Mobile Home Park Mastery: Episode 256

The Economic Evolution of Housing And Why It’s Ok

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Housing is getting more expensive. The old saying “you’re either growing and changing or your dead” is true for places we live, as well. And that’s OK. In this Mobile Home Park Mastery podcast we’re going to discuss how housing is changing, how it displaces customers, how mobile home parks are not immune to this metamorphosis, and why that’s just a natural part of life.

Episode 256: The Economic Evolution of Housing And Why It’s Ok Transcript

There's an old saying that you are either growing and changing or you're dead. This is Frank Rolfe for Mobile Home Park Mastery Podcast. We're gonna talk about the economic evolution of housing that's going around right now in America. So, housing is changing, it's changing rapidly in many ways. Number one, it's getting more expensive, the average house right now is coming in at around $400,000. That's very pricey, but of course, it's also getting bigger. The average square foot of the house today is roughly double of what it was not too long in the past, and it's certainly getting nicer. If you look at a modern single-family home, and I mean, even one that's an older home that's been remodeled, and you compare that to the quality of the homes not that long ago, it's a night and day difference. I grew up in a 1960s home, and if you're in a 1960s home, and many of you remember that era, you can't even compare that 1960s house to anything even remotely resembling what you have today. Today, homes as a standard have granite counter tops and expensive appliances. We had none of those things in the '60s, the bedrooms of a '60s home are hardly as big as the bathroom of a modern home. So the housing market has changed, it's gotten more expensive, it's gotten bigger, it's gotten nicer, and the same things have happened in the mobile home park industry.

So mobile homes of today, well, they look the best they ever have. There's no question, the interior of a modern mobile home looks just like pretty much a regular stick-built home, and the parks are looking definitely the best they ever have. I'm amazed as I go through across America, how many mobile home parks that not that long ago, were looking pretty bad, which now look just like new. Improved common areas, improved entry, improved roads. Everything is on a level that no one's ever really seen before. And of course, mobile home housing prices have gone up a lot since COVID, they've skyrocketed up to $60,000-80,000. That's really expensive for a mobile home. And the lot rents have gone up a lot too, but it all magically works because of the value the customer gets. Customers don't mind paying up to live in a quality mobile home park any more than they mind paying up to live in a nicer single-family subdivision. So if you really think about it, mobile homes and mobile home parks have become the attainable single-family home option. $400,000 doesn't fit for almost anyone, certainly not that bottom 30% of American wage earners, but those who don't wanna live in an apartment, those who want to live in detached housing, we give them that opportunity. We're the only ones who give them that opportunity.

But then who takes over the position of housing those who cannot afford the modern mobile home park? What happens then? What happens to those who are dislocated and priced out of living in a mobile home park? Well, let's look at the options: You got the apartment option, but that probably doesn't work. Most of your class C, class D apartments are very, very low quality, have terrible locations, and on top of that, they're falling apart. And those that aren't falling apart, the rents will be very, very high as people strain to try and keep those apartments in business, keep them repaired. Then you have Section 8 housing. Well, but that's not really going to work now, is it? Because the program was flawed from the onset and it's pretty much completely wiped out of the capability to add new entrants. Section 8 made a terrible mistake early on, it never sought after trying to find ways of housing the American public who couldn't afford it on less money, but instead just became a program of basically handouts to apartment owners. So what happens today is, you the American taxpayer pay the difference between the standard rent and what the customer can afford, and the government for whatever reason, they don't seem to much care.

So as a result, their ability is nowhere near the demand, the demand has completely outstripped anything America can do as a safety net for people who cannot afford housing prices. Then you have tiny homes. Well, that's nonsense. Tiny homes, as we all know, may be small, but they're not small in price. Typical tiny homes that you see, even the ones on TV, they come in at anywhere from $60,000-100,000, that doesn't even include the land. And good luck finding that. The average lot in the United States for a single-family home is $80,000, and you can't put a tiny home on a single family lot. It's against the Uniform Building Code. So instead, you have to go way out in the county somewhere, buy some land, good luck finding utilities. So tiny homes, no, that's not gonna solve it. Then you have living with family, you know, it's not an option most people like to do. Most people when they reach the age of being an older individual, they wanna move out on their own and form their own household. But in America, it's not uncommon to have multiple generations of people living under one roof. So, living with family, it is an option, but that's probably not the option that most Americans wanna pursue. That's probably not how they wanna live.

And of course, then there's the final option, which is, I have absolutely no idea how you solve it. I don't know what you do to house all of those folks who need a place to live that's inexpensive in a world where there are no options left. But the key item is, as we bring these old mobile home parks back to life, and we lift their quality and the price goes along with it, because the housing market is ever-changing and everything in the world is ever-changing. It's not the Mobile Home Park owner's responsibility to find that replacement housing type. We are not on this earth as mobile home park owners to solve America's housing problem. We're only here to solve the mobile home park problem of so many communities in rundown condition that need to be brought back to life. And we do that extremely well. But we never signed on with the job of having to create the next form of housing. That is up to our political leaders and they better hurry, because it's becoming a gigantic problem in America.

Now, one problem you have, is that the income of those who need to buy housing has not gone up nearly at the speed of the homes. And there really is no solution to that. Obviously, wages are on the rise, but they're never gonna catch up. There's never any way that somebody going to work at Huddle House or Arby's is ever gonna be able to buy a $400,000 home. Not unless they can get promoted quickly and make it up to assistant manager and then manager and beyond. So we really have created this vacuum as a nation for housing people who earn not a lot of money. In fact, mobile home parks are one of the few solutions out there for that subset, but even then, we're not limitless. There's only 44,000 mobile home parks in the United States. And we can only house so many Americans, then we're depleted. I don't think they'll ever allow any more parks to be built. I know that's contrary to what some may say, but of course they're wrong.

I don't know a single market that I've seen or that we're in, in which cities are allowing new parks to be built, and I don't think they ever will. But it doesn't get away from the simple fact that it's not the responsibility of park owners to figure it all out. Now, recently, there's been some legislation passed in some states where it would appear that the government's trying to impress upon park owners to solve it. They're saying, "Well, if you wanna re-develop that park, you've got to find a new place for those folks to live. You have to give them more time to try and buy the park from you." How in the world is that fair? I have absolutely no idea. This is as ludicrous a concept as someone building new single family track homes from the 400,000s saying, "Well, now as you displaced those people, you've gotta find some place for them to go." It's kinda crazy that as a housing model, that any owner of any property would be responsible to do that which the government is supposedly designed to do. But yet, that has been the plight, that has been the burden of park owners for many, many years.

So I would endeavor to suggest that really as a nation, we need to start thinking more in terms of a global solution to the housing crisis by looking at new options. Don't know whether it's 3D printed homes, don't know what the solution might be. But all I know is, there is perfectly and naturally going to be the demand for some new cheaper form of housing, something far cheaper than mobile home parks. Because mobile home parks, let's all face it, are not nearly as inexpensive as they used to be. They've risen in value, they've risen in quality, they've risen in price, and there's nothing wrong with that, nothing at all. That's perfectly natural. That's the way all economic conditions work. This is Frank Rolfe for the Mobile Home Park Mastery podcast. Hope you enjoyed this, talk to you again soon.