"Will mobile home parks be affected by Proposition 10?"

The answer is No.

Mobile home parks are not affected by by the Costra-Hawkins Rental Housing Act.  However, rent control for mobile home parks already exists in many California jurisdictions. And we expect to see more restrictions on large mobile home park rent increases, but not because of voters.

The State of California says over 5% of the state's population lives in a mobile home or manufactured home. A large percentage of those are in land lease communities, aka mobile home parks. The home owner owns the home and leases the lot under a lease agreement with the park owner. Lease terms vary greatly across California from ranging form month to month agreements to year to year leases. Manufactured housing represents a significant portion of California's affordable housing inventory, but like all California housing, more desirable locations have higher values.  However, the unique nature of land lease manufactured home ownership as a significant component of necessary California affordable housing results in different market landscape than real estate ownership. 


The two arguments we hear are new rent control measures will either save home owners or that without significant rent increases mobile home park owners will derelict mobile home parks in the long run. Both are extreme positions on the issue. While this issue will not be on the ballot, municipalities and most industry professionals tend to support long term reasonable and dependable rents.

The greater question is how does land lease cost impact home value, home buyer and home owner investment and sustainability of mobile home parks as a long term part of California's affordable housing solution. What about renewal and replacement of an aging inventory? What is the value of a lease site?

Dependable mobile home park rents create dependable markets.

What is the value of a manufactured home in a park? It's actually a combination of the home value and the value of the site and of course, location, location, location. "Wait, what do you mean value of the site. You don't own it. You lease it." That's correct, but California manufactured home parks are full and there is demand for lots designated for replacement. Retailers compete for them and will often pay a premium for an old mobile home just so it can be demolished and replaced. The cost of manufactured home construction is inexpensive and the demand for housing is strong. In California, it's very common to see land lease manufactured homes appreciate in value. And not just in rent control parks, this happens in market based rent parks.

The best performing manufactured home markets where home sales price exceed replacement cost all have one thing in common, reasonable and dependable rents. There are thousands of examples across the state where the leased site value is easily estimated to be $100,000 or more. Crazy? Welcome to California. One rule of thumb in lending is that $100 in debt is the equivalent of $10,000 in qualifying ability for the average buyer. The same formula seems to work for valuation. Much more goes into sound valuation; however, the relationship between home price and monthly space rent is certainly inverse. Higher space rents result in lower home prices.

What about renewal?

Many California mobile home parks were built in the 1970s. In most markets the renewal process has been consistent.  One of the confounding economies of very low and very high lot rent communities is the lack of renewal. If lot rents are so low that home prices are inflated, the cost of site acquisition never supports the cost of a new home. The reverse circumstance is just as bad when the lot rent is excessively above market. When lot rents are too high, new home sales don't make sense. 

Mobile home park rent control may not be legislated the same as real estate; however, municipality sentiment seems to be falling on the side of the home owner. Recently the LA County Supervisors approved a moratorium on short term rentals and are discussing permanent rent controls for mobile home parks. Both the cities of San Jose and Sunnyvale have rent control discussions on their agenda. Challenges to rent control have held in San Juan Capistrano and in Carson in well publicized cases.

We join the California Association of Realtors® and do not support Proposition 10. We also don't support elimination of existing rent control provisions for mobile home parks.. Loss of equity would be devastating to home owners that purchased under assumption of rent control provisions. We do support long term rent stability and believe park owners are entitled to reasonable profits. We understand it's often a difficult balance.  We are not fans of legislation but acknowledge the need to protect affordable home ownership and preserve home values. 


What is the value of your manufactured home?