Mobile Home Park Mastery: Episode 248

Winners And Losers In Biden’s Mobile Home Attack Plan

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The Biden administration is trying to push the narrative that the mobile home park industry might be the savior to the affordable housing crisis. Some of these initiatives have potential and others are just the same B.S. in new packaging. Who are the winners and losers in these proposed changes to everything from building codes to home financing? That’s the focus of this Mobile Home Park Mastery podcast.

Episode 248: Winners And Losers In Biden’s Mobile Home Attack Plan Transcript

Bloomberg announces Biden's New Housing Plan: Fire Up The House Factories. Well, manufacturers before you start bringing those for wanted-for-hire ads, let's discuss that article in a little more depth. This is Frank Rolfe of The Mobile Home Park Mastery podcast. We're gonna review some of Biden's ideas and sort through that, which has a hope that which has no hope, and a lot of it we've heard many times before.

First, our quick review of the manufacturing of mobile homes in the United States. It's a riches-to-rags story. You had manufacturing in the US back in the late 60s, in the early '70s, of between 600,000 units a year and 400,000 units a year. And at one point in 1972, mobile homes were 60% of every new housing start in the United States and then it all came crashing down. What happened was the no-income-doc, zero-down mobile home loan of roughly 1998, led into what was called the great chattel collapse, which reduced production down below 100,000 units where it's pretty much remained ever since. So we've been sitting here now for about 15 years at a incredibly low production. Based on all the manufacturing plants out there, the industry has been scoring about 60 to 120,000 homes per year.

And now the Biden administration is trying to grab onto this as a tool to explain how they will solve affordable housing. But I'm not sure a lot of the tools that they're pulling out of their tool drawer, we haven't seen before, and some aren't even functioning. The first observation of the Biden administration on how to solve this mobile home/affordability crisis is to lower the cost of the home is by having Fannie Mae and Freddie Mac securitize the loans, thereby bringing forth lower interest rates. And we've all been saying, I think I've been writing articles now for, at least, 15 years, that it makes no sense that the government does no support whatsoever to the mobile home financing part of the housing industry.

Why would you not? Why is the sole focus of Fannie and Freddie to date been on single-family homes and condominiums and a complete absence of any push, any initiative in mobile homes? And yes, if you could lower the rates on mobile home loans, everyone would benefit, the customer would benefit and mobile home park owners would also benefit. If the rates came down, that makes the customer's burden lower. If the rates came down, there might even be customers who can go down to their local mobile home dealer and buy a home themselves and bring it into the park and save us doing that step.

The problem, of course, is the industry has been pushing this initiative seemingly forever. It was on the table throughout the Trump administration, it was on the table throughout the Obama administration. This is hardly a new idea, however, it is something that perhaps through executive action could actually become a reality. And the industry, I guarantee you, would welcome that with open arms, the idea that our customers could get the same interest rates on a mobile home loan that they get on a single-family. So that one is possible, does not require, I don't believe, any congressional support. So that is a good idea if it was to come into action. We've heard it many, many times, but if, finally, after all these years, they're going to do that, well then that's definitely a good thing.

Another item is making it possible to remove that frame, that boat trailer the mobile homes arrived on, so they can be set on the ground like a regular home. Most people do not realize that in the HUD regulations from 1976, which required the HUD seal on the back of every home sold in America, it also required you could never remove the home from the frame. It didn't make a lot of sense at the time because the frame was used for transport. But most things in life, you don't keep the box that came in when it arrives. I don't recall having any regulation why I have to keep the box my TV arrived in stuck to the back of the TV, but that's how it has always been. It's a HUD rule. Now personally, I think if he relaxed the rule and allowed homes to come off those hideous trailers, it would definitely benefit everyone once again, because now you could get rid of the stigma against mobile homes, which we all can spot them. There's no stick-built home that has vinyl skirting on a deck sitting 3 ft off the ground. However, we all know that awkward appearance was by design.

When HUD did this, they wanted to deliberately create what they considered a lesser class of housing, because let's all be honest, the housing industry and all of its might, one of the biggest industries in America, it's all focused on single-family construction, not on mobile home. So kind of just screw over the competition, they made us keep the packing materials, that frame with the wheels and the hitch. And if you got rid of that, if you could set the home at ground level, you really couldn't tell the difference in many cases between a mobile home and a stick-built, particularly when you get into the world of double wides. Now parkers have been trying to do this for a long time. We even own a park in Bloomington, Illinois, where the homes are what they call ground set, so you actually dig down and the frame is still attached, but the frame is below the earth such that the home looks like a traditional single-family home. You put shrubs around it and you really can't tell the difference.

And once again, this is something that could be cured through executive action. I don't think it needs any congressional support whatsoever. So if someone at the Biden administration wants to go forward and make this a reality, it's been discussed for years and years, well, then once again, I think the industry would welcome that. Then you have Biden's attempts to give what he calls protection from private equity groups. In fact, the quote in the article is that, "Acquisitions by these groups are often followed by lots of rent hikes."

