Research
Why Aren’t We Building New Manufactured Home Parks?
Living in the pacific northwest, I noticed a lot of housing construction going up, but it seemed to me, that I didn’t see a lot of new Mobile Home Parks being built. Because I am in the business of managing mobile home parks, this got me curious and wondering why?
From my working with tenants, I knew mobile homes were in high demand, and are one of the last genuinely affordable options for many working households. Plus I knew by the number of calls my family kept getting to sell the park, that investors wanted them too. So why weren’t more being built?
The following research project is the result of the rabbit hole I followed to get to that answer. I love rabbit holing!
To answer my question, I built a financial model comparing what a single two-acre parcel would earn under three uses developers actually choose between.
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A manufactured home park,
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Rental townhomes, and
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A mid-rise apartment unit.
All three options are grounded on real Seattle-area market data, incorporating operator lot rents and current cap rates, to Washington's new HB 1217 rent stabilization law. Then I stress-tested it, applying higher rents, both ends of the interest-rate cycle, and even the parks' own submarket. The result never changed. Even though these communities are valuable to residents and investors, based on the numbers, the park loses the math every time. It is consistently worth less than if the land is used to build denser.
That gap in value, not weak demand, is the answer to my question. The absence of new manufactured home parks isn't an oversight or a sign that no one wants them, it's the predictable result of how land value works.
Please read my full paper, for a closer look at my model, the data behind it, and my attempt at a comprehensive analysis of why this valuable, important and affordable housing option keeps becoming harder to find.
