The Covid-19 pandemic has changed many things about the U.S. – but does that include the best places to buy mobile home parks? In this episode of the Mobile Home Park Mastery podcast we’re going to examine how changes to America post-virus are impacting different parts of the nation in relation to affordable housing and other challenges. The U.S. is in a state of turmoil on many fronts, but is mobile home park geography one of them?
Episode 166: Geography Revisited Transcript
America is a really big place, a lot of territory to cover. So where in all that territory, should you look to buy and operate a mobile home park? This is Frank Rolfe, The Mobile Home Park Mastery Podcast Series. We're going to be talking about geography revisited, how things have changed in America in a post COVID economy, in the most post COVID world. And how does this impact where people want to own and operate mobile home parks today? Well, let's first talk about some of the impacts of COVID.
First one is what is now known as the great reshuffling, and that is simply the fact that many Americans today no longer want to live in big cities. For the longest time we did. A study recently came out and it showed that in property searches from people online, at one time in February, before COVID, the urban areas were searched 37% of the time, the suburban areas were searched 43% of the time, small towns were searched 11% of time and the rural areas were searched only 9% of the time. Today in a post COVID world, only 19% of the searches are for living in urban areas. That's a huge drop, that's over 50%. Then what took up the balance? Well, suburban searches went up. They went up from 43 to 50%. The big winner though, were rural areas, which jumped from 9% to 19%. While small towns have held steady at 11%, both pre and post COVID.
And this exile of people, these people streaming out of large urban cities moving into suburbs and what some would call exurbs, the area that is the ring beyond suburbs. This has been titled by bestplaces.net as the great reshuffling and it's completely true. People are just completely changing where they choose to live today. They're tired of all of the issues in the big city, tired of urban unrest, tired of COVID concerns. And they're just kind of tired in general because it's kind of a hassle to live in the city, always has been, but there was payback for all the hassle. You had restaurants, you had theater, you had movies, you had all kinds of events, but now you can't use any of them. So many people are simply saying, gee, living in the city was so rough. I think I want to get out of here, mainly since I don't get any benefits from being here any longer. And that great streaming of people out of urban markets, we would call the great reshuffling.
So what does that do to mobile home parks? When people want to leave the city, leaving Chicago, leaving New York and going out of those dense areas to less dense areas. And the truth is, that's really good for mobile home parks and it's really true across America. So I don't think that impact of COVID has great impact on most park owners, because almost all the parks of those 44,000 in America, by far the majority are already in suburban and exurban areas. You won't find if you drive around Chicago, for example, one single mobile home park in greater Chicago. That's just the way it worked out across America. So I don't think that has a large impact on geography.
The next item, as we all know, is the end or limitation on non-essential jobs sectors. So today, and since March is the essential jobs that have been the key to survival economically for markets, for the people who live there, while non-essential jobs were destroyed. What are non-essential jobs? Well, they relate a lot to the travel industry, sports industry, anything that basically you don't really need, lodging, dining, all these many things. The government pretty much said, nope, these are not important enough to stay open during COVID-19. And because they did this once, people assume that they'll do it again. And as a result, they've lost complete confidence in those types of employers. And what that has done is that has changed mobile home park geography to some degree because some areas that were hot back in February are no longer hot, because they've got too much non-essential employment.
A perfect example would be Orlando, Florida. Orlando, land of Disney World, land of many attractions. What happens when those attractions close? Or the amount that can go through those turnstile gates are diminished? Quite a lot actually. What's happening is, is these markets with heavy concentration of non-essential jobs, as they can't hire people because they can't let customers in, those jobs, those careers are ruined. Look at Las Vegas, for example, look at the decline in the revenue of Las Vegas this year. It's stunning. Revenues are down 80 to 90%. What does it mean? Well, it means that mobile home parks, just like any other form of housing, do rely to some degree on employment. Sure, we have lots of retired people who live in many mobile home parks, but we also have a very large core of those who need jobs. And if there are no jobs, they can't stay in that area.
