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The Subprime Mortgage Crisis – A Boon For Mobilehome Owners? PDF Print E-mail


The PBS news story was about Hemet, California in Riverside County. A former farming and retirement community, Hemet became a “boom” town in recent years. Its population increased by 20% over the past seven years. Low price homes and easy credit attracted many homebuyers to Hemet. Between 2000 and 2005, home values doubled. Many new homeowners used their homes as “ATM machines,” They refinanced their houses and the local economy boomed as they bought cars, boats, RV’s, etc. Everyone thought, “home values will keep going up – we’ll sell the home later, and get the money back then.”

However, over the past year or so, things haven’t worked out that way. The subprime mortgage crisis is largely to blame. Home sales in Hemet are at their lowest level in a decade. Home values have dropped - in some cases as much as 25%. The number of local foreclosures tripled in the past year. A realtor interviewed by PBS said that some housing subdivisions have turned into “ghost towns.”

Now you say, what does all this mean to me? Well, here’s the interesting “twist” I mentioned earlier. PBS went on to say that sellers of mobilehomes were among the few groups benefiting from the subprime mortgage crisis. That’s because many owners (of stick-built homes) who are now “in over their heads” are downsizing and moving to mobilehome parks.

Obviously, this crisis is affecting different people in different ways…

1. If you own a “stick-built” home, but cannot afford your new, higher mortgage payments, you have a problem. The subprime crisis is affecting you very directly. You may need to sell your home and “downsize.” And, you may be thinking about moving into a mobilehome.

2. If you are a mobilehome owner looking to sell, the marketability of your home has increased. Those “downsizers” are looking for a place to live, and you are selling a unit of “affordable housing.” You are especially fortunate if you own a mobilehome in or near a former “boom” town.

By the way, if you live in a “space-rent” park, your park’s owner will benefit as well. More homebuyers means fewer vacancies and more rental income for your “investor” park owner.

3. Do you live in a “resident owned” park? That is, a mobilehome park owned by an association made up of you and your neighbors? If you do, you already know that your park is an affordable housing business. With the high price of housing in California, that’s a good business to be in. Mobilehome buyers prefer to purchase homes in resident owned parks - for financial security, stable monthly costs and an ownership interest in the land. “Downsizers” want to live in a park like yours. Your situation will be affected positively by the subprime mortgage crisis.

4. What if your resident group doesn’t own the park where you live, but is thinking about buying it? The “subprime” mortgage situation should not stop you from moving forward with your plan. There is mortgage money “out there” for resident groups seeking to buy their parks. The commercial lenders who would make a mortgage loan to your group are not “subprime” lenders. The impact of this crisis on them has been minimal. And (to your benefit) commercial mortgage interest rates are still low. If your homeowners’ group buys the park where you live, then you will be in the affordable housing business. And in California - in good economic times or bad - that is a great business indeed.

id Loop is a real estate attorney and past homeowners’ association president at resident-owned Aptos Knoll Park, near Santa Cruz. You can ask him questions by sending an e-mail to This e-mail address is being protected from spambots. You need JavaScript enabled to view it This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or calling 831-688-1293.
Last Updated on Friday, 05 March 2010 21:41
 
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