Patriot's 2 Min Drive: The Affordable Housing Crisis
The affordable housing crisis and how Mobile Home Parks offer the most affordable solution to the needs of 20 million Americans.
Stagnating Wages vs. Rising Housing Costs:
Over the past six decades, housing costs have increased at an alarming rate compared to wages. While the median rent has gone up by 61% from 1960 to 2021, the median income of renter households only rose by a marginal 5%. This disparity is further exacerbated by the inflation rate, which erodes the purchasing power of salaries.
The United States has seen a 19.5% population increase since the year 2000. As the demand for affordable housing increases, without a proportional increase in supply (we dive into why supply is limited below), the availability of affordable housing is constrained, driving increases in asset values.
Urbanization & Rural Exodus:
There has been an ongoing influx of people into urban areas in search of better job opportunities and amenities. Urban populations have seen an almost 150% increase since 1960. This migration has led to an increased demand for housing in cities and suburbs. Urban housing supply has not kept pace with this demand, leading to a steep rise in rental and property prices in urban areas.
Rising Cost of New Construction:
Recent data from the U.S. Census Bureau shows construction costs went up by 17.5% year-over-year from 2020 to 2021, the largest spike in this data from year to year since 1970. 2021’s costs were also more than 23% higher than pre-pandemic 2019. This rise can be attributed to several factors, including regulatory barriers, labor shortages, the increasing cost of building materials, and global supply chain issues.
Limited Government Subsidies:
Federal housing assistance is unable to cater to the vast majority of those in need. Currently, only about 25% of eligible low-income households receive housing subsidies. The waiting lists for housing assistance are long, and in many cases, are closed due to overwhelming demand. Without sufficient governmental support, low-income families have to turn to the most affordable housing available, mobile home parks.
Currently, over 20.4 million renter households are cost-burdened, which means nearly 47.5% of all renters are spending more than 30% of their income on rent and utilities. This high expenditure on housing means that more and more households are turning to mobile home parks as a solution for their housing needs.
Limited Supply, Growing Demand:
The construction of new mobile home parks is extremely limited due to a combination of regulatory constraints and societal perceptions. One of the biggest challenges is the zoning restrictions set by local municipalities; zoning laws are either too strict or explicitly prohibitive for the development of mobile home parks. These restrictions stem from a prevalent “Not In My Back Yard” (NIMBY) sentiment. Many communities are opposed to mobile home parks, and this resistance makes it challenging for developers to get the necessary permits and approvals for constructing new parks.
Mobile Home Parks: A Feasible Solution
Approximately 20 million Americans live in mobile homes. The industry comprises over 44,000 communities, with a total value exceeding $3 trillion.
Unique Investment Opportunity
The constrained supply and rising demand have created a unique investment opportunity as existing mobile home parks become increasingly valuable and can yield significant returns. Please contact our investor relations team to learn more about our investments in Self-Storage and Mobile Home Parks via our Funds.
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