WEBVTT 00:00:00.000 --> 00:00:02.839 Welcome back to the Deep Dive. Today, we're doing 00:00:02.839 --> 00:00:04.500 something a little different. Usually, we take 00:00:04.500 --> 00:00:07.719 a topic that seems really complex or far away, 00:00:07.980 --> 00:00:12.619 quantum computing or ancient history, and we 00:00:12.619 --> 00:00:15.240 try to bring it close to home. But today, we're 00:00:15.240 --> 00:00:17.379 taking something that is physically close to 00:00:17.379 --> 00:00:19.640 home for millions of people, something we all 00:00:19.640 --> 00:00:22.579 drive past every single day, and realizing that, 00:00:22.660 --> 00:00:25.339 well, we actually know almost nothing about it. 00:00:26.869 --> 00:00:29.550 arguably the most visible, invisible industry 00:00:29.550 --> 00:00:32.009 in the world. That's a great way to put it. Everyone 00:00:32.009 --> 00:00:33.770 thinks they know what it is. Everyone has an 00:00:33.770 --> 00:00:36.130 opinion. And, you know, usually that opinion 00:00:36.130 --> 00:00:38.450 is based on data that is, what, about 50 years 00:00:38.450 --> 00:00:40.229 out of date? We are talking about the world of 00:00:40.229 --> 00:00:42.710 manufactured housing. Now, before you tune out 00:00:42.710 --> 00:00:45.030 because you think you know what that means, let 00:00:45.030 --> 00:00:48.229 me just say, I thought I do too. We all do. I 00:00:48.229 --> 00:00:50.250 saw the topic come across the desk and I immediately 00:00:50.250 --> 00:00:52.840 pictured a specific thing. I pictured a trailer, 00:00:53.039 --> 00:00:55.759 pictured something flimsy. I pictured, you know, 00:00:55.759 --> 00:00:59.159 a temporary solution. Which is exactly the stereotype 00:00:59.159 --> 00:01:01.659 we're going to dismantle today, because the reality 00:01:01.659 --> 00:01:05.280 of this industry involves federal preemption 00:01:05.280 --> 00:01:09.260 laws, aerospace level engineering, climate controlled 00:01:09.260 --> 00:01:13.120 factories. Right. And fire safety codes that 00:01:13.120 --> 00:01:16.299 in some very specific ways are actually stricter 00:01:16.299 --> 00:01:18.159 than the code used to build the house you're 00:01:18.159 --> 00:01:20.719 probably sitting in right now. That was the part 00:01:20.719 --> 00:01:22.340 that just blew my mind in the reading. Yeah. 00:01:22.480 --> 00:01:26.459 The idea that a factory built home might technically 00:01:26.459 --> 00:01:29.739 be safer in a fire than my, you know, my stick 00:01:29.739 --> 00:01:31.680 build suburban house. We're going to get into 00:01:31.680 --> 00:01:33.280 the numbers on that later, but it really sets 00:01:33.280 --> 00:01:36.159 the stage. We're stripping away the trailer park 00:01:36.159 --> 00:01:38.849 stigma to look the machine underneath. And we 00:01:38.849 --> 00:01:41.469 mean machine quite literally. There is an engineering 00:01:41.469 --> 00:01:45.129 reality here that really dictates the economics 00:01:45.129 --> 00:01:47.049 of the whole thing. So we have a lot to get through 00:01:47.049 --> 00:01:49.049 today. We've got sources covering the Code of 00:01:49.049 --> 00:01:51.870 Federal Regulations, the history of highway transport 00:01:51.870 --> 00:01:54.709 laws, some pretty intense economic case studies 00:01:54.709 --> 00:01:56.950 from the San Francisco Bay Area. And Australia, 00:01:57.049 --> 00:01:59.590 which is a fascinating comparison. Yeah, even 00:01:59.590 --> 00:02:01.849 a look at how Australia handles this. But the 00:02:01.849 --> 00:02:03.810 mission is simple. By the end of this, we want 00:02:03.810 --> 00:02:05.569 to understand the difference between a trailer, 00:02:05.769 --> 00:02:08.789 a manufactured home, and a modular home. Yes. 00:02:08.990 --> 00:02:11.509 Because apparently if you use those words interchangeably, 00:02:11.610 --> 00:02:15.129 you are wrong. You're legally wrong, financially 00:02:15.129 --> 00:02:18.069 wrong, and structurally wrong. It's the trifecta. 00:02:18.110 --> 00:02:20.210 So let's start there, the definition dilemma. 00:02:20.729 --> 00:02:24.069 I feel like most people, myself included, use 00:02:24.069 --> 00:02:26.509 mobile home as a catch -all. Of course. If it 00:02:26.509 --> 00:02:29.110 looks like a long rectangular box and it's in 00:02:29.110 --> 00:02:31.629 a park, it's a mobile home, why is that a problem? 00:02:31.900 --> 00:02:36.060 It's a problem because words... have legal consequences. 