3 mobile home parks hit market, putting spotlight on overlooked segment of CT’s undersupplied housing sector

The potential sale of three mobile home parks in Connecticut, recently put on the market for $13.3 million, has thrown a spotlight on an under-considered housing sector in the state.

“Typically, these don’t come up for sale very often. Most of them are family held,” said Peter Gray, president of Stamford-based Pyramid Real Estate Group, which has put the parks on the market.

Image

Peter Gray

It’s a sector that — while small — is changing through consolidation, and is also facing renewed interest as the state continues to struggle with an affordable housing crisis. At the same time, rising land values and rents are creating new activism among mobile home owners.

Pyramid has owned the parks it’s selling, two in Branford and one in Southington, for more than a decade, but Gray says he’s trying to rebalance his company’s entire real estate portfolio to include more out-of-state holdings.

In addition to the mobile home parks, his company also owns other types of commercial properties, including retail and office, and provides leasing, property management and construction services.

“We are looking to add in other markets, including Florida and Texas and Georgia,” he said. “It’s very important to diversify and when you have too heavy of a concentration in any one submarket, there’s risk associated with that.”

Between them, the parks have spots for 150 mobile homes. Gray says Pyramid will only sell the three as a package, and only as a cash sale.

“It’s such a great business model that you’re renting the land and that’s it,” he said. “There’s no responsibility. As a landlord it’s so much better than owning an apartment building.”

The landscape

There are some 200 mobile home parks across Connecticut, with around 10,000 homes, which represents less than 1% of the state’s total housing stock. The vast majority operate on a land-rent model.

The park owner owns the land and the basic amenities, including roads and septic systems, and rents lots to homeowners who buy a manufactured home to site there.

Most mobile home parks were built in the 1950s through 1970s, and some are beginning to suffer from a lack of investment to upgrade aging infrastructure.

But it’s the sheer affordability of manufactured homes that makes the sector significant beyond its scale.

Image

Marcus Smith

“The average price of the manufactured home that comes through our programs is about $114,000,” said Marcus Smith, director of research, marketing and outreach for the Connecticut Housing Finance Authority (CHFA), the quasi-public agency that offers help for Connecticut residents to get on the housing ladder.

By contrast, the average purchase price for a first-time homebuyer applying for a traditionally built home in the state is $280,000.

“In the affordable housing space, mobile manufactured homes represent a really low-cost, affordable, attainable homeownership option for a lot of folks,” said Smith. “Especially in Connecticut with the rising home values, for folks who want to have a little more control over their space and their housing, it’s a good option for them to have.”

That’s prompted CHFA to revamp its programs in recent years to try to expand lending in the manufactured home market, where Smith says, there is a need for alternatives.

“It’s not unusual for the owner of a mobile home to have a double-digit interest rate,” he said. “I think a lot of times because of the way that mobile homes are viewed, they’re not seen as traditional housing types by a lot of lending agencies — they’re seen more like a car loan.”

That’s because, typically, manufactured homes depreciate in value over time, rather than appreciate as a traditional home would.

CHFA has rolled out lower interest rates for mobile home applicants both for first-time loans and a refinancing program, and has also just authorized 100% loan-to-value packages, eliminating the need for a down payment.

“Going into next year with these changes in hand we’ll be doing a lot more marketing, a lot of promotion to make sure that there’s an awareness of these changes, and hopefully we’ll be able to support more,” he said.

Private equity investment

Another program recently rolled out by CHFA, but so far unused, is a park acquisition lending program, aimed at residents who want to band together to literally buy the land their homes are on.

That reflects a recent change in Connecticut law, which — responding to a wave of consolidation in the sector — now gives residents the right of first refusal when a park goes up for sale.

The very existence of the statute reflects the wider changes that are happening in the industry, which has begun to attract interest from private equity investors.

“Out-of-state ownership often increases rents steadily once they take over,” said Dave Delohery, president of the Connecticut Manufactured Homeowner’s Alliance.

Delohery and his wife bought a mobile home in 2012 as a plan for retirement. The park where their home is sited was owned by Jensen, a Southington-based company. But in 2019, Jensen sold all of its Connecticut holdings to Michigan-based Sun Communities, the nation’s second-largest mobile home park operator.

He says since then, his land rents have increased around 30%, and Delohery has embarked on a new career organizing mobile home owners.

“We’re a grassroots organization,” he said. “When people get a notice that their park is selling, or their rents are going up, they tend to become more motivated to participate.”

Last year, a class action lawsuit was filed in Illinois on behalf of mobile home owners, alleging a group of park owners colluded to raise lot prices.

Just three parks in Connecticut — in Colchester, Milford and Danbury — are resident-owned, representing perhaps 200 homeowners, and so far none have been acquired under the new right-of-first-refusal law.

But Delohery says that law could still be key in effecting change.

“The states across New England that have had mobile home park right-of-refusal legislation on the books for between 20 and 30 years, generally between 20% and 30% of the parks are resident-owned,” he said.

‘Younger people are moving in’

Image

Mark Asnes

While big companies see opportunities for investment and profit here, the existing Connecticut market continues to be dominated by small-scale owners, and also isn’t likely to expand in any significant way in the near future, according to Mark Asnes of Freehold Real Estate in Norwich.

He is the president of the Connecticut Manufactured Housing Association. He’s also, along with Delohery, a board member on the state of Connecticut’s Advisory Council on Manufactured Housing.

Asnes says as home prices in Connecticut continue to rise, he’s seeing new trends in the type of consumer who’s in the market for a mobile home.

“It definitely used to be an older downsizing population, or people on fixed incomes,” he said. “What we’re seeing is that younger people are moving in and buying these homes.”

He owns and operates communities in Connecticut, Massachusetts, Rhode Island and Ohio, and he’s recently achieved the almost impossible by getting permission to create a new mobile home park in Waterford.

It took more than two years to get approvals to begin construction on the park, which was only approved under the state’s 8-30g affordable housing statute. Even as construction begins, the park is already the target of lawsuits from abutting property owners.

“Our specific industry has tried very hard to shed the trailer-park moniker,” Asnes said. “The ‘not-in-my-backyard’ has followed us so strongly that most of the towns in Connecticut just don’t want a new manufactured home community.”

In his advisory role, Asnes has fought hard against additional state regulation like rent caps, and says the state’s park owners could do with extra support like financing to upgrade aging infrastructure.

“If you keep whittling my ability to earn a living and provide safe, affordable housing for people, which is our sole purpose in life, if you keep chipping away at it, you end up with distressed properties,” he said. “When you get distressed properties, you end up selling them to private equity.”