Why you should care
Because, well, whose American dream is that, anyway?
Minh Dam can’t wait to buy his new house. He shows me pictures on his iPhone: gleaming images of a four-bedroom in Sacramento with high ceilings, chandeliers, a gorgeous foyer and broad windows. He’s ready to pay cash: $324,000, ASAP. He just has to sell his pesky current dwelling.
That house? It’s a classic 1960s trailer, bought 13 years ago for $70,000, which 40-something Minh is hoping to sell off for $89,000. He reflects one afternoon, at his kitchen table in his 1,030-square-foot mobile home in San Jose, California, that he can have his pick of a buyer. A half-dozen interested parties have swung by already, but he’s still waiting around for the dreamboat option — one who will put down all the money now. “None of this financing,” he says impatiently. He doesn’t trust loans, or other people’s credit. He’s a first-generation Vietnamese immigrant with a 10- and 13-year-old, and he’s ready to cash in on that damn American dream already. Suburbs, good schools, square footage galore, here he comes.
Minh’s tale is a good-news one: Settle for a cheaper home, screw the stigma that’s accompanied trailer parks since the Great Depression; wait patiently, save money and move on up and out. And certainly, this world has its share of feel-good stories, of lucrative flips. Alongside those are the heartbreaking fire sales. What it all adds up to is one certainty: No home market in the country, indeed in the world, is quite like this one.
Some 20 million Americans live in mobile or manufactured home dwellings — that’s about the same as the population of New York City and São Paulo combined. These residents form the foundation of a $7 billion construction and real estate industry, according to a 2014 report from the market research firm IBISWorld.
But this world exists on the fringes of the legal and economic systems most Americans take for granted. Between a mostly cash purchasing economy; a loan, insurance and tax structure that’s far from the norm; and a tradition of ownership that leaves many residents in limbo — Is it a house? A home on wheels? Do you pay taxes? Get tenants rights? — the whole world lacks stable scaffolding. This market, full of those with “transient incomes,” exists in a perpetual limbo, in an in-between state between known factors, explains MIT real estate economist Albert Saiz. Case in point: As the rest of the housing market is recovering from the 2008 financial crash, the manufactured home industry is plagued with bankruptcy and growing at only about a quarter of the rate of the rest of the market. Which, of course, induces a vicious cycle: skittish investors, even tougher loan situations.
But as with the rest of the economy, there’s a glimmer of something new. Growth is coming. Slow and steady, the industry should expand to $8.3 billion by 2019, the IBISWorld report predicts. Some real estate agents are cautiously optimistic. Many buyers remain skeptical. The houses are generally still more affordable than most: New ones sell, on average, for $64,000 — less than a third of the median American home price — according to the 2014 census report. The thing about buying a home, though, is that it’s never just about the numbers.
For Teresa Distel, it’s certainly about more. The day I meet her marks her 11th month of house hunting. She holds a fat sheaf of yellow legal pad paper marked up in faded pencil, printed Craigslist ads, receipts from application fees. She figures she’s seen about a hundred homes, spent $1,000 on application fees and been rejected from every single one. The 60-year-old’s credit is terrible, and her only source of income is Social Security money — $900 a month. She was once a homeowner — a nice place in Novato, California, a half-hour from the Golden Gate Bridge, across from her favorite water skiing spot.
Then came the divorce after 19 years: She lost the plumbing business to her ex-husband, her bikini shop went under when the rent shot up by $1,000 a month, and soon she couldn’t meet her $5,000 monthly mortgage payments. The bank foreclosed on her home two years ago. She’s staying in Sonoma, California, with her cousin, who doesn’t want her around any longer; her 18-year-old daughter hasn’t lived with her for three months due to the instability, preferring to stay at her dad’s place.
“I’m telling you, I should be writing this friggin’ book,” she tells me. It’s a weekday afternoon; we’re in a Mexican restaurant off the highway. Distel is dressed boisterously, in yellow-and-black polyester leggings, with a yellow scrunchie, bow and bracelet to match, and she speaks the same way. The last year, and the time leading up to it, have made her suspicious. Because she’s seen so many almosts. The guy who said his credit was good and they could split a place in his name. (“He LIED!”) The $48,000 trailer she could have bought with help from her mom, who wouldn’t chip in because the application asked for a Social Security number. The friend turned roommate who turned out to be on meth.
