the government still continues to make no efforts to make mobile home mortgages more easily attainable for buyers. All those mobile homes you see being shipped along the highway, those are going into mobile home parks and they're going there because the owner of the park effectively back stops and makes that mortgage possible because typically they're in the loop somehow. If it's with the cash program, for example, the park owner, if the customer defaults, is gonna pay the mortgage, abate the lot rent, make the improvements to get the home back out the door. Without that backstop, they never, ever bless that loan with that customer.
The average mobile home is about $35,000. The average single-family transaction in the US is about 375,000. The government bends over backwards to get that mortgage on that $375,000 home done, no effort at all on the $35,000. How does that make any sense? If the country is devoted to affordable housing, how can you tell me that not fostering programs to make homes that are a tenth of the cost of the traditional single-family available to the masses? Again, I would have to say, "Well, gosh, that does seem kind of dumb," but now here's the dumbest of all, article, Washington Post just recently, "After decades, Biden plans to make mobile homes greener." Oh my gosh, you're kidding me now. So even though the government has these $10,000 and $20,000 add-ons in some states deciding a new mobile home, and they don't give out any help at all, no perceptible help as far as a customer being able to get a mortgage on a mobile home, now we're gonna go ahead and try and start doing this green initiative to stack, oh, another maybe $10,000 or $20,000 again onto the cost of a mobile home.
How does that make any sense? How is that not, once again, the story of the cat? Mobile homes are already pretty green, they're small, they don't cost a lot to heat or cool because their footprint compared to a traditional stick-built is a fraction of the size. And it takes a whole lot less carbon footprint to build a mobile home than a stick-built home or an apartment. So why are we being singled out now for a green initiative that just doesn't make any sense? Instead, what the government should be doing is trying to figure out how to make the cost of mobile homes less, that would be the smart thing to do, right? With the COVID supply chain interruptions, the price of mobile homes has gone up again without this green initiative by around $10,000 or more. We are simply going in the wrong direction.
And if I was in charge of the government regarding affordable housing, I know what I would do. I would not take up the issue of making mobile homes more green, I would end and minimize my installation standards and I would no longer require concrete slabs or piers or runners under the mobile homes. And then I would bring out vast programs to try and make mobile home financing more attainable, right? That's the smart thing to do. But good heaven, let's not go down this path. Remember, there was a plan at one time, or a time in which mobile home sales and production was around 300,000 to 400,000 units a year. What are our American factories producing now? Only 100,000. Is that good? No, "At a time in which the Americans' need for low cost places to live has never been greater... "
To quote The New York Times, how in the world do we consider it a success when we're only producing 100,000 in factories that used to produce 400,000. Could you produce more homes and sell more homes if the price point was lower? Obviously. Could you sell more homes if the mortgage programs are more available? Clearly, that's what we need to put our focus on. How do we move the needle on mobile home production and shipments? That's what the government should be watching. Don't worry about leveling of a mobile home, let's not worry about reducing the power bill by 3%, let's worry about getting more units out the door and in the hands of people who need them. It amazes me always when things are so clearly obvious to those in the know inside the industry, but the government seems completely lost.
I don't even know who you could ask in mobile home manufacturing, retail or even mobile home park owners who would tell you, "Oh yeah, where the government needs to go right now to really make the lives of their customers better and the American public, we need to get more green." No, we don't have to get more green, unless green is for the color of money. Let's work on initiatives to bring the price of homes down. Let's make credit more available to people who can then buy these homes, that would be the smart thing for all of us to do. Don't be the bureaucrat regarding the outdoor cat. Let's make smart decisions starting immediately to help Americans out who desperately need affordable housing. Read the headlines every day, the price of single-family is skyrocketing. The price of renting apartments is skyrocketing. We are the only solution. We're the only non-subsidized way that an American can truly afford to live with dignity and a high quality of life on a reasonable amount of earnings.
Come on government, let's support our industry more. This should be no different than somebody who has a car sitting in their driveway that won't run and their focus is on, "Should I do something with the carpet?" More than, "How do I get the car to start?" Let's all collectively hope and wish the government does not take up this green debate, but instead tables that and replaces that with a debate instead on how to ramp up manufacturing until you see 200,000, 300,000, 400,000 units being produced by American factories. Let's table the green initiative. Once you see that kind of level of sales again, which the industry had for a long while in the past, then maybe we can take up the concept of green energy, unicorns and rainbows.
This is Frank Rolfe, from Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.