John Oliver Isn’t Wrong About Mobile Homes, But There’s More to the Story
In a new sketch on John Oliver’s late night comedy TV show, Oliver rips into the harsh realities for many folks living in mobile home communities across the country.
On YouTube, the clip has racked up more than 4.7 million views and has been featured in over 30 news websites.
While we can’t and won’t argue that for many living in a mobile home community, the threat of poor management and raised rent is very real, there are other points about the broader mobile home industry Oliver makes which focus heavily on what mobile homes don’t offer the low to middle income earner, rather than what they do.
For instance, Oliver opens with the stunning fact that mobile homes are “one of America’s last affordable housing options, costing up to 50% less per square foot than a conventional house.” Yes. This is accurate, and in many cases, they can cost even less than that. This means that a middle-income earner struggling to pay $1,000-$1,500 a month in rent can purchase a manufactured home and cut their payment in half—including escrow and insurance.
The problem, he goes on later to discuss, isn’t the manufactured homes themselves, but how they’re financed. Mobile homes are known for their higher interest rates and shorter term “chattel loans” which Oliver compares to the terms of a car loan. It’s important to note, however, that mobile homes do not inherently come with a high interest rate. Banks aren’t looking at the mobile home and arbitrarily jacking up the interest rate.
Interest rates are a complicated tallying of credit score, down payment, debt-to-income ratio, and length of credit history. And the correlation in unfavorable loan terms and mobile homes must be looked at in light of the demographics purchasing them—young families with little credit history and folks with poor credit histories and little to no down payment.
But don’t we have government subsidized loans with lowered interest rates and down payment for those unable to afford a conventional mortgage on a traditional home?
Sure, but in many areas of the country home buyers can’t find a traditional site-built home for under $200,000. And once their property taxes, home owner’s insurance, and private mortgage insurance is tallied up, they are back where they started.
Clearly, Oliver wants to bring awareness to mobile home buyers and ensure they aren’t taken advantage of in any sense by players in the mobile home industry—desperate people are often the target of those with greedy hearts and big means—but in doing so has perpetuated myths plaguing the industry for years, further pushing a necessary solution to the affordable housing crisis out of the conversation.
The problem runs deeper than rich investors buying out mobile home parks, jacking up rent, and forcing out residents who can’t afford to do anything about it. Oliver proposes a law that would allow residents to get first dibs when their community goes up for sale, giving them a chance to become shareholders with their neighbors and thus shielding their homes from park buyers only interested in profit.
While a law like this would at least offer residents an opportunity, there’s a greater force at play in markets than regulation—competition. Cities across the U.S. have essentially outlawed the development of new mobile home communities and driven many out of business. The ones that have managed to survive are really the only ones left to choose from for home buyers needing a place to install their mobile home without the option of personally owned or leased land.
The attitude toward mobile home communities within city limits has taken away any incentive for parks to be competitive in their pricing, and instead allows them to capitalize on scarcity, raising rent prices unchecked knowing there is always someone else in line to replace those who are forced to leave.
While cities essentially beg developers to create more affordable housing for their citizens, they simultaneously edge out the most affordable housing option currently on the market—manufactured homes.
Within most city limits, zoning laws either overtly or stealthily exclude manufactured housing based on requirements for roof pitch, foundation, and even square footage. This leaves many tracts undeveloped and run-down homes left in condemnation because the average home buyer can’t afford the cost of building a new home in accordance with zoning requirements and aren’t allowed to install a manufactured home instead.
To specify, the average home buyer being priced out of traditional site-built housing aren’t those at or below the poverty line, it’s your local high school teacher and police officer. It’s the average hard working, middle class earners who must move further and further out of their cities to afford working in them.
As a work around to some of these zoning and financing issues, the CEO of Clayton Homes, Kevin Clayton, has worked with the Fannie Mae loan subsidy to develop the MH Advantage program. This offers home buyers the option to purchase an “MH Advantage” approved manufactured home with a steeper roof pitch and other more “traditional” exterior features at a conventional 30-year mortgage and 3-4% interest rate. The ability for developers to begin installing a federal HUD code approved home in accordance with city zoning requirements is a total game changer for cities with skyrocketing housing and rent costs.
The bottom line to begin tackling some of the issues plaguing the affordable housing crisis and mobile home community malfeasance: These cities need competition and competition will only come with innovative solutions, city cooperation, and a whole lot less stigma on what exactly a mobile home is and who exactly a mobile home helps.