So I think right now COVID has created kind of a new focus for park owners on areas that are heavy in essential employment. What are the essential employers to us? Well, my favorite essential employers are government, education and healthcare. We also like agriculture. All four of those sectors remain pretty tightly employed even in bad times because you just can't get rid of them. Parents are still going to send those kids to college despite COVID-19. People are still, or even more importantly now going to go to a hospital. And of course, the government has to be there to maintain everything regardless of the emergency or not.
Another COVID impact we're seeing right now is oil and gas. And that is going to have somewhat of an impact on the geography of mobile home parks, or at least the area we want to own and operate parks in. So areas that were heavily concentrated just on oil and gas, some markets in West Texas, for example, maybe things in the [inaudible 00:07:17] field of North Dakota. These are all areas that will be impacted, particularly those who own what are called man camps, mobile home parks that cater just oil and gas workers. They're already seeing massive declines. I think as a result, you'll see many buyers, many operators tended to get out of those areas and go to areas where things appear to me more safe and more fertile.
Now those are some macro ideas about changes in America post COVID and changes in markets you might want or not want to pursue owning a mobile home park in. But what are some other things that we see going on? Well, what we're seeing is when you add all these things together, you're seeing just more growth, more strength in markets that are not quite so dense. Huge numbers of people are pouring out of certain areas like Chicago, New York, San Francisco and they're leaving these big cities. And a lot of them are moving to less populated cities or areas. Case in point, if you look at what are the top 10 fastest growing areas by population, a couple of those of note are areas that we have large concentrations of mobile home parks in. One, Kansas City. The other, Omaha. Now why are Kansas City and Omaha suddenly doing well? We always were doing well there, but why are they now suddenly becoming hot given all of these COVID forces?
Well, Kansas City for example, has a very large amount of their workforce in the areas of education, government, and healthcare. And they do also have some degree of agricultural backbone. So as these glamor markets start to dissolve, as people say wait a minute, maybe it's not so smart owning that mobile home park in Las Vegas anymore. They're looking for areas that people are doing well, who are weathering the storm very effectively. And a lot of those markets are in the Midwest and the Great Plains. Now we've always been huge fans of those, and that was in a pre-COVID world. But now in a post COVID world, we find they're performing even better. This year, our sales in many of these markets have exceeded all expectations. So even post COVID, we're actually selling and renting more homes today than we did pre-COVID. Part of that has been our team and the training and the product, but also part of it has simply been sheer luck on geography because the areas that we bet on all those years ago just turned out to be properly aligned with COVID.
And I think many other owners in the same markets are really very thankful of where they are. Others who are not in those markets are saying, wait, I think I'm going to stop looking and buying parks in such markets as Orlando and other parts throughout America and say, well, I think I want to go where times are good and where times are solid. I remember back to Iowa during the great recession. Here it was, 2008, 2009. Unemployment in America had soared to around 10%. And here we were with parks in Iowa with unemployment rates down in the 3% area. That is very impressive. We've never forgotten it. That's why we really like those sections of America. And that's why we're even more thankful now today in a post COVID world, that that's where we're located at.
The bottom line is affordable housing is still strong across America. We need it everywhere. There's no question of that. The main problem be though, where can people actually afford it? Where can they actually make the payments? Where do they actually have the jobs? Where are they actually trying to go? It's the smart people who think through these issues and look at a long term forecast that will make the best buys. Those will be the markets that do the best in the years ahead. Those are the parks that will see the largest increase in rental rates and in occupancy, and probably be the most profitable.
So perhaps the main message is look around you, look and see what's going on, open your eyes. Don't use the herd mentality that some people use in selecting mobile home park markets or markets for any real estate sector. Be an independent thinker, look at the mega trends, decide accordingly. There's huge opportunity in affordable housing and in mobile home parks, but perhaps there's a little more opportunity in some areas of geography than others. This is Frank Rolfe, The Mobile Home Park Mastery Podcast Series. Hope you enjoyed this. Back again soon.