00:02:36.300 --> 00:02:38.919 I mean, huge legal consequences. In the United 00:02:38.919 --> 00:02:40.599 States, the definition of what we're talking 00:02:40.599 --> 00:02:43.319 about is incredibly rigid. It is governed by 00:02:43.319 --> 00:02:45.340 the federal government, specifically under the 00:02:45.340 --> 00:02:47.740 Code of Federal Regulations. The magic number 00:02:47.740 --> 00:02:52.159 here is 24 CFR 3280. OK, you know, I usually 00:02:52.159 --> 00:02:53.960 gloss over the code numbers, but this one seems 00:02:53.960 --> 00:02:55.840 to pop up everywhere in the research on this. 00:02:55.960 --> 00:02:59.580 So what is 24 CFR 3280 actually say? Well, it 00:02:59.580 --> 00:03:02.360 defines the very existence of the object to be 00:03:02.360 --> 00:03:05.870 a manufactured home. unit has to be first at 00:03:05.870 --> 00:03:08.229 least 320 square feet. So we're not talking about 00:03:08.229 --> 00:03:10.129 a tiny little camper. Right. That's bigger than 00:03:10.129 --> 00:03:11.889 some studio apartments in New York. Exactly. 00:03:12.110 --> 00:03:14.650 But the definition doesn't stop at size. The 00:03:14.650 --> 00:03:17.629 most critical, the defining feature, the thing 00:03:17.629 --> 00:03:20.030 that separates this from every other type of 00:03:20.030 --> 00:03:23.090 house in America is the chassis. The chassis. 00:03:23.270 --> 00:03:26.050 The permanent chassis. The law states, and this 00:03:26.050 --> 00:03:28.530 is almost a direct quote, that the home must 00:03:28.530 --> 00:03:31.189 be built on a permanent chassis to assure the 00:03:31.189 --> 00:03:34.020 initial and continued transportability of Okay, 00:03:34.280 --> 00:03:35.620 I want to stop you there because this was the 00:03:35.620 --> 00:03:38.819 first aha moment for me in the research, but 00:03:38.819 --> 00:03:40.539 it also really confused me. It's confusing for 00:03:40.539 --> 00:03:44.000 everyone. A permanent chassis. That means a steel 00:03:44.000 --> 00:03:47.740 frame. With axles and wheels. Yes. Two massive 00:03:47.740 --> 00:03:50.639 steel I -beams running the entire length of the 00:03:50.639 --> 00:03:54.039 house. Axles, wheels, and a tow hitch. It's the 00:03:54.039 --> 00:03:56.259 skeleton of the home. Okay, so let's play this 00:03:56.259 --> 00:03:59.039 out. I buy one of these. A really nice, modern, 00:03:59.219 --> 00:04:01.740 double -wide, manufactured home. I have it shipped 00:04:01.740 --> 00:04:04.000 to a piece of land I own. The crew comes, they 00:04:04.000 --> 00:04:06.280 set it up, they take the tires off. Right. I 00:04:06.280 --> 00:04:08.659 build a beautiful brick. skirting around the 00:04:08.659 --> 00:04:10.780 bottom so you can't see underneath. I build a 00:04:10.780 --> 00:04:13.479 front porch, a back deck. I plant a 50 -year 00:04:13.479 --> 00:04:16.839 -old oak tree right in front of the door. I am 00:04:16.839 --> 00:04:20.360 clearly never moving this house again. Does the 00:04:20.360 --> 00:04:23.269 law still care about that chassis? The law cares 00:04:23.269 --> 00:04:26.009 immensely. Even if the tires are gone and the 00:04:26.009 --> 00:04:28.790 tow hitch has been cut off with a torch, that 00:04:28.790 --> 00:04:31.870 steel frame buried in the subfloor is the legal 00:04:31.870 --> 00:04:34.449 fingerprint of the home. Wow. As long as that 00:04:34.449 --> 00:04:37.509 chassis is part of its structure, it is a manufactured 00:04:37.509 --> 00:04:40.670 home, period. If you built the exact same house 00:04:40.670 --> 00:04:42.790 with the exact same materials, the same floor 00:04:42.790 --> 00:04:44.550 plan, but you put it on a concrete foundation 00:04:44.550 --> 00:04:46.310 instead of that steel chassis. It would just 00:04:46.310 --> 00:04:48.629 be a normal house. It would be a modular home 00:04:48.629 --> 00:04:50.569 or a site -built home, and it would fall under 00:04:50.569 --> 00:04:52.740 completely different laws. This feels completely 00:04:52.740 --> 00:04:55.060 arbitrary. Yeah. I mean, why are we so obsessed 00:04:55.060 --> 00:04:57.379 with the chassis? If the stats say that something 00:04:57.379 --> 00:05:00.180 like 99 % of these homes never move once they 00:05:00.180 --> 00:05:02.639 are set up, why are we forcing them to carry 00:05:02.639 --> 00:05:05.339 around this heavy, expensive steel frame forever? 00:05:05.639 --> 00:05:08.680 That is the multi -billion dollar question. And 00:05:08.680 --> 00:05:11.579 the answer is actually about power. The power. 00:05:11.759 --> 00:05:14.740 It's about who gets to tell you how to build 00:05:14.740 --> 00:05:17.259 your house. See, if you build a house on a foundation, 00:05:17.420 --> 00:05:19.920 a stick -built house, you have to deal with the 00:05:19.920 --> 00:05:22.300 local building inspector. Oh, right. The permits, 00:05:22.519 --> 00:05:30.579 the inspections. Yeah, I've heard the horror 00:05:30.579 --> 00:05:34.060 stories. Exactly. But if you build a vehicle... 00:05:34.350 --> 00:05:37.050 And legally, that's what something with a chassis 00:05:37.050 --> 00:05:39.310 is. A vehicle. It's a vehicle. And that falls 00:05:39.310 --> 00:05:41.970 under federal jurisdiction. It falls under HUD, 00:05:42.170 --> 00:05:43.870 the Department of Housing and Urban Development. 