Two Ends of the Housing Crisis

Both candidates, and most people, are concerned about housing costs, and how to fix the problem. The Convicted Felon is convinced that “mass deportations” will solve the housing problem.

OF NOTE: THIS WILL NOT WORK. IT WILL ACTUALLY DECREASE HOUSING STOCK BECAUSE THINK ABOUT WHO ACTUALLY PHYSICALLY BUILDS HOUSES!
But I digress.

Vice President Harris wants to build 3 million new housing units. This is a great start. Good for having places to live, good for the economy.

But there’s a lot else to consider, and no, I’m not going off on my middle-housing rant like I usually do.

First, let’s start at the low end, and talk about mobile homes. About 30 years ago, friends of mine bought a mobile home. I had never been in one, and had all sorts of pre-conceived notions. I actually asked if in buying it, they took out a mortgage or a car loan. A few months after they bought, I went to visit, and it was very different from what I had imagined. There was a large living room, an eat-in kitchen, a utility room, 3 bedrooms, and 2 bathrooms (one of which had a spectacular bathtub). It was surprising to me, it was a REAL HOME. It was located in a park where there was a swimming pool, a kids’ playground, and a small building where people could hold parties and meetings. The homes were arranged on “lanes”, as opposed to being on top of one another. There were a lot of trees and gardens. All very pleasant.

Most, not all, people who live in mobile homes are at the lower end of the income spectrum. In many cases, this is what they can afford since mobile homes are far less expensive than other homes. According to the Manufactured Housing Institute, 11% of all single family house starts are mobile homes, and buyers have a median household income of $35,000 (2023 data).

There is a great split between mobile homes produced prior to 1976, and more recent ones, as laws were passed to make the homes far more secure against weather disasters. The HUD Code of 1976 regulates home design and construction, strength and durability, fire resistance and energy efficiency. The code was updated in the 1990’s to enhance energy efficiency and wind resistance. Of course, it depends on how they are installed on a site, and, well, it doesn’t always work out well. Like recently, due to Helene and Milton. Below is a map (source) that shows mobile homes by county. The statistics are disheartening, in terms of the number of units destroyed.

Most mobile home dwellers do not own their property, they rent lots from parks. After a disaster, like a hurricane, to rebuild, the park owner must raise the lots above the flood line and make other improvements, meaning many of them sell to developers who can make a lot more money on larger, stick-built houses on the same land plat. This adds to the misery of the people who have lost their homes, and now have nowhere to go.

This is not what happens in Maine, where last year a law was passed forcing mobile park owners to provide advance notice of an intent to sell, and allow the residents of the park to have the opportunity to buy the park. The first park was just bought by residents last week. All the deets here. (That should avoid the paywall, let me know if it didn’t.)

In looking at the potential solutions for the housing problem, mobile home parks where the residents own the land, the homes themselves are above flood stage, and are well constructed and installed, are a great idea. Along with that, let’s briefly mention tiny house communities where each “house” has a living area, a bedroom, a bathroom, and storage. (In some, not all communities, the houses also have kitchens.) The communities normally have a large communal kitchen, outdoor facilities, along with social services. These are temporary solutions for people transitioning from being unhoused. I’m a fan.

So we have some ideas of how to house some people, but to understand the real problem, we need to look at the other end of the spectrum. Billy Joel is selling one of his New York houses: it’s on the market for $49.9 million. He is moving for two reasons: first, the almost $600,000 in annual taxes (yes, you read that right) and because his young daughters are in school in another state. Click the link for some pix.

WOW! How many people could be housed on the 26 acres of Joel’s property for $50 million?

Why won’t the land be repurposed for housing regular people? That’s the other end of the spectrum of housing costs. It’s not just the NUMBER of units, but what people will pay for them.

From Politico:

In March, federal authorities seized a Manhattan luxury apartment owned by the daughter of Denis Sassou Nguesso, longtime ruler of the Republic of the Congo in central Africa. The forfeiture complaint in U.S. District Court charges that the funds used to buy the $7 million apartment, which overlooks Central Park, originated from “misappropriation, theft, or embezzlement” from the Congo treasury, and traces the layers of shell companies through which the stolen money was laundered.

Press accounts have highlighted the famous name on the outside of the apartment building: Trump International Hotel and Tower. But they have missed the bigger story.

There has been an enormous influx of dirty money from overseas into high-end residential properties in major cities like New York, Los Angeles and Miami. Some of this money comes from Africa, which has lost more than $600 billion to illicit capital flight since the turn of the century. More comes from Latin America, Asia, Eastern Europe and the Middle East.

Once you’ve got the 1% willing to spend all sorts of (often stolen) money on property, it makes it hard for regular people to compete. We see this not just about the mobile home parks that won’t be rebuilt, and the high end properties, but also the purchase of single family homes by corporations who then rent them out, further decreasing the amount of housing stock available for regular buyers.

Not to mention people “buying down”. Let’s pretend that I want to buy a $500,000 house in a certain neighborhood. I am outbid by a developer who is willing to pay $600,000. So I go look at $400,000 houses in a nearby neighborhood, where I can outbid people who cannot go about $400,000. Then THOSE buyers go look at $300,000 house neighborhoods. And in reality, this actually starts with the people who compete to buy $50 million houses. It all just keeps squeezing DOWN, and causes sellers to hold out for more.

This leads to problems beyond people “buying down”. For example, it also leads to empty houses. There are 2 in my neighborhood. In both cases, the sellers insisted on purchase prices substantially about what the market will bear. I spoke with one of the real estate agents, and mentioned that she was at least $55,000 above what she could get. She told me I was wrong. That house has been empty for about 2 months. The other (which listed for even more, and is smaller) has been empty since the spring. You can talk all you want about buyers paying “what the market will bear” but in solidly middle-class neighborhoods like mine, buyers need mortgages they can’t pay all cash, and the banks won’t lend above the value of the house.

From a political perspective - Vice President Harris is on the right track with a plan to build houses. Hopefully, within the actual legislation will be caveats that preclude selling the houses to companies, and only to individual buyers who are prohibited from renting out the houses for a minimum of 10 years. In addition, I hope the legislation looks at ways of floating construction bonds backed by the counties/cities where the houses are being built. This will enable a lower interest rate, and provide the kind of public-private partnership that has more up-sides than down-sides.

Remember all this when you vote, and when you talk to indecisive voters!