Why There Is No Federal Government Solution To Affordable Housing

It’s election season, and there are wild claims hitting the media of how the Federal government can be used to create affordable housing. In this Mobile Home Park Mastery podcast we’re going to burst the bubble on these reckless claims and explore the two key solutions that nobody cares to talk about.

What is Mobile Home Park Mastery?

Welcome to the Mobile Home Park Mastery Podcast where you will learn how to identify, evaluate, negotiate, perform due diligence on, finance, turn-around and operate mobile home parks! Your host is Frank Rolfe, the 5th largest mobile home park owner in the United State with his partner Dave Reynolds. Together, they also own and operate Mobile Home University, the leading educational website for both new and experienced mobile home park investors!

We have a very predictable cycle every four years in America when there's a lot of false claims that come to light as part of the presidential election season. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're gonna be talking about one of the most audacious bits of claims that are coming right now as part of the presidential election, and that is concerning the federal government somehow creating affordable housing.

Now, politicians often use the whole narrative of affordable housing because obviously all Americans have to have some form of housing, and the American dream has always been home ownership. So when you promise people more and greater availability of cheap housing, it's clearly a smart political move. It gets people thinking, oh, I wanna vote for this candidate because they're the one who will get me a home for a lot less money. But the problem is pretty much all of it is a lie.

Now, why is that? Well, let's not forget that recently the Supreme Court reversed what is called the Chevron Doctrine. And what the Chevron Doctrine did was it allowed the federal government and its agencies to pretty much create whatever laws they wanted without any oversight from Congress. So the way it would work is Congress would say, okay, we're gonna do X at a 5,000 foot macro elevation. And then the government agency would come up with whatever rules and regulations it wanted. But there was no oversight. There was no one saying, wait a minute, that's wrong. That law is stupid. That isn't going to work. That's unfair. But they got away with it anyway 'cause decades ago, the Supreme Court affirmed this concept, and even though everyone knew it was always wrong, it finally has taken all these decades to get the thing overturned.

And what it means is when the federal government says something going forward, it doesn't have a lot of weight. It really makes the federal government much less relevant. Even the laws we have right now concerning such groups as OSHA or even HUD, those are all be litigated now because under the Chevron Doctrine reversal, it gives everyone the ability to file a suit to undo whatever federal regulations have already been made.

So going forward, it's very unlikely you'll see the federal government really ever attain much again as far as things that they want to mandate upon Americans, because everything will be litigated. I was talking to someone who's fairly well known figure at one of our state manufactured housing associations recently, and they thought going forward, it will take probably about a decade for most things to filter the way through the court system to ever take effect. So when you promise something today, and it will take 10 years to come out the other end, it doesn't really have very much weight.

So that's the very first problem with this whole concept of the federal government mandating affordable housing. But yet there are other, and perhaps even bigger problems in that with it. Now, let's first also remember that when we talk about affordable housing, true affordable housing is not subsidized. So all those apartments out there that are under the program known as Section 8, those are not affordable apartments. Those are apartments in which it's affordable to the people who live in them, but the taxpayers are paying the burden.

So the government can probably expand those Section 8 programs. They might need to because a lot of Americans, they can't afford to live in a modern world. But we're not really talking about that tranche of the American population here, because even though, who knows, they might ultimately litigate the entire Section 8 concept. Most people dream and desire is not to live in a Section 8 apartment.

So when we talk about affordable housing, what we're really talking about is that, the word house, home, a detached dwelling with the yard, that's what Americans truly seek. Most Americans are not looking for, some call it, multifamily shoulder to shoulder existence. And a lot of these discussions and things that are being thrown out in this four year cycle of the presidential election are perhaps more audacious than those of the past.

Let's just take them apart one by one. The first one is the claim that one of the candidates is making that they will give a $25,000 federal subsidy to every first time home buyer. Well, that's not going to work. No one can truly afford it. That's not going to really get you anywhere anyway, that $25,000 first payment is not going to get you in a position to buy a home because what's lacking is not really the down payment. What's lacking is people don't earn enough money to meet the current $400,000 average home and its mortgage, so that program really isn't going to work.

And then these concepts of having tax incentives for builder to build starter homes and tax incentives to build cheaper homes. Well, tax incentives are all fine and good, but you only have tax if you make profit. So that isn't going to really sway anything one way or the other. If there was money in those first time starter homes, people would already build them. And the taxed situation is not going to sway them one way or the other to build or not to build. And then there's this concept of repurposing federal land to build houses. Well, the problem is that that federal land is in mostly the worst parts of almost every city in America. So I don't think people are gonna wanna live in those areas where there is federal land and then a whole lot of federal land is out in the middle of nowhere.

