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A Response to a Reader

A Response to a Reader

It all comes back to incentives

Christopher Ebert
January 30, 2023

We received an email this week from the esteemed George Allen (bio here) who has grown concerned about the “sharply escalating rental homesite rates in land lease communities throughout the U.S.”. His suggestion for MHI’s National Communities Council division (“NCC”) is as follows:

“encourage NCC division members to ascribe to the decades old 3:1 formula for balancing conventional apartment and land lease community rents in any local housing market: Ascertain, via market survey, the average monthly apartment rent for a 3BR2B unit in the target local housing market. Then, divide that average $ by '3', to estimate what land lease community rental homesite rate should/could be, e.g. $$1,200 apartment rent / '3' = $400.00/month rental homesite rate. Does this always work? No. It's already out of sync in some markets where portfolio community owners/operators have escalated rents closer to a 2:1 ratio than 3:1. But it's certainly a 'start' in the right direction”

I understand where Mr. Allen is coming from, I really do. However, one can never lose sight of the fact that incentives drive 99.9% of profit-seeking economic decisions in this country. Taxes too high in this state? Ok, let’s move to another state. Rent control keeping my property from maximizing its value vis-a-vis another use? Ok, let’s redevelop.

When you cap the revenue potential, you are disincentivizing people to reinvest. Love them or hate them, Havepark spent $35 million in property improvements during 2022 (link here). Why did they do that? For charity? Hint, they are a for-profit company.

I don’t like people being squeezed out of their living situations as much as the next non-sociopath, but distorting free markets is not the answer. What is the simple answer? Build more parks and have supply meet demand. The realistic and practical answer? I don’t know. If I did I wouldn’t be writing a newsletter. My best guess is some form of government incentives. Tax breaks for limits on rent increases? Maybe. Expansion of Section 8 to lot rentals? Maybe. Government takeover? Yeah right (link here)

No matter what the right answer is, I know that incentives will drive the outcome.

Enjoy!

What We Are Reading

The Goods - Manufactured Housing

Lawmakers not aware of bills regarding lot rents — Blue Field, VA

Whether new legislation could aid West Virginia mobile home park tenants facing major increases on their lot rents was questioned by the representatives for Mercer County in the West Virginia Legislature.

The Housing Struggle — Mercer County, WV

America is staring down the barrel of its long term housing issues. Now, there are added complications and divisions created over the last few years. On this episode of Us & Them, host Trey Kay looks at the outcome of the country’s housing shortage.

Attleboro mobile home tenants paid after approval of class action lawsuit settlement — Attleboro, MA

A group of tenants at the Oakhill mobile home park have received compensation from a $1.26 million class action suit against the park’s owner.

Shady Lakes highlights challenges for mobile home park residents — Fresno, CA

Harmony Communities, the Stockton-based owner of the Shady Lakes Mobile Home Park in Fresno County, have raised rents nearly 100% for some residents since purchasing the park four years ago.

Havenpark Communities Invests $35 Million in Property Improvements during 2022 — Orem, UT

Havenpark Communities, an operator and developer of manufactured home communities, announced today that it completed $35 million in community upgrades across its properties last year, making good on its 2022 capital investment pledge ahead of schedule.

Broadmoor Valley owners file Chapter 11 bankruptcy — Colorado Springs, CO

The company that owns the Broadmoor Valley manufactured home park has filed for Chapter 11 bankruptcy, according to filings in U.S. bankruptcy court.

70 mobile home parks in Colorado can’t raise rent due to new laws designed to protect residents — Federal Heights, CO

Seventy mobile home parks across Colorado cannot raise rent on residents due to beefed-up protections that went into effect this fall, part of the state’s growing efforts to protect tens of thousands of low-income individuals in one of America’s last bastions of affordable housing.

Tampa Bay mobile home community hit with 2 unexpected price hikes — Tampa, FL

A double whammy! Residents at a Tampa Bay area mobile home community are getting hit with two unexpected price hikes. They turned to 8 On Your Side, asking how to challenge the charges.

Riverdale mobile home residents frustrated as deadline to move approaches — Riverdale, UT

Jason Williams has lived in Lesley's Mobile Home Park for 22 years, his mother lived here before that. He says he knew the evictions were coming but it doesn't make it any easier.