00:05:44.009 --> 00:05:47.009 The chassis is essentially a legal shield. A 00:05:47.009 --> 00:05:49.850 legal shield. I like that. It allows the manufacturers 00:05:49.850 --> 00:05:53.009 to build one standard house in a factory in, 00:05:53.069 --> 00:05:56.310 say, Indiana, and ship it anywhere in the country, 00:05:56.430 --> 00:05:59.470 to California, to Florida, to Maine, without 00:05:59.470 --> 00:06:01.350 having to worry about what the local building 00:06:01.350 --> 00:06:03.670 inspector in Topeka or Tallahassee thinks about 00:06:03.670 --> 00:06:06.310 it. So the wheels aren't really for moving the 00:06:06.310 --> 00:06:08.610 house around. They're for moving the jurisdiction 00:06:08.610 --> 00:06:11.589 from local to federal. That is a brilliant way 00:06:11.589 --> 00:06:15.310 to put it, yes. The chassis allows for federal 00:06:15.310 --> 00:06:18.509 preemption. It overrides local building codes. 00:06:18.689 --> 00:06:21.250 And that's why it has to be permanent. If you 00:06:21.250 --> 00:06:23.209 were allowed to remove the chassis, you would 00:06:23.209 --> 00:06:25.610 lose that federal protection and suddenly you'd 00:06:25.610 --> 00:06:28.110 be at the mercy of the local town council and 00:06:28.110 --> 00:06:30.629 their specific rules. That makes so much sense. 00:06:30.750 --> 00:06:33.589 But at the same time, it seems incredibly wasteful. 00:06:33.629 --> 00:06:35.990 Oh, it is. We're burying millions of tons of 00:06:35.990 --> 00:06:39.470 steel under houses just to satisfy a legal loophole. 00:06:39.569 --> 00:06:42.050 Welcome to the world of housing regulation. But 00:06:42.050 --> 00:06:43.730 there's another layer to this whole definition 00:06:43.730 --> 00:06:46.759 game. OK. We used the term mobile home earlier, 00:06:46.920 --> 00:06:49.060 and I said that was incorrect. Right. And you 00:06:49.060 --> 00:06:51.660 said I was legally wrong. You are. There is actually 00:06:51.660 --> 00:06:54.779 a hard line in the sand. A specific date, June 00:06:54.779 --> 00:06:59.899 15th, 1976. June 15th, 1976. This date came up 00:06:59.899 --> 00:07:02.319 in the notes as the big bang for the industry. 00:07:02.699 --> 00:07:05.480 What happened on that specific Tuesday in June? 00:07:05.870 --> 00:07:08.029 That was the day the federal manufactured home 00:07:08.029 --> 00:07:10.649 construction and safety standards went into effect. 00:07:10.970 --> 00:07:13.709 It's known as the HUD code. So what was happening 00:07:13.709 --> 00:07:16.329 before that? Before that date, June 14th and 00:07:16.329 --> 00:07:18.750 earlier, there was no national standard. It was 00:07:18.750 --> 00:07:21.519 the Wild West. Quality was, well, variable is 00:07:21.519 --> 00:07:23.600 the polite term. Variable is a very polite way 00:07:23.600 --> 00:07:25.199 of saying some of them are basically just tin 00:07:25.199 --> 00:07:27.620 cans, right? Some were fine. Some were well built. 00:07:27.699 --> 00:07:29.939 But some were essentially camping trailers trying 00:07:29.939 --> 00:07:32.759 to be houses. There was no consistency in wiring, 00:07:32.959 --> 00:07:35.839 plumbing, insulation, structural integrity, nothing. 00:07:36.100 --> 00:07:37.959 So the industry and the government got together 00:07:37.959 --> 00:07:40.959 and drew a line. A very hard line. Anything built 00:07:40.959 --> 00:07:44.620 before June 15th, 1976 is legally and forever 00:07:44.620 --> 00:07:47.660 a mobile home. Anything built on or after that 00:07:47.660 --> 00:07:50.250 date is a manufactured home. So when I hear people 00:07:50.250 --> 00:07:52.230 on the news or even just my neighbors complaining 00:07:52.230 --> 00:07:54.370 about a new mobile home park being built down 00:07:54.370 --> 00:07:56.490 the street. They are using a word that has been 00:07:56.490 --> 00:07:59.350 legally obsolete for half a century. And it's 00:07:59.350 --> 00:08:02.810 not just semantics. Not at all. It matters because 00:08:02.810 --> 00:08:06.069 the engineering changed overnight. A mobile home 00:08:06.069 --> 00:08:10.370 implies that pre -1976 era of loose regulation 00:08:10.370 --> 00:08:13.910 and, frankly, questionable safety. A manufactured 00:08:13.910 --> 00:08:17.310 home implies a structure that has to meet a rigorous 00:08:17.310 --> 00:08:19.949 ongoing. federal safety code. It's like calling 00:08:19.949 --> 00:08:23.009 a new Tesla a horseless carriage. Exactly. Technically, 00:08:23.110 --> 00:08:25.129 they both get you from A to B, but the technology 00:08:25.129 --> 00:08:27.930 is just it's incomparable. Precisely. But the 00:08:27.930 --> 00:08:30.029 language hasn't caught up. We still say trailer 00:08:30.029 --> 00:08:33.169 park. We still say a mobile home. And that language, 00:08:33.230 --> 00:08:35.669 it keeps the stigma alive. Well, speaking of 00:08:35.669 --> 00:08:37.409 trailers, let's dig into the history of that 00:08:37.409 --> 00:08:39.730 word, because it wasn't always a slur, right? 00:08:39.789 --> 00:08:41.590 It was a description of function. Absolutely. 