The Baker House Newsletter Issue IV
The Most Affordable Housing Nobody Is Building
America is short millions of attainable homes, and the communities that provide them at the lowest cost are aging, family-owned, and nearly impossible to replace. What the numbers show, what to look for, and where the risks are.
THE LEAD
Manufactured Housing Communities
This week’s subject is the least expensive form of homeownership in the country. In a manufactured housing community, residents own their homes and rent the land underneath, a pad with utility hookups, typically alongside 15 to several hundred neighbors. There are roughly 44,000 of these land-lease communities in the U.S., and about 40 percent of manufactured homeowners rent their lot, per HUD. Most communities are still owned by the families who built them decades ago.
The affordability gap is not subtle. A new manufactured home averaged $115,557 in 2025, per the Manufactured Housing Institute’s industry data, while the median existing site-built home sold for $410,200, per the National Association of Realtors. Factory construction runs about $85 per square foot against roughly $164 site-built. For a large share of American households, this is the only new housing the math allows.
Supply tells the other half. New community development remains constrained by local siting and zoning approval, per Northmarq’s 2026 outlook, which keeps pad vacancy scarce nationally. Most towns will not approve a new community, which means the existing ones cannot be replicated at any reasonable cost. Scarce, essential, and mostly family-owned: the same combination this series keeps finding, applied this time to housing itself.
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CHART
Source: Manufactured Housing Institute. National averages; excludes land, foundation, and site work.
THE TURN
Why does nobody build them? Zoning. Most municipalities exclude new manufactured housing communities outright or make approval so difficult that developers stop trying, a stigma written into land-use codes decades ago. Policy is slowly moving the other way: HUD now runs a dedicated preservation program for these communities, and industry analysts describe the sector as a central tool in the national affordability toolkit. The housing is essential. The supply is fixed. That tension defines the category.
The ownership structure is what makes these communities different from any rental asset in this series. Residents own their homes, and moving one costs thousands of dollars when it is possible at all, so occupancy is remarkably stable through cycles. That stability is the strength of the asset, and it is also a responsibility, because the owner of the land holds real pricing power over people with few alternatives. How that power is used is the difference between a durable community business and a reputation problem, and it shapes everything below.
The most affordable home in America already exists. The land under it is the scarce part.
THE FRAME
One Property, Two Ways to See It
| WHAT THE MARKET SEES | WHAT A DISCIPLINED BUYER SEES |
|---|---|
| An aging trailer park | Housing stock that cannot be replicated under current zoning |
| Small lot rents, dated common areas | Residents who own their homes and stay for decades |
| A tired family operation | Income upside that never touches anyone’s rent |
WHAT TO LOOK FOR
Size and shape. A 15 to 50 pad community is the segment below institutional radar and within a first buyer’s reach. City water and sewer are worth paying up for. A park on private well and septic is a different, riskier purchase.
The four acquisition targets. A stable small community priced off its old rent roll. A park with vacant pads, because each filled pad adds income to infrastructure already built. A poorly managed family property with informal collections and no written leases. Or land already entitled for manufactured or modular homes, the rarest find of all.
Physical condition. The costs that surprise new owners live underground and overhead: water and sewer lines, electrical pedestals, roads, and drainage. Ask what the park owns versus what the utility owns, and walk it after rain.
Below-market signals. Vacant pads in a market with no vacancy, one master water meter for the whole community, handshake agreements, and rents unchanged for a decade. Each points to a property run on habit rather than management, which is the opportunity and the responsibility.
HOW THE MATH WORKS
A 30-pad community has 24 pads occupied at 350 dollars a month, collecting about 100,000 dollars a year, with the park paying one master water bill for everyone. A buyer who fills the six vacant pads at the same rent adds roughly 25,000 dollars a year on infrastructure that already exists. Submetering water and sewer, so each household pays for what it uses instead of subsidizing its neighbors, recovers perhaps another 15,000 while typically lowering total usage. Written leases and consistent collections add more. That is a meaningful increase in income, and notice what it does not include: raising rent on a single family already living there. The value comes from running the community properly, and residents get working infrastructure, fair utility bills, and neighbors on the empty pads.
THE RISKS, TOLD STRAIGHT
Every strength here has a matching risk. Private utility systems are the big one: a failed well or septic system can cost six figures and close a park. Aging underground infrastructure, park-owned homes that turn the owner into a landlord and a used-home dealer, thin financing options for small properties, and flood exposure all demand diligence. The regulatory picture is real too: several states are extending rent protections to manufactured housing communities, and enforcement attention follows the operators who buy these parks to push rents on residents who cannot move. That model exists, it has earned the industry its worst headlines, and it is not the model here. A buyer counting on aggressive rent increases is underwriting a fight with residents, regulators, and their own reputation.
THE WIRE
The sector is being recognized. Cap rates for manufactured housing communities compressed to about 5.9 percent over the past year, with the median price near 45,500 dollars per space, per Northmarq, and HUD’s PRICE program now funds preservation of exactly these communities. Institutional capital owns the large amenity-rich parks. The 15 to 50 pad community changing hands from a retiring family owner sits below that radar, and it is where careful local buyers still set the price. It is early days at that end of the market, and the housing shortage that makes these communities essential is not resolving soon.
OFFICE HOURS
This issue covered the case, the checklist, the math, and the risks. The judgment, which community, which infrastructure, which price, is where the real questions start. Richard takes them every Wednesday at 2pm ET in his free office hours. No slides, no pitch. He answers whatever attendees ask, live, for an hour. If this issue raised a question for you, bring it.
SOURCES
- Manufactured Housing Institute and MHInsider 2026 State of the Industry: new home average $115,557 in 2025; $85 per square foot factory-built versus $164 site-built.
- National Association of Realtors: median existing home price $410,200, November 2025. HUD: roughly 40 percent of manufactured homeowners rent their lot; PRICE preservation program.
- Northmarq manufactured housing outlook, February 2026: cap rates near 5.9 percent; median price about $45,500 per space; development constrained by siting and zoning; sector described as a central tool in the national affordability toolkit.