March 10, 2020
In many respects, it was the dysfunctional housing market that precipitated the financial crash 12 years ago. Reckless subprime lending in the States led to thousands of families losing their homes, with these bad debts then being sold on around the global financial markets. The long term human cost is still washing through the system with one in fifteen Americans now living in trailer parks (200,000 in the UK). Hard to believe that the money men are now circling these trailer parks and see them as the next big opportunity to squeeze even more profit out of housing. When America sneezes…
For a few years at the start of this century, Juan Nevarez tasted the American dream. Having moved a few miles across the border from Tijuana when he was nine-years old, his close-knit family of Mexican migrants slogged away to make a better life for themselves. They were working people: his dad was a welder, his mum worked in shops and Juan, after leaving school, built a small concrete-pumping business. They did not have much money, but they were content and the future looked bright.
Soon after the arrival of the new millennium, the family ploughed all their savings into a four-bedroom house in a nice neighbourhood in southern California. No deposit was required — banks wanted customers, everyone was buying property and prices were rising — but monthly payments were tight. They hoped to refinance after a year to ease the pressures, as promised by the salespeople, but somehow that never happened since the house was never worth enough for such a deal.
Then came the crash. Prices began to falter in 2006, then plummeted as panic set into property markets. Little did this family know their humble mortgage was the sort of sub-prime loan being passed around by sharks in the financial sector. Banks chopped up such loans and sold them in complex mortgage-backed packages to investors who thought they were buying safe products. Instead, these 100% mortgages, often flogged to low-income citizens, helped spark a financial contagion that is still resonating around the world today.
“We thought we were upgrading,” said Juan, 40. But the house that his family had bought so proudly for $500,000 went under the hammer at an auction for $225,000, losing them about $150,000 — money they had worked so hard to save in order to clamber onto the lower rungs of the property ladder. “We never knew that prices would collapse and we’d lose all our money. It was very difficult for us all.”
Today, Juan lives in the ‘Siesta’ trailer park in Imperial Beach, barely 10 miles but a world away from his birthplace on the other side of the border. He showed me his mobile home — white with a maroon stripe along the side — which sits among 103 spaces on the tidy five-acre site filled with rows of similar vehicles. One resident has been settled there for four decades while many others have spent years on the site. “I like it here,” said Juan, though he admitted it was cramped. “These parks are one of the last places where you can live in a good community. In my big house I never knew my neighbours, but here we all talk.”
His new home costs $650 a month. This is about one-third of average rental prices in Imperial Beach, where rents are rising fast and at a higher rate than the national average. Little wonder that amid a housing crisis that spans the United States, there are 22 million Americans — an astonishing one in 15 of the population — living in what is politely termed ‘manufactured housing’. Most own their trailers but rent the land beneath them. Some sites look like the dishevelled Hollywood stereotypes, filled with noisy families and tatty trailers, but many are neat and homely.
Trailer parks reflect affordability rather than mobility these days, with most residents earning under $50,000 a year. I visited another one near Los Angeles that looked like the sweetest suburbia, filled with lovingly-tended plants and even white picket fences. Yet as Juan’s story shows, they also reflect the gaping inequalities of the world’s richest nation — along with the continuing impact of a financial crisis that left many working people so embittered against elites, fuelling a sense of dislocation that led to Donald Trump’s election.
Increasingly, trailer parks reflect something more sinister as well: the rapacious nature of unchecked capitalism that sees the homes of poor people as an asset to be bled, rather than pockets of humanity that deserve protection. Private equity firms, hedge funds and rich speculators are muscling in on the parks, sensing higher returns than on many other property investments. They are buying out traditional ‘mom and pop’ operators — a state of affairs that alarmingly echoes the sub-prime crisis that forced many families from their homes. And it is sparking loud claims of exploitation as low-income tenants complain angrily of rising rents and reduced maintenance.
Many residents have been left terrified. They fear that if rising rents force them to move out, they might end up among the bedraggled armies of homeless people on the streets or, at best, squeezing into the homes of siblings or parents. Inevitably, this is becoming a hot political issue seized upon by progressives. Senator Elizabeth Warren, for instance, visited one site in Iowa where people were fighting a 70% hike in their rents after it was taken over by an investment firm. “They come into parks like this with a vacuum and see how much money they can take out,” said the Democratic presidential candidate.
Last year, the tranquillity of Siesta — which lies less than one mile from the Pacific waves — was shattered by the news that their owner was planning to sell the land for condominiums. “We were given a letter saying they wanted everyone to attend a meeting,” said Juan. “When we got to the meeting there was a lawyer who said the park was being sold and you guys must all leave. He said we had six to 12 months to get our stuff and go. He had no feeling about how this would affect our lives. No feeling for the people in wheelchairs, with families or the elderly people.”
They were offered relocation assistance, including $500 in costs. Yet while it is called a mobile home park, the average age of its trailers is 25 years old and many parks will not take a vehicle older than five years. New ones can cost $100,000 and fresh arrivals often face higher rents. “We were all so scared,” said Tricia Harrelson, 59, who has lived there more than two decades after moving from Boston due to her former husband’s military service. “Some people think everyone living in these parks are stupid, that they’re idiots, because they are lower class citizens. But it’s been like a family here.”