00:08:41.710 --> 00:08:44.870 To understand the width of the home, which is 00:08:44.870 --> 00:08:46.710 really the defining struggle of the industry's 00:08:46.710 --> 00:08:48.299 history, we have to to go back to the beginning 00:08:48.299 --> 00:08:51.159 okay originally these units were travel trailers 00:08:51.159 --> 00:08:53.899 think of the 1930s and 40s they were designed 00:08:53.899 --> 00:08:56.720 for people who were genuinely mobile like migrant 00:08:56.720 --> 00:09:00.039 workers vacationers right people following jobs 00:09:00.039 --> 00:09:04.250 carnival workers people on holiday And crucially, 00:09:04.309 --> 00:09:06.830 they had to be towed by a car. The family sedan. 00:09:07.110 --> 00:09:08.950 Correct. The family sedan. And because I had 00:09:08.950 --> 00:09:11.409 to be towed by a regular car down these, you 00:09:11.409 --> 00:09:14.830 know, 1940s two lane roads, they had to be narrow, 00:09:15.090 --> 00:09:17.470 eight feet wide. Usually that was the standard. 00:09:17.529 --> 00:09:20.179 I've been in an eight foot wide camper. It's 00:09:20.179 --> 00:09:22.440 cozy. You can pretty much touch both walls if 00:09:22.440 --> 00:09:24.379 you stretch out your arms. It's a hallway that 00:09:24.379 --> 00:09:26.740 you sleep in. It works for a weekend fishing 00:09:26.740 --> 00:09:29.480 trip. It does not work well for raising a family 00:09:29.480 --> 00:09:32.179 of four. I can't even imagine. But in the post 00:09:32.179 --> 00:09:34.679 -war boom of the 1950s, there was this massive 00:09:34.679 --> 00:09:36.799 housing shortage. Right. The G .I. is coming 00:09:36.799 --> 00:09:40.080 home. Exactly. And people started looking at 00:09:40.080 --> 00:09:43.080 these trailers not as vacation spots, but as 00:09:43.080 --> 00:09:46.139 cheap, permanent housing. But living in eight 00:09:46.139 --> 00:09:48.759 feet of width with two kids is tough. It is. 00:09:48.860 --> 00:09:51.519 So the industry was desperate to expand. And 00:09:51.519 --> 00:09:54.240 in 1956, they pushed through what they called 00:09:54.240 --> 00:09:56.840 the 10 wide revolution. The 10 wide. They introduced 00:09:56.840 --> 00:09:59.460 the 10 foot wide home. So they added two feet. 00:09:59.559 --> 00:10:02.179 It doesn't sound like a lot on paper. In terms 00:10:02.179 --> 00:10:04.740 of a floor plan, it's a massive difference. It 00:10:04.740 --> 00:10:07.059 allows for an actual hallway and a room next 00:10:07.059 --> 00:10:10.000 to it, not just one or the other. But the implications 00:10:10.000 --> 00:10:13.240 for transport were the real story. What do you 00:10:13.240 --> 00:10:16.399 mean? You cannot tow a 10 foot wide box with 00:10:16.399 --> 00:10:20.080 a 1956 Chevy Bel Air. It's just too wide. It's 00:10:20.080 --> 00:10:22.759 too dangerous. It takes up the entire lane and 00:10:22.759 --> 00:10:25.500 then some. You're a menace on the road. So this 00:10:25.500 --> 00:10:27.879 is the moment the travel part of Travel Trailer 00:10:27.879 --> 00:10:30.860 really died. Exactly. 1956 was the fork in the 00:10:30.860 --> 00:10:33.450 road. Once you went to 10 feet, you needed a 00:10:33.450 --> 00:10:36.070 professional trucking service. You needed a commercial 00:10:36.070 --> 00:10:39.409 vehicle. You needed wide load signs, permits, 00:10:39.590 --> 00:10:41.870 pilot cars. You couldn't just hitch up and go 00:10:41.870 --> 00:10:44.669 on a whim. The whim was gone. So the industry 00:10:44.669 --> 00:10:47.529 split right there. Travel trailers, what we now 00:10:47.529 --> 00:10:50.309 call RVs or campers, stayed small and towable 00:10:50.309 --> 00:10:53.289 by a pickup truck. And mobile homes got wider, 00:10:53.429 --> 00:10:55.830 heavier, and effectively stationary. And they 00:10:55.830 --> 00:10:57.330 just kept getting bigger from there, I assume? 00:10:57.590 --> 00:11:00.190 Oh, yeah. 10 feet became 12 feet in the 60s, 00:11:00.190 --> 00:11:03.250 then 14. feet became common. Then someone had 00:11:03.250 --> 00:11:05.889 the brilliant idea to build two 12 -foot boxes 00:11:05.889 --> 00:11:08.169 and join them together on site. The double wide. 00:11:08.190 --> 00:11:09.929 The double wide was born. And now we have triple 00:11:09.929 --> 00:11:11.870 wides where they ship three sections and join 00:11:11.870 --> 00:11:14.809 them together. You can get a 2 ,500 square foot 00:11:14.809 --> 00:11:16.669 manufactured home that looks like a suburban 00:11:16.669 --> 00:11:19.590 ranch house. But the irony is as the houses became 00:11:19.590 --> 00:11:22.490 more livable, more like a real house, they became 00:11:22.490 --> 00:11:25.389 less and less mobile. That is the central paradox 00:11:25.389 --> 00:11:28.480 of the entire industry. So we are back to this 00:11:28.480 --> 00:11:31.539 strange situation. We have these massive, comfortable 00:11:31.539 --> 00:11:34.899 homes that are legally defined by their ability 00:11:34.899 --> 00:11:38.620 to move, but physically moving them is a logistical 00:11:38.620 --> 00:11:41.159 nightmare that almost never, ever happens. And 00:11:41.159 --> 00:11:44.399 that paradox, it creates the stigma, and even 00:11:44.399 --> 00:11:46.779 more importantly, it creates the finance trap. 00:11:47.059 --> 00:11:48.519 Okay, this was the part of the research that 00:11:48.519 --> 00:11:51.019 honestly made me angry. It's infuriating. Because 00:11:51.019 --> 00:11:52.919 we talk about affordable housing all the time. 00:11:52.940 --> 00:11:55.220 Everyone says we need more of it. And here's 00:11:55.220 --> 00:11:58.120 a solution that costs what? sometimes half as 00:11:58.120 --> 00:12:01.080 much as a site -built home. But the entire financial 00:12:01.080 --> 00:12:03.639 system seems designed to punish you for choosing 00:12:03.639 --> 00:12:05.539 it. It all comes back to that legal definition 00:12:05.539 --> 00:12:07.840 we talked about, real estate versus personal 00:12:07.840 --> 00:12:10.200 property. This is the absolute critical thing 00:12:10.200 --> 00:12:12.419 to understand. Okay, break that down for us. 00:12:12.620 --> 00:12:15.299 When I buy a regular house, the kind most people 00:12:15.299 --> 00:12:18.700 think of, I'm buying real estate. Correct. You 00:12:18.700 --> 00:12:21.740 are buying the land and the improvements on the 00:12:21.740 --> 00:12:24.440 land, the building itself. And banks love real 00:12:24.440 --> 00:12:26.990 estate. They love it. They'll give you a 30 year 00:12:26.990 --> 00:12:29.669 mortgage at a relatively low interest rate because 00:12:29.669 --> 00:12:33.149 they know that historically land appreciates. 00:12:33.230 --> 00:12:37.090 The asset grows in value over time. It's a safe 00:12:37.090 --> 00:12:39.389 bet for them. A very safe bet. But when you buy 00:12:39.389 --> 00:12:41.610 a manufactured home. Because of that chassis. 00:12:41.690 --> 00:12:43.549 Because of that chassis. Because it is technically 00:12:43.549 --> 00:12:47.590 a vehicle. The law views it as chattel. Chattel. 00:12:47.769 --> 00:12:49.629 That sounds like an old -timey word for cattle. 00:12:49.730 --> 00:12:51.990 It's from the same root. It just means personal 00:12:51.990 --> 00:12:54.490 property. It's in the same legal category as 00:12:54.490 --> 00:12:58.049 a bulldozer or a boat or a refrigerator. Or a 00:12:58.049 --> 00:13:00.590 car. Or a car. And think about how a car loan 00:13:00.590 --> 00:13:03.230 works. You don't get 30 years to pay off a Toyota 00:13:03.230 --> 00:13:05.850 Camry. No, you get five years, maybe seven if 00:13:05.850 --> 00:13:07.549 you're lucky. Right. And the interest rate, it's 00:13:07.549 --> 00:13:09.889 way higher than a mortgage rate. Much higher. 00:13:09.990 --> 00:13:12.970 Because the bank assumes the car is losing value 00:13:12.970 --> 00:13:16.850 every single day you own it. Exactly. Depreciation. 00:13:17.259 --> 00:13:19.340 A car is worth less the moment you drive it off 00:13:19.340 --> 00:13:22.259 the lot. Historically, manufactured homes have 00:13:22.259 --> 00:13:25.059 been treated the exact same way. They depreciate. 00:13:25.179 --> 00:13:27.460 So the banks see them as high risk collateral. 00:13:27.779 --> 00:13:31.059 They charge and the source material says considerably 00:13:31.059 --> 00:13:33.879 higher interest rates and they offer much shorter 00:13:33.879 --> 00:13:36.059 terms. So let's play this out for a real family. 00:13:36.220 --> 00:13:38.960 You have lower income family. They want to buy 00:13:38.960 --> 00:13:41.200 a home. They can't afford a half a million dollar 00:13:41.200 --> 00:13:44.440 site built house, but they could afford a hundred 00:13:44.440 --> 00:13:46.860 thousand dollar manufactured home. Right. It's 00:13:46.860 --> 00:13:49.159 on the table for them. But when they go to the 00:13:49.159 --> 00:13:51.320 bank to get a loan, the bank says, sure, we can 00:13:51.320 --> 00:13:53.519 help you. But your interest rate is nine percent 00:13:53.519 --> 00:13:55.779 instead of four. And you have to pay it all off 00:13:55.779 --> 00:13:58.980 in 15 years, not 30. Which often drives the monthly 00:13:58.980 --> 00:14:01.879 payment right back up into. unaffordable territory. 00:14:02.120 --> 00:14:04.120 That's a trap. It is a trap. It traps people. 00:14:04.299 --> 00:14:06.240 They can't build wealth because the asset itself 00:14:06.240 --> 00:14:08.559 is depreciating and they're paying a fortune 00:14:08.559 --> 00:14:11.080 and interest on a chattel loan, not building 00:14:11.080 --> 00:14:13.759 equity through a mortgage. And this is all because 00:14:13.759 --> 00:14:16.120 of the legal classification stemming from the 00:14:16.120 --> 00:14:19.110 chassis. Mostly, yes. Now, to be fair, there 00:14:19.110 --> 00:14:22.009 are ways to convert it. If you own the land and 00:14:22.009 --> 00:14:24.070 you permanently affix the home to a foundation, 00:14:24.409 --> 00:14:26.769 you can sometimes go through a legal process 00:14:26.769 --> 00:14:29.090 to have it retitled as real estate. But that 00:14:29.090 --> 00:14:32.070 sounds