This last experience haunts her today. We are about to visit a trailer that promises to be a mixed bag. She can live there for free, in a quiet 55-and-over park with a pool and a genteel air about it. Except she only gets the deal if she caretakes for the current resident, a man just a year older than her with a nasty drinking problem, a habit of tearing up his own clothes and pillows, and occasionally wetting himself. The job amounts to “being his housewife,” she shrugs. Then: “I think he’s on meth,” she muses. “He might not be. But, God, that would suck.”
Real estate agents say Teresa’s is not a unique experience, though it’s pronounced to almost parodic extent. Ike Redman, a mobile home real estate agent in Vallejo, California, who lives in the same park where she sells, says about two out of every five clients she works with can’t buy a place because they can’t put down enough money — often a $20,000 down payment — or qualify for loans. Mobile home financing is a hairy beast. Loans are difficult to come by even with good credit: According to a 2014 Consumer Financial Protection Bureau white paper, 68 percent of loans issued for manufactured homes in 2012 (the most recent year with data available) were priced well above average; only 3 percent in standard homes crossed to a higher threshold. And the interest rates on manufactured home loans that year were over twice as much for mobile homes.
Down payments can spiral as high as 20 percent, the upper end of average in today’s market. Real estate agents take almost twice the commission they normally would. Redman reports she’s seeing more buyers who find they can’t own a mobile home and try to rent one instead, a rare possibility in this world.
MIT’s Saiz suggests, in fact, that the current housing market boom is worsening many would-be-trailer-buyers’ already tough situation. That’s because the mobile home world acts more like a rental market than an ownership market, he explains. Owning a physical structure doesn’t protect against landlord control, for instance. Teresa says, anecdotally, that she looked at a park where lots ran as high as $1,200 a month.
So in fact, it’s a seller’s market. Deals close within a matter of weeks. Real estate agent Vanessa Nelson, also based in Vallejo, reports one listing selling for over $300,000, tens of thousands over the asking price, just one week after it went on the market. The home was 1,600 square feet.
Along with one of Teresa’s friends, we scuttle over to the park, tucked just under busy Highway 101, behind a shopping complex with a Safeway and a Peet’s Coffee. You might never know it was there. It’s quiet, well-groomed, nicer than Minh’s. Teresa’s possible home is a docile white manufactured house that looks a bit like someone chopped the wheels off a stereotypical trailer; the owners bought it for $69,000, and it sits on an $800-a-month rented lot. It’s about 1,800 square feet, with two bedrooms.
“First thing I’m gonna do if I live here is put a lock on my door,” she says, sweeping her hair into a messy bun with the scrunchie. She visited once before, and her potential roomie could barely get out of his recliner. The place smelled of cat piss. She’s back because since then, tensions have escalated at her cousin’s and the house hunt has stagnated. It’s time to get out.
“Getting out” looks like this: The house still has a whiff of cat about it, and Teresa is unhappy with that odor in what would be her bedroom. The good news is that today, Ken — who didn’t give me his last name — can stand. His hair is receding but long and greasy. He’s unshaven, wearing sweats with holes. The cat yawns. Teresa spies the stale sausage pizza on the kitchen counter. She’s a good cook, she tells me. She can cook for him. This looks way better than it did before — he looks way better than he did before. By the end of the 20-minute visit, the two of them are chatting easily. He’s a karaoke aficionado and mourns the lack of good options around here. “We’ll go together, when I’m your roommate,” she says, placing an affectionate hand on his shoulder.
On our way out the door, I turn back to ask about his utility bill. He doesn’t know much about his own finances. His brothers and sister-in-law, the people who are offering Teresa this gig and who are fed up with taking him to the hospital multiple times a week and cleaning up after him, keep most of everything in their name for unspecified “legal reasons.” Ken pays them out of his pocket. When they’re mad at him, as they often are, they threaten to kick him out once and for all. “Honey, don’t I know about family drama,” Teresa says. “We’re gonna be friends. That won’t happen when I live here. We’ll put a stop to that.”