Manufactured Home News: U.S. Senator Elizabeth Warren ‘Blasts’ Wall Street for Buying Up Manufactured Home Communities, Trapping Tenants, and Worsening Housing Affordability Crisis
The following contains excerpts from a Friday April 1, 2022 online report by the Sierra Sun Times.
At a hearing of the Senate Banking, Housing, and Urban Affairs Committee, U.S. Senator Elizabeth Warren called out Wall Street’s role in worsening the housing affordability crisis for seniors by buying up manufactured home communities. Senator Warren called for Congress to loosen Wall Street’s grip on the housing market and ensure that seniors have access to affordable and accessible housing.
Manufactured homes, homes that are factory-built and anchored on a piece of land, are an essential source of housing for seniors. Almost half of the 22 million Americans who live in manufactured housing are seniors. Senator Warren called out the troubling trend of giant Wall Street investors buying up the land that manufactured home communities sit on and raising rent and imposing exorbitant fees, often trapping tenants. Many seniors on fixed incomes don’t have the means or physical ability to move, but also have trouble selling their homes when rent and fees increase. As seniors spend more on housing, they are left with less money to spend on other basic necessities such as food and medications.
Senator Warren blasted Wall Street’s strategy of trapping tenants to rake in massive profits. Since 2000, manufactured housing has been the only real estate asset class that hasn’t experienced an annual decline in operating income.
As the country faces a housing affordability crisis, Senator Warren has called out Wall Street for buying up manufactured home communities and jacking up prices for consumers across the housing market. At a hearing in February, Senator Warren called out private equity firms and other big investors for exacerbating inflation and locking families out of affordable housing opportunities. In January, Senator Warren sent letters to three corporate landlords for their growing activity in the housing market that has resulted in rent hikes and less housing stock for first-time home buyers.
In a prior session of the Congressional hearing on March 31, 2022, Warren stated that the affordable housing crisis has affected families across the country who are struggling to keep up with rising costs. And American seniors, who often live on fixed incomes that can’t meet the demands of unrelenting rent increases, have been hit especially hard.
Senator Warren: Manufactured housing, however, is not just attractive to seniors. A few decades ago, manufactured housing communities were generally owned by mom-and-pop businesses. But as the population aged and our housing has dwindled, the smell of money lured new players and those are big investors.
So private equity firms, hedge funds, and other Wall Street giants have scooped up manufactured home communities across the country- including those, like Sandcastle Estates and Liberty Estates in Massachusetts, that cater to seniors. Institutional investors accounted for nearly one-quarter of manufactured home park purchases between 2019 and 2021,a 10 percentage-point jump in just two years.
Senator Warren: You know, make no mistake, trapping tenants is a key part of the investment strategy. And we know this because the investors actually say it out loud. One online investor “boot camp” for those interested in manufactured housing investments states, and I quote here, “the fact that tenants can’t afford the $5,000 it costs to move a mobile home keeps revenues stable and makes it easy to raise rents without losing any occupancy,” end quote.
In fact, according to one analyst report, since 2000, manufactured housing communities are the only real estate asset class that hasn’t experienced an annual decline in operating income, in any year. With money from big rent hikes and exorbitant fees rolling in, and protection against people moving out, why wouldn’t it produce huge profits?