complicated and expensive. It is. And 00:14:32.070 --> 00:14:34.169 for the millions of people living in communities 00:14:34.169 --> 00:14:36.129 or parks where they only rent the land, it's 00:14:36.129 --> 00:14:38.889 not even an option. They are stuck with chattel 00:14:38.889 --> 00:14:41.789 loans forever. And then you have the zoning issue 00:14:41.789 --> 00:14:44.450 on top of all that. Which is the other side of 00:14:44.450 --> 00:14:47.500 the stigma coin. Because these homes are stigmatized 00:14:47.500 --> 00:14:50.720 as trailer parks, local towns and cities often 00:14:50.720 --> 00:14:53.019 do everything in their power to keep them out. 00:14:53.100 --> 00:14:55.700 The classic not in my backyard effect. And I 00:14:55.700 --> 00:14:58.799 am blazing. It's fierce. Many jurisdictions have 00:14:58.799 --> 00:15:01.440 outright bans on any new manufactured housing 00:15:01.440 --> 00:15:04.639 placements. Or they get sneaky with it. They 00:15:04.639 --> 00:15:06.899 create aesthetic zoning rules that effectively 00:15:06.899 --> 00:15:09.139 ban them without saying the words. What does 00:15:09.139 --> 00:15:11.019 that look like? They'll pass an ordinance that 00:15:11.019 --> 00:15:13.779 says all new homes in this town must have a roof 00:15:13.779 --> 00:15:16.779 with at least a 512 pitch. A steeper roofline. 00:15:16.919 --> 00:15:20.179 Right. Knowing full well that most standard affordable 00:15:20.179 --> 00:15:24.120 manufactured homes have a lower 312 or 412 pitch. 00:15:24.399 --> 00:15:27.200 Or they'll just ban single wide units completely. 00:15:27.850 --> 00:15:30.350 Why the specific hatred for the single wide? 00:15:30.529 --> 00:15:33.090 It's the visual symbol of the trailer park. It's 00:15:33.090 --> 00:15:35.230 long and narrow. It looks like a vehicle. And 00:15:35.230 --> 00:15:36.789 towns, you know, they worry about their property 00:15:36.789 --> 00:15:39.190 values. They have this ingrained belief that 00:15:39.190 --> 00:15:42.309 if a manufactured home community moves in, the 00:15:42.309 --> 00:15:44.309 value of all the surrounding real estate will 00:15:44.309 --> 00:15:46.350 drop. Which becomes a self -fulfilling prophecy, 00:15:46.509 --> 00:15:49.110 doesn't it? If you force all of these homes into 00:15:49.110 --> 00:15:51.889 poorly maintained parks on the edge of town and 00:15:51.889 --> 00:15:54.350 refuse to let them integrate into regular suburban 00:15:54.350 --> 00:15:56.330 neighborhoods. That's exactly what happens. You 00:15:56.330 --> 00:15:58.470 create the very... outcome you claim to be afraid 00:15:58.470 --> 00:16:01.029 of. Okay, I want to pivot for a second. We've 00:16:01.029 --> 00:16:03.429 talked a lot about the laws and the banks. Let's 00:16:03.429 --> 00:16:05.710 look at the actual object itself, the engineering. 00:16:06.230 --> 00:16:09.149 Because despite the financial mess, the manufacturing 00:16:09.149 --> 00:16:12.850 process sounds, well, incredible. It is. If you're 00:16:12.850 --> 00:16:15.269 an efficiency nerd or a manufacturing geek, you 00:16:15.269 --> 00:16:18.809 have to love the factory built concept. So walk 00:16:18.809 --> 00:16:20.929 us through it. I've seen houses being built in 00:16:20.929 --> 00:16:23.950 my neighborhood. It's a slow, messy process. 00:16:24.230 --> 00:16:26.830 There's mud everywhere. Lumber gets rained on. 00:16:27.409 --> 00:16:29.950 Materials get stolen. That is the number one 00:16:29.950 --> 00:16:32.690 argument for manufactured housing. Yeah. A site 00:16:32.690 --> 00:16:35.029 -built home is built out in the wild. It's exposed 00:16:35.029 --> 00:16:37.610 to the elements. Right. If it rains for three 00:16:37.610 --> 00:16:39.350 days straight while they're framing your house, 00:16:39.509 --> 00:16:42.110 your subfloor gets soaked. Your studs get soaked. 00:16:42.799 --> 00:16:45.019 That can lead to warping squeaky floors down 00:16:45.019 --> 00:16:47.419 the road, even mold getting trapped inside the 00:16:47.419 --> 00:16:49.779 walls when they seal it up. And in the factory. 00:16:49.960 --> 00:16:52.519 Imagine a building the size of three aircraft 00:16:52.519 --> 00:16:55.940 hangers. It's brightly lit. It's a constant 70 00:16:55.940 --> 00:17:00.059 degrees. And it is bone dry. It never rains inside 00:17:00.059 --> 00:17:02.460 the factory. So all the materials stay pristine 00:17:02.460 --> 00:17:04.980 from start to finish. Yes. And the workflow is 00:17:04.980 --> 00:17:06.660 completely different. It's an assembly line. 00:17:07.150 --> 00:17:09.230 On a normal construction site, you have guys 00:17:09.230 --> 00:17:11.769 climbing up and down ladders, cutting wood with 00:17:11.769 --> 00:17:14.470 handheld saws, fighting against gravity to nail 00:17:14.470 --> 00:17:16.869 up heavy shits of drywall over their heads. Fighting 00:17:16.869 --> 00:17:18.950 gravity. I like that description. Think about 00:17:18.950 --> 00:17:21.849 hanging sheetrock on a ceiling. You have to hold 00:17:21.849 --> 00:17:24.710 this heavy, floppy piece of gypsum up with one 00:17:24.710 --> 00:17:28.430 hand or a T -brace while you try to drive screws 00:17:28.430 --> 00:17:30.910 into it. It's awkward. Okay, so how do they do 00:17:30.910 --> 00:17:33.069 it in the factory? In the factory, they build 00:17:33.069 --> 00:17:36.240 the walls flat on a table. Oh, like on a giant 00:17:36.240 --> 00:17:39.140 jig. Exactly. A perfectly flat level surface. 