going from homeowner to homeless by losing the land under your home

How the government helps we allow investors buy mobile home parks, raise rent and evict people

Money is tight for Mary Hunt. She often has to decide which bills to pay on time — heat, her car loan, the phone bill. But she’s been able to scrape by for more than 30 years, living in a mobile home park in Swartz Creek, Mich.

She owns her home outright. But she needs to pay monthly “lot rent” to the park for the little patch of land that it sits on. And the managers of the park, a couple named Stan and Nancy, used to live right here.

She is not homeless but landless…she owns her home but the land is a market-rate commodity, in the hands of investors, not the community or a trust controlled by the people who live on it. But she may be homeless soon, losing both her home as a place to live and the value of it as an investment. The value of the land is more than the value of anything built or kept on it.

But there’s something else at play here, too — when mobile home park investors like Havenpark put the squeeze on residents like Hunt, they’re getting help from an unlikely source: federally backed companies with a core mission of helping to make homeownership affordable.

“When private investors come to buy parks, [they] raise the rent, sometimes 20, sometimes 50, sometimes 70%” says economist George McCarthy, president of the nonprofit Lincoln Institute of Land Policy.

And, he says — what’s really troubling to him — is that the government is basically turbocharging this trend.

That’s right: we are enabling this system. From subsidized home ownership and tax deductible mortgage interest to this ripoff, we allow land to be controlled and sold at ever-higher prices to those who can afford it and are willing to turn it into an investment.

Several industry insiders tell NPR that this is the way it works: When a company raises the rents and fees in a park, that increases the cash flow and makes the park more valuable on paper. So the company can then borrow more money against the property.

This is essentially the argument I have been making, that the rental value of land is cash flow that can be borrowed against by a city to fund needed development or services with taxing income or commercial activity through sales taxes. Recall the Mercer Megablock project, with the $1+ Billion dollars in ground rent offered that Seattle’s city council rejected, settling for $150 million. Now that $1B wouldn’t be paid upfront, but over time, 99 years to be exact. But that could be annualized to about $12 million a year…for one property, about $4 million per acre. Consider that many of our wealthiest neighbors don’t need to qualify for a mortgage using income from labor but by using their wealth in stock or land as a collateral. Why can’t a city do the same?