When private equity came for trailer parks

I’ve never been called “trailer trash”, but I did live in a trailer in Northeast Georgia in my early teens. Trailers don’t have the best reputation, but I liked it better than the home I grew up in. It was well-insulated, with a shotgun floorplan, so my room was far from my mother’s and her boyfriend’s, giving me more privacy than when we’d shared a wall (Iggy Pop, who lived with his parents in a trailer in Ypsilanti, Michigan, felt differently, and tells how he used to draw pictures of fantastical, u-shaped trailers where a boy would have space to hide). There was a hill I could skate down, woods to walk through, and because we were parked over gravel rather than dirt, we didn’t have as many problems with bugs. I had lived in a typical postwar suburb where neighbours were suspicious of each other and maintained a degree of distance. The trailer park, by contrast, was cosy; people knew each other and waved hello. I remember having long talks with a man there who owned four beautifully restored Ford Mustangs from the Sixties.

And yet, in America, the widespread prejudices against those who live in trailers, as well as the downsides of owning and renting them, have long kept them attainable for the rural and suburban poor. Mobile homes are uniquely prone to bad weather — hence the slang term “tornado bait” — and if they catch fire, they can burn to the ground in just 10 minutes. You can’t park a trailer in most neighbourhoods, so living in one often means longer commutes to work and a dependency on driving in every aspect of daily life. Trailers are considered personal property, not real estate, and, like other personal property, they depreciate quickly: 10-20% in the first year and 3-5% each year after, though this depends on location and upkeep. It’s an ugly affirmation, but a true one: in a market economy, the best way to keep housing affordable is to make it undesirable.

As home prices and apartment rents climbed precipitously in the 2010s, the trailer park remained a refuge for the poor (I would like to go back to “poor” rather than the anodyne “underprivileged”, because it ought not be a privilege to have food and a place to eat). But after three rounds of quantitative easing (one to save the global banking system, and two more because speculators really liked the first one), all the obvious investments were taken. When QE4 came during the pandemic, pumping an unprecedented $4 trillion into the financial system at a time when interest rates were near zero, those of us who didn’t have money were perplexed to hear of investors paying tens of million dollars for NFTs or properties in Mark Zuckerberg’s now all-but-defunct Metaverse, not to mention crypto billionaire Justin Sun’s purchase of Maurizio Cattelan’s “artwork” Comedian — a banana taped to the wall that Sun subsequently ate onstage. Never has the argument that the rich must be allowed to operate untaxed and unregulated looked stupider; but amid this idiocy, a more insidious form of extractive rent-seeking was also at work. Institutional investors were dumping mountains of loose cash into the goods and services people’s lives depend on: healthcare, nursing homes, rehab facilities, and housing. “Alternative real estate” was a big part of that, including co-working spaces, student housing, data centres — and trailer parks.

The trailer park has proven particularly enticing to private-equity investors for a number of reasons. It is largely recession-proof, because for many, it is the last stop before homelessness, and people will do anything they can to avoid eviction. And zoning laws prevent the opening of new trailer parks in many municipalities, so landlords enjoy the advantages of cartel pricing in a nominal free market. It is, incidentally, worth noting that around two-thirds of manufactured home residents own their homes, but most rent the lots where they sit, while the other third rent home and lot together.

Though, in theory, manufactured homes can be moved, doing so is expensive: around $3,000 for a short move, and up to $20,000 for a long one. Given that the median income for trailer owners is $38,087 , and for renters it’s $28,280, park residents are essentially stuck. With modest initial investments — the cost of land or $50,000 for a new single-wide trailer vs. hundreds of thousands of dollars per newly built apartment or home — developers get a significantly higher return on investment than with traditional properties, making it clear why, during the pandemic surge, nearly a quarter of manufactured housing transactions involved institutional investors.

“The trailer park has proven particularly enticing to private equity investors”

Since 2022, with the spike in interest rates, enthusiasm for investing in trailer parks has waned somewhat — though a friend who owns parks in Virginia tells me not a week passes in which he doesn’t get calls from potential buyers. If the pandemic marked the accumulation phase for large landlords, the…