00:17:39.480 --> 00:17:42.460 They lay up the studs. They run the wiring through 00:17:42.460 --> 00:17:45.099 pre -drilled holes. They put the insulation in. 00:17:45.220 --> 00:17:48.000 They lay the sheetrock down on top of it. They 00:17:48.000 --> 00:17:50.700 use massive mechanical rollers to spread the 00:17:50.700 --> 00:17:53.779 adhesive perfectly evenly. They use automated 00:17:53.779 --> 00:17:57.140 pneumatic arms to drive the fasteners. The tolerances 00:17:57.140 --> 00:17:59.900 are within millimeters. So it's just a tighter, 00:17:59.960 --> 00:18:02.319 more precise construction. It's much, much tighter. 00:18:02.440 --> 00:18:04.319 And because they're building it inside out in 00:18:04.319 --> 00:18:06.200 a... controlled sequence, they can do things 00:18:06.200 --> 00:18:08.500 you just can't do easily on a traditional site. 00:18:08.720 --> 00:18:10.720 What do you mean inside out? Well, the whole 00:18:10.720 --> 00:18:12.900 process starts with the chassis, station one. 00:18:13.079 --> 00:18:15.079 They build the floor system on top of that chassis. 00:18:15.259 --> 00:18:18.079 While it's still open and easy to access, from 00:18:18.079 --> 00:18:20.579 below, they install the plumbing, the ductwork 00:18:20.579 --> 00:18:23.019 for heating and air, and a lot of the electrical 00:18:23.019 --> 00:18:25.960 wiring into the floor joists. Ah, so the plumbing 00:18:25.960 --> 00:18:29.000 is done before the walls even exist. Right. Then 00:18:29.000 --> 00:18:31.059 they put the floor decking on, then the whole 00:18:31.059 --> 00:18:32.819 thing moves to the next station, and the walls, 00:18:32.880 --> 00:18:34.630 which were built on those flat tables we talked 00:18:34.630 --> 00:18:37.650 about are lifted by an overhead crane and set 00:18:37.650 --> 00:18:40.109 perfectly into place. Like a giant Lego set. 00:18:40.250 --> 00:18:43.509 Very much so. Once the walls are up, they lower 00:18:43.509 --> 00:18:45.710 the roof assembly on top, which was also built 00:18:45.710 --> 00:18:48.470 on a separate jig. Then they wrap the whole thing 00:18:48.470 --> 00:18:50.869 in a protective membrane. This is the shrink 00:18:50.869 --> 00:18:53.809 wrap phase I read about. Yes. Because this house, 00:18:53.950 --> 00:18:57.009 unlike a site -built house, has to survive a 00:18:57.009 --> 00:18:59.690 hurricane before it ever sees a storm. What do 00:18:59.690 --> 00:19:01.829 you mean by that? Think about what it takes to 00:19:01.829 --> 00:19:05.170 drive down a highway at 60 miles per hour. The 00:19:05.170 --> 00:19:08.150 wind resistance is immense. The potholes, the 00:19:08.150 --> 00:19:11.579 vibration from the road. It's a constant earthquake. 00:19:11.920 --> 00:19:13.799 I've never thought about it that way. A site 00:19:13.799 --> 00:19:15.660 -built house never has to deal with that kind 00:19:15.660 --> 00:19:18.579 of dynamic stress. A manufactured home has to 00:19:18.579 --> 00:19:21.539 be built rigid enough, glued and screwed and 00:19:21.539 --> 00:19:25.619 braced to survive a 500 -mile road trip without 00:19:25.619 --> 00:19:28.119 a single crack in the drywall or a window seal 00:19:28.119 --> 00:19:30.420 breaking. That's a really good point. The transport 00:19:30.420 --> 00:19:33.819 itself is the ultimate stress test. It is. However... 00:19:34.170 --> 00:19:36.470 And this is important. There is a catch. The 00:19:36.470 --> 00:19:39.369 source material mentions an author, a guy named 00:19:39.369 --> 00:19:42.690 Wes Johnson, who raises a big caution flag right 00:19:42.690 --> 00:19:45.130 here. Right. This is about the setup. The setup. 00:19:45.210 --> 00:19:48.549 You can build a perfect, beautiful, strong house 00:19:48.549 --> 00:19:51.309 in the factory, perfect seals, perfect insulation, 00:19:51.670 --> 00:19:53.990 everything square. But if the guy who installs 00:19:53.990 --> 00:19:56.529 it at the final site is incompetent or just lazy, 00:19:56.829 --> 00:19:59.250 none of that matters. Because these homes, especially 00:19:59.250 --> 00:20:01.329 the double wides, they arrive in sections, right? 00:20:01.410 --> 00:20:03.349 Exactly. They have to be joined together perfectly. 00:20:03.470 --> 00:20:06.130 the roof has to be sealed at the ridge cap where 00:20:06.130 --> 00:20:08.710 the two halves meet the utilities have to be 00:20:08.710 --> 00:20:11.009 connected properly the whole structure has to 00:20:11.009 --> 00:20:13.170 be leveled perfectly on its foundation piers 00:20:13.170 --> 00:20:15.809 if the setup crew is sloppy it's all for nothing 00:20:16.250 --> 00:20:18.130 Right. If they leave a tiny gap in that roof 00:20:18.130 --> 00:20:20.289 seal, you'll have a leak for the next 20 years. 