Mobile Homes, Wealth Accumulation and the Poor

trailer_parkby James A. Bacon

Manufactured dwellings — mobile homes, trailers, call them what you will — are a major source of affordable housing in the United States. But a few market reforms would make them even more affordable to lower- and middle-income families and make them better vehicles for accumulating wealth. That was the message from a session Friday morning at the 2014 conference of the Congress of the New Urbanism in Buffalo, N.Y.

The great advantage of manufactured housing is that it costs less than site-built housing– $44 per square foot on average compared to $86 per square foot, not counting the value of the land, said Doug Ryan, director of affordable housing initiatives for the Corporation for Enterprise Development. But there are drawbacks. Many homeowners don’t own the land beneath their trailers and they cannot obtain long-term mortgage financing like other homeowners can. Also, zoning codes often marginalize manufactured housing, relegating trailer parks to undesirable locations, if permitting it at all.

Many problems with the industry originate from its origins decades ago when companies manufactured mobile trailers primarily as recreational vehicles. Over time, the trailers evolved into houses set in semi-permanent locations while campgrounds evolved into trailer parks. In 1976 legislation formally recognized the difference between “recreational vehicles” and “manufactured housing” but the underlying business model – RVs/mobile homes sitting on land owned by someone else – did not change.

Severing the connection between home ownership and land ownership created at least two big problems. First, trailer owners were subject to the whims of the landowner. In most states, trailer park owners could evict tenants for undesirable behavior or any other reason with only 30 days’ notice. If the landowner wanted to sell to a developer – boom – long-term tenants found themselves uprooted and forced to move to another location, if they could find one, at considerable expense.

Second, financing companies classified trailers as “chattel” property the same as RVs, which meant that homeowners could not access mortgage financing which charged lower interests rates and stretched out payments over longer periods. The second problem was tied to the first: The disconnect between the trailer and the land beneath it made it less desirable collateral for financiers.

Fortunately for mobile homeowners, a non-profit movement has arisen to address those problems. As Lisa Davis, program officer for the Ford Foundation, described it, reformers are moving across a broad front: changing the law to get manufactured housing titled as real estate; improving product quality with a focus on energy efficiency; solving the land-tenure problem; and reforming the financing system.

ROC USA, a not-for-profit enterprise, is addressing the land-ownership issue by converting trailer parks into land-ownership co-ops. It is impractical to subdivide trailer parks into individual lots for individual trailers, said Paul Bradley, president of ROC USA. But giving trailer tenants an ownership interest in a communal property does several positive things. It gives them equity ownership in the land, and it gives them security against the landlord selling the property and evicting them. Thirty years of experience has shown that homes in resident-owned communities sell faster and sell for more, allowing homeowners to build more equity.

Next Step Network is working on several initiatives to help trailer owners. The organization provides education and credit counseling to trailer buyers to ensure they make intelligent consumer decisions, and it works with the industry to make the costs and risks of ownership more transparent, said Dave Betler, marketing and operations specialist with Next Step. The group urges homeowners to look beyond up-front costs and look at life-cycle costs, which include energy payments. Manufacturing trailers to Energy Star specifications can lower monthly payments and increase re-sale value. Energy expenditures loom large for low-income families – twice the percentage of their income compared to average households.

Bacon’s bottom line: For the most part, I find these initiatives to be highly commendable. Instead of seeking government subsidies or engaging in social engineering, they are trying to make the market work more effectively. The goals of greater transparency and consumer education are laudable. Addressing the land-tenure issue by converting trailer parks into co-ops is inspired. Nudging the financial industry into providing mortgage financing sounds reasonable, although there may be complicating issues, such as the use of long-term mortgages that extend longer than the expected life of the trailer, that the panelists did not discuss.

The other reason I prefer this approach to many other affordable-housing initiatives is that it does not bilk taxpayer or turn lower-income people into wards of the state — it turns poor people into property owners and gives them a means to accumulate at least a small amount of wealth. That builds a much healthier society.

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7 responses to “Mobile Homes, Wealth Accumulation and the Poor”

  1. larryg Avatar

    this is a bigger subject than generally thought – in my view – because in much of ROVA to include many of the outer exurban counties – people live in this kind of housing – often on their own land – with a septic drainfield….

    whereas in trailer parks – they are usually too close together to have (legal) drainfields and instead you’ll find them in little niches in urbanized areas where they do have access to central water/sewer. They’re often found behind commercial areas undesirable for other residential or even commercial uses.

    I keep urging people – to get out away from the world of single family detached subdivisions.. get out of the urban area.. then get off of the interstate .. and travel the backroads of ROVA and if you force yourself – you’ll actually start to see
    how much of ROVA actually lives.

    Some live in well-built older stock that they inherited. Others live in mobile homes or double-wides on land they inherited or purchased from a neighbor.

    ( my understanding, by the way is that if the structure is put on a permanent foundation – it then becomes classified for tax purposes as real estate – and I believe that FHWA will provide mortgages for them.

    then we have these kinds of housing – that are catching on:

  2. virginiagal2 Avatar

    There’s also a lot of interest in tiny and very small houses, and things like Katrina cottages – which have lower prices, comparable to mobile homes, but are actually houses.

    The issue that you can hit there is if there is a minimum house size requirement.

    1. larryg Avatar

      also… for some reason..some of them seems to not have water and sewer.

      that’s not good.

      1. virginiagal2 Avatar

        Regular tiny and small houses have water and sewer like larger homes, and are built on a foundation.

        However – there are also tiny houses that are legally RV’s, built on a trailer – and those don’t have hookups. That, I couldn’t deal with.

        The real houses that are very small, and very well designed, those to me are absolutely charming. I don’t know how well I’d live in one, but they just fascinate me.

        For an example of the “real” houses that are very small and very affordable, and a history behind how Katrina Cottages came to be, check out

        1. larryg Avatar

          you know the funny thing…. I live in an exurban place that before I-95, was rural and still is about half rural and the country side is dotted with older versions of “tiny houses” .. and sadly.. most of them now empty… with double-wides and mobile homes sitting adjacent to them on the same parcel.

          1. virginiagal2 Avatar

            Difference is style – many of the new very small homes have high ceilings, often vaulted ceilings with a small loft, very open floor plans, storage carefully designed into the plan, and high-end materials throughout. Lots of windows, lots of style, very appealing.

            A lot of older small homes have old wiring, old plumbing, old oil heating, lots of small rooms, and low end fixtures and design.

            They could be renovated, but it would cost, and it’s easier to get a loan for a new mobile home than to get a home improvement loan. We have some odd disincentives against renovation, probably a mix of it being riskier and renovation being less profitable for politically important industries like construction and mortgage finance.

          2. larryg Avatar

            What I LIKE about well-designed tiny home (that you will also find in some RVs) – is the attention to storage and using every nook and cranny to advantage.

            I’ve always like the concept behind murphy beds… and fold-down and pull-out type surfaces and storage.

            the “loft” in many of these tiny homes is not well used.. in my view.

            with a little higher ceiling and a murphy bed type system – you could use it for a comfortable living area… during the day and sleep at night.

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