Harrelson — like many of those at the park — is on federal benefits, since she suffers severe health problems sparked by trauma. She faced two armed robberies in quick succession when working as a supervisor at a credit union. She told me her rent had surged $300 in seven years after rising just $50 over the previous 18 years, while also claiming the site had become run down prior to its proposed sale. “We wanted to fight back but didn’t know how to do it,” she said.
Juan decided to try. He organised a meeting and, to his surprise, 42 other residents turned up. “Everyone felt angry and the same way,” he said. “People were telling me I would be kicked out of the park but I thought I’d nothing to lose since we were going to be thrown out anyway.” They started to enlist support from local politicians, attending city hall meetings to press their case, and made enough noise that shortly before Christmas the owner’s plans for redevelopment were withdrawn.
We’ve won a battle but I do not think the war is over,” said Juan. I was not surprised when he told me later that he wants to see Bernie Sanders win the presidency for he thinks their struggle is symptomatic of important wider issues confronting the United States:
“Rich people are out of sync with the rest of the country. They should see that without the working class, the people in these parks, they would not be able to afford all the good things they possess. These finance firms want to put poor people out on the streets so they can replace them with middle-class properties. But if the rich woke up, they would see that we are not bad people just because we are poor.”
Many other residents on the site share his distaste for predatory capitalism — but some prefer an alternative brand of political populism. “I don’t like big corporations buying land and tearing down trailer parks where people live. I also don’t like what rich people do when they have money,” said Maria Hirneisen, 57, who has lived in Siesta for 22 years, having moved from New Jersey. But she is a fan of Donald Trump. “I like what he is doing. Trump does not care what people think. People wanted something different to the usual politics and he has stirred up a few dust clouds.”
To appreciate the scale of the US housing crisis, consider this finding from a survey last year, quoted in the Financial Times: median-priced homes are too expensive for average wage earners in three-quarters of the country. In Imperial Beach, the median sale price last year was more than $620,000. Meanwhile mobile home sites are often sitting in prime real estate locations; many started as housing for returning troops after the Second World War, and were built on the outskirts of towns and cities before becoming enveloped by urban sprawl over subsequent years. Thousands are situated near the sea, lakes or other desirable attractions.
Analysts believe the need for more affordable housing is increasing, especially among millennials and pensioners. It is estimated 10,000 Americans retire each day — half of them without savings and with average social security benefits of about $1,300 a month. Yet Mobile Home University, run by one of the biggest investors, advises how to boost profits in “the hottest arena in real estate” by raising rents and cutting back amenities. “With 20 per cent of Americans trying to live on $20,000 or less, the demand for mobile homes has never been higher — and the big winners are the owners of mobile home parks in which these customers reside.”
Frank Rolfe, the body’s founder, boasts that trailer parks have the highest yields in commercial property, as he churns out publicity promoting such investments. “One reason that mobile home parks have long held their value is the simple fact that virtually no city or town in the US will allow new parks to be built,” said one article. “Why? Nobody wants a mobile home park as a neighbour, and their vocal dislike eliminates any chance of political approval. In the entire United States, it is estimated that less than 10 new parks are built each year — below the number torn down for re-development.”
In a couple of states — South Carolina and New Mexico — mobile homes comprise about one in six housing units. The three biggest owners have more than 50,000 sites each, while private equity firms such as Blackstone and Carlyle and sovereign wealth funds have been snapping up sites — to the alarm of activist groups such as Manufactured Housing Action. “We exist to counteract predatory investor schemes,” said Kevin Borden, the executive director. “They usually increase rents and decrease maintenance. These people are making profits of 20 to 22 per cent from some of the poorest people in our country.”
Borden believes trailer parks are vital to national well-being — at a time when gentrification and rising house prices are driving low-income citizens from city centres. “If you look at our country’s housing situation you can see that we’ve not figured out a strategy since the 2008 crisis for people to have decent and affordable homes. Mobile home communities offer something good for all those people getting pushed out of urban areas.”
One man who shares his concerns is Qui Vuong, 57, who came to the US after the fall of Saigon and today lives in a community largely filled with elderly Vietnamese migrants, beside a Catholic church in Santa Ana. The sleek Mercedes parked by his three-bedroom home indicates a prosperous past. He tells me over coffee how he thrived in finance in Texas before costly heart surgery, followed by a promise to care for his terminally-ill partner, landed him in a Californian mobile home park.
“I had no concept of what a trailer park was because I could always afford homes, especially in Houston where the cost of living is so low,” said Vuong. “There is a stigma associated with them because they are for people who can’t afford houses. But these are not bad people, just people with limited resources or scaling down. Yet you seem to have no rights and no laws to protect you
During his time running pension funds he was at one point approached to invest in trailer parks. “They saw it as another source of excess returns to beat the market.” Now he is fighting to protect residents from price-gouging after seeing typical rents at his park rise from $600 to $800 in just four years. “People here are scared,” he said. “There are people on the final edge of the safety net for survival. If they face another $50 in rent, they must turn to their families for help.”
Vuong nurses ambitions to set up a fund to protect rather than exploit such places. “I think I’m in the right place for a reason,” he said. He is highly critical of the predatory owners of trailer parks. “They say it is the market and that it is capitalism but they are too stupid to see how it is hurting their own self-interest since it is simply not sustainable.”
Then this affable man takes a sip of his coffee before adding: “This shows how capitalism has lost its soul.” As I walked around the homes in his community, many with neat little gardens and wheels hidden by fake brick facades, it was hard to argue.