Manufactured homes have been an essential part of affordable housing in the U.S. for many years. They offer an economical alternative for individuals and families who cannot afford traditional homes. However, the influx of private equity into this market has sparked concerns about significant increases in lot rents. These rent hikes have prompted residents, lawmakers, and industry experts to weigh in on how to balance affordability, market growth, and property improvements.

Why Lot Rents Are Increasing

Over the past few years, the dynamics of the manufactured housing industry have changed dramatically. Historically, lot rents in manufactured home communities (MHCs) were stable and affordable. However, recent data reveals a troubling trend: nationwide, lot rents rose by an average of 7.7% over the past year, marking the steepest annual increase on record. This was also the third consecutive year rents climbed by 5% or more.

The Sun Belt states, such as Arizona, have experienced some of the sharpest increases, but the impact isn’t limited to those regions. From Maine to Washington, mobile home residents are grappling with higher rents, which often outpace income growth. Much of this surge is tied to private equity firms purchasing manufactured home parks, seeking to capitalize on their potential profitability. These investors now own a significant portion of the market, a trend that has led to rent hikes and reduced affordability.

States Push for Rent Control to Protect Residents

In response to these rent increases, several states have introduced or passed rent control legislation aimed at manufactured home communities. New Jersey is a prominent example, with a proposed law to cap annual rent increases at 3%. The legislation has bipartisan support, and lawmakers expect it to pass by 2025.

Supporters argue that such laws are crucial to prevent exploitation, especially for seniors and low-income residents who are particularly vulnerable to sharp rent hikes. “These people need protection from being gouged unmercifully,” said Joe Sullivan, the executive director of the Manufactured Home Owners Association of New Jersey.

Pennsylvania has seen similar proposals, with lawmakers suggesting that lot rent increases should be tied to the consumer price index’s growth rate. However, these bills failed to pass before the state’s legislative session ended in 2023. Despite this setback, many believe the legislation will resurface in the future. Other states, including Michigan and Iowa, are also considering similar measures.

Private Equity and the Transformation of the Market

The ownership of manufactured home parks has shifted significantly over the years. Once dominated by local, family-owned businesses, these communities are now increasingly owned by large private equity firms. In 2020 and 2021, private equity firms accounted for 23% of manufactured home park purchases, up from 13% between 2017 and 2019.

This transition has brought both opportunities and challenges. While private investors bring capital that can be used for improvements, residents often face reduced services, higher rents, and less direct communication with park management. For example, in New Jersey’s Jackson Township, only one out of nine mobile home parks is still owned by a local operator. Residents in these parks have reported issues ranging from poorly maintained infrastructure to rents doubling in a short period.

The Role of Zoning Laws in Rising Rents

One of the root causes of rising lot rents is the limited supply of manufactured home communities. Strict zoning laws in many states make it difficult to build new parks or even place manufactured homes on private land. These restrictions have created a supply-demand imbalance that drives up rents.

Pennsylvania is a prime example of this challenge. Zoning restrictions are so prohibitive that, in some areas, even private property owners face significant hurdles in placing manufactured homes on their land. This resistance is partly fueled by outdated stereotypes about manufactured home residents, who are often portrayed as poor or uneducated. However, data shows that many residents are employed professionals raising families, and manufactured homes represent an appealing, affordable alternative to traditional housing.

Balancing Affordability, Improvements and Manufactured Homes

The debate over how to address rising lot rents has highlighted a need for balance. On one side, residents and lawmakers argue for stronger rent control measures to protect vulnerable populations from excessive hikes. On the other, real estate professionals caution that blanket rent controls could stifle necessary property improvements and deter investment.

Some rent control proposals, such as New Jersey’s, include provisions that allow park owners to request higher rent increases if they can demonstrate the need for capital improvements. However, critics argue that government officials may not have the expertise to make such decisions, and rigid laws could limit owners’ ability to adapt to rising costs, such as taxes and insurance.

Zoning reform may offer a solution that benefits both sides. By loosening restrictions and encouraging the development of more manufactured housing communities, policymakers could alleviate supply constraints and stabilize rents. This approach has received support from both advocates and industry leaders.

The Future of Manufactured Homes

Manufactured homes remain a vital part of the affordable housing market, providing shelter to over 22 million Americans. However, as private equity firms continue to invest in the sector, tensions between affordability and profitability are likely to persist.

The federal government has taken notice, with initiatives like the Biden administration’s $225 million program to boost manufactured housing supply and affordability. Yet, the outcome of these efforts remains uncertain, especially as the political landscape evolves.

In the meantime, residents, lawmakers, and industry leaders are navigating the challenges of this growing market. Whether through rent control, zoning reform, or other measures, the goal is to ensure that manufactured housing remains a viable, affordable option for the millions of Americans who depend on it.