Well, they certainly should be. If you're going in and buying an old mobile home park that's all run down and bringing it back to life, redoing all of the streets, the utilities, making everything in good condition and then instilling professional management, and then trying to create better common areas, of course, the rent is going to go up. There's no other direction for the rent to go. No one's gonna bring these things back to life and keep the rent at the same rent it was when they purchased it. So what in essence, the Biden administration is doing is pointing the finger and trying to publicly shame those people who are keeping these parks in operation because I guarantee you, if the private equity groups don't buy up many of these parks, they will simply be torn down. If you Google mobile home park in your computer, all the articles that pop up are about parks that are being redeveloped. So since we all understand basically economics, we understand that people will always gravitate towards the use of land that is in fact the most profitable. It makes no sense to try and publicly shame those who invest and risk their own capital to keep mobile home parks in operation. But that's what the Biden administration is basically doing there.

Now, the problem is you can't have it both ways. If you want to go ahead and publicly shame private equity groups and say, Oh no, buying mobile home parks is wrong, if you fix them up or bring them back to life and raise the rent even though all just get torn down. There's a motion picture out right now called... I think it's called A Better Home. I'm not sure of the title. You'll never see it in the theater. That's for sure. It's something that some group paid for, I can't really tell. They don't even want to say who they are because I think they're a little bit ashamed of being stuffed into some kind of industry mantras being traders to housing. But the problem with the movie is it discusses a park called Denver Meadows, which is located obviously in Denver, hence the name, and this is a property that was a functioning mobile home park that was sold to a developer to be made into something of more use to the city of Denver or wherever it's located in. And that is what you've got if you don't raise rents. What's strange in the article is they try and shame the guy that sold it for selling it in such a gigantic profit.

I think he sold it for $17 million. That doesn't save the mobile home parks. If you want people to keep these things alive and bring them back to life, you have to embrace and cheer them on for doing so. You can't attempt to shame them into not doing it because if you do that, then what's going to happen is they are just not going to do it anymore. And if you read that part of the article, they're spouting their great support for Fannie Mae and Freddie Mac who's starting to adapt what they call tenant protection things into the loans, things where you have to give your customers a longer period before notice of eviction or a rent increase. These, again, are not really productive. They're things that I think sound good. There's not a lot of impact to them, but this whole notion, the private equity groups are evil, that anyone who buys an old mobile home park and brings it back to life is evil, that's simply gotta stop. That's not smart on the Biden administration to do that. Also they talk about relaxing the building codes to allow new mobile home parks to be built. And they opined on the fact that only 25% of US cities had building codes in 1960, whereas today, they all do.

And as a result, what happens is you can't build mobile home parks anymore. Now we have a problem in even pretending that this initiative has any legs whatsoever. The problem is that cities don't want more mobile home parks. The population of cities do not want more mobile home parks. And you're never gonna be able to change that. That is a function of decades of negative stigma against the mobile home park industry, and the simple fact that anyone knows, if you simply look on Zillow, you'll see that homes next to mobile home parks have lower values than identical homes a couple of blocks away. You're never gonna be able to turn that reality around and convince anyone that adding mobile home parks is a good thing. It's not going to happen. So this concept, you can go in and kind of relax building codes, I don't think it's possible. I know it from action. We've tried many, many times to expand mobile home parks by buying or put it under contract to buy the land next door, but most of the time, we are turned down and turned down violently by a town population who does not support this concept, whatsoever.

Until you can change that narrative, until you can undo years of negative stigma, you are not ever going to be able to change that around, and that will require congressional support. There would have to be laws to make cities allow mobile home parks. And I don't think you have the support to do that. I think it would be a very, very unpopular issue. It also goes on to talk about how the Biden administration wants to push what they call gentle density. Again, this is never going to happen. You can't force cities to do what cities don't wanna do. That's the whole point of America. We do have state rights, and we do allow voters to support their thoughts. We're not supposed to be just one flavor. We're the entire Baskin-Robbins. That's what makes us different. That's what's called freedom. That's what gives meaning to our entire society, and you can't, from a Federal government level, go to all of these various municipalities, cities, suburbs, and say, Well, I know you don't want more mobile home parks, but gosh darn it, please do that. And they talk about trying to get there through perhaps giving a little additional federal money. Here's the problem. The cities where people want to live, they don't need that federal money. That's opportunity zone stuff. That's not what you're gonna find in the suburbs and the exurbs that Americans want to live in.

As a result, if you build a mobile home park due to some government attempt to create this notion of what they call gentle density, well, it's just never going to happen. The bottom line to it all is the Biden administration if done through executive action, which is lowering mobile home costs through securitizing through Fannie and Freddie mobile home loans and make it possible to remove that hideous metal trailer off the homes upon arrival, those things might happen. And if they think they can get that done, that's great. This notion of publicly shaming private equity groups that has to go out the window. It does not help in any possible manner. It doesn't help customers, it doesn't help housing, doesn't help any living human. And this concept where you're gonna go ahead and force cities to accept the new construction of mobile home parks, that's a nonstarter. It's never gonna happen. They haven't allowed new mobile home parks in America in half a century. I don't think you're gonna be able to change that. And certainly not with the Biden administration. This is Frank Rolfe, the Mobile Home Park Mastery podcast. I hope you enjoyed this. Talk to you again soon.