Instead of teardown, mobile homes near Zebulon get revamp — Raleigh, NC

A Raleigh real estate company is looking to revitalize a neglected mobile home park in eastern Wake County.

Tax incentives for mobile home park owners who sell to nonprofits proposed in Virginia Senate — Christiansburg, VA

State Sen. Hashmi, who introduced the bill to counteract the national trend of large corporations buying mobile home parks and raising the rates on tenants, has been following the story Cardinal News broke on Massie’s mobile home park in Christiansburg.

County postpones trailer park project vote — Key West, FL

The Monroe County Commission, which met in Marathon last week, postponed voting on setting up a new zoning district for Roy’s Trailer Park on Stock Island, after Stock Island residents complained the issue should be voted on in Key West.

Commissioners vote to allow mobile home expansion near 100-year-old farm — Lumberton, NC

The Robeson County Commissioners gave T D Pate Investments owner the go-ahead Tuesday to more than double the capacity of his mobile home park on a tract of land that neighbors one of North Carolina's few Black-owned Century Farms.

CV Water District receives nearly $4 million in clean water funding for mobile home parks — Coachella, CA

Representatives from Coachella Valley Water District (CVWD) along with Congressman Raul Ruiz, M.D. (CA-25) announced at a press conference in Coachella today new federal funding secured for CVWD’s Valley View Mobile Home Park Water Consolidation Project.

Trailer park proposed for Tay's Wye Heritage marina slated for in-person hearing — Midland, ON

An Ontario Land Tribunal (OLT) hearing regarding a 74-lot trailer park proposed at the Wye Heritage Marina in Tay Township could be held in person in Midland this April.

Opinion: It’s time for bipartisanship on affordable manufactured housing — Washington, D.C.

As the 118th Congress begins, we return to a divided government in Washington. The American public will be looking to Washington for bi-partisan initiatives and real accomplishments. One of the prime areas of opportunity is affordable manufactured housing homeownership.

Residents Remain in Hollister Mobile Home Park Set to be Vacated — Hollister, MO

Two residents of the Yacht Club Mobile Home Park in Hollister are still living in the park after residents were told in August that they had to move by the end of the year.

General Real Estate News

Murdoch in talks to sell Move Inc to CoStar: report. (Link)

It’s the Economy, Stupid

Nationwide Rent Control? (Link)

Regulatory and Affordability

As Thousands Fall Behind on Rent, Public Housing Faces ‘Disaster’. (Link)
FACT SHEET: Biden-⁠Harris Administration Announces New Actions to Protect Renters and Promote Rental Affordability. (Link)
Building More Housing Makes It Cheaper. Really. (Link)
Low-income housing on track for demolition. (Link)
Housing for homeless and low-income community members going up in Oceanside. (Link)
NIMBY: Liberal Elites Lose It Over Proposed Nantucket Low-Income Housing Project. (Link)
Brookfield alder in hot seat after comments against affordable housing project. (Link)
The U.S. senior population keeps growing, but where will they live? (Link)

Public Markets Corner

UMH Properties, Inc. will host fourth quarter and full year 2022 financial results webcast and conference call.

UMH Properties, Inc. (NYSE:UMH), a real estate investment trust (REIT) specializing in manufactured home communities, announced that it will host its Fourth Quarter and Full Year 2022 Financial Results Webcast and Conference Call. Senior management will discuss the results, current market conditions and future outlook on Wednesday, March 1, 2023, at 10:00 a.m. Eastern Time.

UMH Properties, Inc. announces tax treatment for 2022 distributions.

UMH Properties, Inc. (NYSE:UMH) today announced the tax treatment of its 2022 distributions. The following tables summarize, for income tax purposes, the nature of cash distributions paid to stockholders of UMH’s common and preferred shares during the calendar year ended December 31, 2022.

ELS Announces Tax Treatment of 2022 Distributions.

Equity LifeStyle Properties, Inc. (NYSE: ELS) (referred to herein as “we,” “us” and “our”) today announced the tax treatment of our 2022 common stock distributions. The following table summarizes the income tax treatment of our 2022 distributions.