David R. Williams was a formidable force in U.S. architecture and was hired by the U.S. government in 1941 to design and build what may serve as the first true large-scale mobile home/modular park. It was called Avion Village and was located on a vacant tract of land near Dallas. It was needed to provide housing for 300 households that would be working at a defense plant nearby. It's still there and is located at 800 Skyline Road in Grand Prairie.
We've seen other landmark mobile home parks in west Dallas, including the one built by Stanley Marcus (of Neiman Marcus fame) that we did due diligence on back in the 1990s (it no longer exists). Across America there are very notable mobile home parks, including ones built by such celebrities as Bing Cosbie, Lucille Ball, and many others. But what makes Avion Village interesting is both the age as well as the fact that we actually know what the lot rent was in 1941. And that monthly cost was $25.
Now $25 may not sound like a lot in today's world (with Bidenomics you may soon see a loaf of bread approaching that price) but let's inflation-adjust that number:
$25 in 1941 = $525 in 2024
The average mobile home park lot rent in 2024 is around $300 per month. Yet the going lot rent in 1941 equates to $525 per month when adjusted for inflation. That's almost 50% off. Why? There are several reasons:
- Mom-and-pop owners never raised rents in-line with inflation. Some call it "mom-and-pop quantitative easing". While inflation raged thoughout the era of Jimmy Carter (greater than 10% annually) moms and pops did nothing. Basically, the owners of mobile home parks only tracked 50% of the rate of inflation each year. They essentially got lost in the simple fact that they were falling behind in inflation-adjusted dollars.
- Since there has been no meaningful number of new parks built since the 1970s there was never a reminder of what rents should be. With apartments there is a constant stream of new construction, and that reminds all owners of what apartments really need to charge. Then the Class B and Class C buildings get in line behind those new-build rents. But since cities have not allowed new park construction since the 1970s there was never any such reminder for owners.
- Mom and pop owners forgot that they were a business. When you talk to many mom-and-pop owners you realize that many did not view their parks as actual businesses but instead just a side-hustle. That's because many of them had day jobs and saw their mobile home parks kind of just as a hobby – they never took them seriously.
The bottom line is that mobile home park lot rents are horribly underpriced. In an America in which the average single-family home is $400,000 and the average apartment rent is $2,000 per month, a $300 lot rent is laughable. If you want evidence of this, simply consider the fact that 1941 lot rents were – in today's dollars – roughly twice as much. And that's absurd. As more mom-and-pop owners pass the baton to professional investors, this number will rise substantially. It needs to . Rents would have to double just to hit the 1941 threshold.