March 31, 2022

At Hearing, Warren Blasts Wall Street for Buying Up Manufactured Home Communities, Trapping Tenants, and Worsening Housing Affordability Crisis for Seniors

Warren: “Congress needs to act to weaken the investors' grip on the housing market”

Video of Hearing (Senator Warren at 01:33)

Washington, D.C. – At a hearing of the Senate Banking, Housing, and Urban Affairs Committee, United States Senator Elizabeth Warren (D-Mass.) called out Wall Street’s role in worsening the housing affordability crisis for seniors by buying up manufactured home communities. Senator Warren called for Congress to loosen Wall Street’s grip on the housing market and ensure that seniors have access to affordable and accessible housing. 

Manufactured homes, homes that are factory-built and anchored on a piece of land, are an essential source of housing for seniors. Almost half of the 22 million Americans who live in manufactured housing are seniors. Senator Warren called out the troubling trend of giant Wall Street investors buying up the land that manufactured home communities sit on and raising rent and imposing exorbitant fees, often trapping tenants. Many seniors living on fixed incomes don’t have the means or physical ability to move, but also have trouble selling their homes when rent and fees increase. As seniors spend more on housing, they are left with less money to spend on other basic necessities such as food and medications.  

Senator Warren blasted Wall Street’s strategy of trapping tenants to rake in massive profits. Since 2000, manufactured housing has been the only real estate asset class that hasn’t experienced an annual decline in operating income. 

As the country faces a housing affordability crisis, Senator Warren has called out Wall Street for buying up homes and jacking up prices for consumers across the housing market. At a hearing in February, Senator Warren called out private equity firms and other big investors for exacerbating inflation and locking families out of affordable housing opportunities. In January, Senator Warren sent letters to three corporate landlords for their growing activity in the housing market that has resulted in rent hikes and less housing stock for first-time buyers. 

Transcript: Affordability and Accessibility: Addressing the Housing Needs of America’s Seniors
U.S. Senate Committee on Banking, Housing, and Urban Affairs 
Thursday, March 31, 2022

Senator Elizabeth Warren: Thank you, Mr. Chairman.

The affordable housing crisis has affected families across the country who are struggling to keep up with rising housing costs. And America’s seniors, who often live on fixed incomes, that can’t meet the demands of unrelenting rent increases, have been hit especially hard. 

Manufactured homes – homes that are factory-built and anchored on a plot of land – have become an essential source of housing for seniors who are looking to own their own homes and be able to age in place. Nearly half of the more than 22 million Americans who live in manufactured housing are seniors.

Ms. Guzman, you are an expert on older Americans’ housing needs so let me ask you: what characteristics of manufactured home housing that makes it a desirable alternative for seniors? 

Mrs. Shannon Guzman, MCP, Senior Strategic Policy Advisor, AARP Public Policy Institute: Thank you, Senator Warren. 

So manufactured housing is cheaper to build than single-family housing. And they are a more affordable option for older adults. They’re also located in communities where they’re clustered together. And so this allows for residents to get together, to get together socially. It also allows for delivery of services, certain services, because they’re closer together. So in-home care or Meals to Wheels programs.  

But there are limitations to manufactured housing, in that they’re not allowed everywhere, they’re not allowed to be developed everywhere. 

Senator Warren: Ok, so let’s get into this. So what you’re telling me though is when you can get a community together, of manufactured housing, it can be a terrific alternative for seniors… 

Mrs. Guzman: Yes. 

Senator Warren: …because of affordability, because of the fact that people can come together. 

Manufactured housing, however, is not just attractive to seniors. A few decades ago, manufactured housing communities were generally owned by mom-and pop businesses. But as the population aged and our housing has dwindled, the smell of money lured new players: and those are big investors. 

So private equity firms, hedge funds, other Wall Street giants have scooped up manufactured home communities across the country – including those, like Sandcastle Estates and Liberty Estates in Massachusetts, that cater exclusively to seniors. Institutional investors accounted for nearly one-quarter of manufactured housing park purchases between 2019 and 2021, a 10 percentage-point jump in just two years.

Dr. Molinsky, you lead research on seniors’ access to safe and affordable housing. So let me ask you the same question I asked Ms. Guzman, but this time about the giant investors. What characteristics of manufactured home communities – particularly those that cater to seniors – make them so attractive to Wall Street?

Dr. Jennifer Molinsky, Project Director, Housing and Aging Society Program, Joint Center for Housing Studies of Harvard University: Thank you, Senator Warren. Yeah these investments can be very profitable. Residents typically own their homes but rent the land underneath in these communities, so an investor purchasing a community can raise the lot rent and other fees. 

This can put residents in a bind – the cost of moving their homes can be more than they can afford, or even physically impossible, and the increased rent can make it harder to resell a home. So residents have few alternatives but to pay the increased rent, but for those on fixed incomes, this means less left over for food and medication and health care –  tradeoffs that we often see when housing is unaffordable. And for older adults in particular, a move can be disruptive. Taking people away from support networks and community. 

Senator Warren: Yeah, you know, make no mistake: trapping tenants is a key part of the investment strategy. And we know this because the investors actually say it out loud. One online investor “boot camp” for those interested in manufactured housing investments states, and I quote here, “the fact that tenants can’t afford the $5,000 it costs to move a mobile home keeps revenues stable and makes it easy to raise rents without losing any occupancy,” end quote. In fact, according to one analyst report, since 2000, manufactured housing is the only real estate asset class that hasn’t experienced an annual decline in operating income, in any year. With the money from big rent hikes and exorbitant fees rolling in, and protection against people moving out, why wouldn't it produce huge profits? 

So Wall Street investors buying up manufactured home communities threatens the remaining affordable housing stock that seniors rely on. It threatens, it means that seniors have fewer opportunities to age in their own homes and that they risk being squeezed by rising rents, leaving them even with less money to buy medicine and to put food on the table. Congress needs to act to weaken the investors' grip on the housing market, and I want to thank you both for your work. 

Thank you, Mr. Chairman.