Mobile Home Parks: The Future of Affordable Housing?

December 17, 2018
Authors: Tyson Cross, HFO Senior Broker
Publishers: HFO Apartment Investor Newsletter

Succession PlanningAfter years in the shadows, mobile home parks appear to be ready for their turn in the spotlight. As cities struggle to build and preserve enough affordable housing units to keep up with the demand, leaders and advocates have begun turning their attention to what in many cities is the only indeed naturally occurring affordable housing option. 

In an interview with CityLab earlier this year, architect Eduard Khakhmalnikov argued that mobile home parks have gone from a popular housing option for construction and factory workers to a haven for vulnerable groups including women, retirees, and families on a limited income. Approximately 20 million Americans live in mobile homes, but many cities have written them out of the zoning code. When park owners sell, many parks get redeveloped into apartments or other more expensive housing options. This can mean that the park residents lose not only the pad they rent but also their homes, which represent a substantial investment but are not as “mobile” as their name suggests.

The city of Portland is home to 56 mobile home parks. City leaders are beginning to understand the critical role these parks play in the local housing market. In 2016 the Oak Leaf Mobile Home Park on NE Killingsworth was purchased by Living Cully, and faith groups when they learned the park would be sold for redevelopment. Ultimately, the St. Vincent de Paul Society of Lane County purchased the property from the nonprofit groups and is working to rehabilitate the complex’s dilapidated conditions. St. Vincent de Paul expects to replace 10 to 12 homes and replace roofs on others. In all, the projected cost is $195,000 per unit – not a small sum for a park intended to house residents who earn less than 60% of median family income.

The situation at Oak Leaf has inspired city leaders to rethink its classification of mobile home parks. In July, the Planning and Sustainability Commission voted 7-2 in favor of creating a new zoning designation for mobile home parks in the city. The City Council will vet the proposal from the PSC and vote on whether to approve the plan. Housing advocates hope that the new park designation will be a hurdle for redevelopment, and prevent displacement of the families who live in the parks. City leaders are more cautiously optimistic – they believe
that even if the re-zoning is approved, property owners will file claims under the state’s Measure 49 initiative. Measure 49 was approved by voters in 2007 and requires that the state compensate or waive land use regulations if those regulations went into effect after the claimant had purchased the property.

Meanwhile, a new study from the Urban Institute based in Washington D.C. determined that the home price index for mobile homes had an average annual growth rate of 3.4% vs. 3.8% for traditional homes. Some values have risen at a faster pace for manufactured homes than conventional properties. The Urban Institute report states “Although there are limits to what the data can tell us, the index suggests a need to reevaluate the presumption that manufactured homes do not appreciate at the same rate as site-built homes.”

Tyson Cross is a Senior Broker at HFO Investment Real Estate. He can be reached by phone at (503) 241-5541 or by e-mail at tyson@hfore.com.