So again, I don't think that's really a workable concept. And then you have the bigger problem, which is that all of these various things that are tossed about, those are all reliant on getting them passed through Congress. And there is absolutely no indication at this point that any political party is going to have both the House and the Senate and the presidency all at the same time. And if it were to occur, the person who is mostly spreading these wild claims on affordable housing in the federal government, would certainly not be the party that would have that power. So unless one group was able to control everything at one time, which hasn't happened in quite a long time, then none of these proposals would ever make it through Congress anyway. So saying them over and over is really just a waste of time.

You'll never get 'em approved. And if they're not approved, well, there's no point in even talking about them, right? But then it begs the question, is there anything that could be done to foster more affordable housing in America? And by affordable housing, I'm again talking the concept of a detached dwelling on a yard. And here would be three observations I would have that don't get much discussion because they're not really politically correct and nobody cares much for them, but here they are anyway.

Number one, you've gotta convince people who live in expensive cities that they cannot afford to live in to move, they need to go somewhere else. I'm endlessly amazed by the articles in which the people who live in very expensive cities and expensive mobile home parks with expensive lot rents, for example, that they can't afford to pay it. And they're demanding a solution where they can still live in that very expensive market in a more affordable way. And the answer is, you can't.

So if you've retired into San Francisco, which has among the highest housing prices in America, my first observation on growing affordable housing is for people to move to less expensive areas. Particularly if you're in retirement and no longer relying on a job, it would make a whole lot more sense if you lived, for example, in New York City to move to Hot Springs, Arkansas. It's got nicer scenery, more fun things to do there, healthier fun things to do. There are free things to do there, and the housing is a fraction of that cost. When people talk about affordable housing, they seem to always want it to be affordable housing in the markets they already live in. But we're gonna have to see some sizable population shifts. People are going to have to abandon the idea of staying in those same cities that they've lived in that have grown so outrageously expensive, and they're gonna go have to move to less expensive areas.

So that's one big way to achieve affordable housing is for the population to move from expensive areas to less expensive areas. Yet no one ever really wants to talk about that. Also, you're going to have to have people doing farther commutes. Look at the fact right now that you've got 60 million Americans living on 97% of the landmass and 240 million Americans who live on 3% of the landmass. That is the statistic.

Now why is that? Well, it's because most Americans want to live in the big city. They feel in the big city, they have more access to fun things to do, shopping and movies and things like that. But there'll have to be a trade off with people's aspirations of what they're going to find near their home and what they can afford.

Now, we've always been big fans of the concept of moving to small towns. I live in a small town in Missouri. Dale lives in a small town in Colorado. Those towns are what we now call exurbs, the ring beyond the suburb. And when you live in an exurb, you can still get to the hospital and you can still get to Walmart, but you may have to drive an hour to do it. And people don't much like to have a two hour commute, but they may have to accept it and start doing things they don't like to do. Right now in most cities, if you were to drive an hour out of that city, you can find housing that is a fraction of the cost of what you find in the urban core. If you drive into the exurbs, you can find things that are probably 50% of the price of the suburbs and the suburbs are probably 50% off from the urban center.

So Americans are gonna have to be more accepting in driving further out. That's another solution to affordable housing. And then finally, and this is the most politically incorrect, but I can say it because I'm a baby boomer, is we have to wait it out for baby boomers to move outta their homes. And they'll move outta their homes as natural byproduct of age and move into assisted living in nursing homes, or of course, even pass away because that's what the older generation typically does. I had a class on this very topic back at Stanford back when I was an economics major. It was a class that became very much of a political liability for Stanford. And the professor who taught it was later asked to not teach it anymore. It was taught by Victor Fuchs, the guy that wrote the economics textbooks back in that era.

And it was a class all about the fact, in his opinion, that there would be a period when America wasn't gonna be dysfunctional because of the weight of propping up the baby boomers, which back when I had the class back in the late '70s, early '80s, the baby boomers at that point were young, so it wasn't that big a deal, but he saw it coming. He saw a point where we would have much fewer workers having to pay those social security and health payments on the boomers and we put a real strain on everything.

And in the class, he taught us that basically we'd all have to suffer through that era, and we wouldn't see things really improve until the boomers basically started to die off. And that, again, is part of the affordable housing solution. People complain that boomers are not leaving their homes like they used to.

Well, that's probably 'cause they're living longer than they used to and they're healthier than they used to. But at some point, as a biological clock keeps ticking, more than likely that supply of homes will once again hit the market, and that will also make prices go down. The bottom line to it is that we live in a free market system, that's always worked best for us. That's part of capitalism. But no federal mandate is going to, in any possible way, create more affordable housing. It's utter nonsense. Don't buy it for a minute. This is Frank Rolfe from the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.