00:20:20.410 --> 00:20:22.529 If they don't level it properly, doors won't 00:20:22.529 --> 00:20:24.990 close right and windows will stick. So the weak 00:20:24.990 --> 00:20:27.250 link isn't the factory. It's the one afternoon 00:20:27.250 --> 00:20:29.130 when it arrives at its new home. That's what 00:20:29.130 --> 00:20:32.210 Johnson argues. He advises buyers to be there, 00:20:32.329 --> 00:20:35.470 on site, watching the setup like a hog. That's 00:20:35.470 --> 00:20:37.509 good advice for any construction project, I suppose. 00:20:37.789 --> 00:20:40.549 True. But it's especially critical here. Okay, 00:20:40.609 --> 00:20:43.309 so let's tackle the biggest myth of all. The 00:20:43.309 --> 00:20:47.180 one I hear constantly. The tinderbox myth, the 00:20:47.180 --> 00:20:49.759 idea that these homes are fire traps. This is 00:20:49.759 --> 00:20:52.799 a powerful, persistent myth, and it's almost 00:20:52.799 --> 00:20:56.180 entirely a legacy of that pre -1976, pre -Hud 00:20:56.180 --> 00:20:59.279 Code era. And the data today says what? The data 00:20:59.279 --> 00:21:01.880 today completely contradicts the myth. The notes 00:21:01.880 --> 00:21:04.200 reference a big National Fire Protection Association 00:21:04.200 --> 00:21:08.440 study from July 2011. The NFPA. OK, what did 00:21:08.440 --> 00:21:10.859 they find? They compared fire occurrence rates 00:21:10.859 --> 00:21:13.200 in manufactured homes versus traditional site 00:21:13.200 --> 00:21:16.000 -built homes. And the result is it's completely 00:21:16.000 --> 00:21:17.980 counterintuitive for most people. Don't leave 00:21:17.980 --> 00:21:20.119 us hanging. The fire occurrence rate and the 00:21:20.119 --> 00:21:23.160 injury rate per fire are actually lower in manufactured 00:21:23.160 --> 00:21:26.720 housing. Wait, hold on. Say that again. You are 00:21:26.720 --> 00:21:30.400 safer from a fire in a so -called trailer. than 00:21:30.400 --> 00:21:32.980 in a regular house statistically speaking yes 00:21:32.980 --> 00:21:35.960 the data shows fewer fires per capita and when 00:21:35.960 --> 00:21:38.420 a fire does occur you have a lower chance of 00:21:38.420 --> 00:21:41.220 being injured how is that even possible I feel 00:21:41.220 --> 00:21:43.180 like I constantly see news stories about trailer 00:21:43.180 --> 00:21:45.660 fires. That's the airplane crash effect. It's 00:21:45.660 --> 00:21:48.119 a vivid image, so it sticks in your head. The 00:21:48.119 --> 00:21:50.240 news reports on the spectacular failures, not 00:21:50.240 --> 00:21:52.759 the millions of homes that perform perfectly. 00:21:53.059 --> 00:21:54.839 Okay, so what's the reason? Why are they safer? 00:21:55.000 --> 00:21:57.680 The reality is the HUD code. Remember, these 00:21:57.680 --> 00:22:00.279 homes are federally regulated. And in some specific 00:22:00.279 --> 00:22:03.259 areas related to fire, the HUD code is actually 00:22:03.259 --> 00:22:05.519 stricter than the International Residential Code, 00:22:05.599 --> 00:22:08.319 or IRC, which is used for most normal houses. 00:22:08.619 --> 00:22:10.920 Stricter how? Give us the specifics. What makes 00:22:10.920 --> 00:22:13.460 them so fire resistant? It comes down to a metric 00:22:13.460 --> 00:22:15.859 called flame spread. Flame spread. It's a rating 00:22:15.859 --> 00:22:18.079 that dictates how quickly a fire can travel across 00:22:18.079 --> 00:22:21.220 a surface. The HUD code requires a flame spread 00:22:21.220 --> 00:22:24.339 rating of 25 or less for the walls and ceiling 00:22:24.339 --> 00:22:26.440 of the water heater and furnace compartments. 00:22:26.500 --> 00:22:29.059 Okay, interpret that number for us. Is 25 good? 00:22:29.240 --> 00:22:31.789 It's very restrictive. On a scale where something 00:22:31.789 --> 00:22:34.329 like cement board is zero and untreated red oak 00:22:34.329 --> 00:22:38.450 is 100, 25 means the material is very, very resistant 00:22:38.450 --> 00:22:41.289 to catching and spreading a flame. For the wall 00:22:41.289 --> 00:22:43.529 behind the kitchen range, it must be 50 or less. 00:22:43.710 --> 00:22:46.769 For all other ceilings, 75 or less. So they're 00:22:46.769 --> 00:22:48.490 essentially legislating that you can't build 00:22:48.490 --> 00:22:50.470 the walls out of kindling, especially around 00:22:50.470 --> 00:22:53.009 heat sources. Correct. They also have strict 00:22:53.009 --> 00:22:55.269 requirements for kitchen cabinets. The bottoms 00:22:55.269 --> 00:22:57.509 and sides of cabinets over the stove need to 00:22:57.509 --> 00:23:01.029 have that super restrictive 25 rating. And smoke 00:23:01.029 --> 00:23:03.289 detectors are mandatory in the main living areas. 00:23:03.569 --> 00:23:05.710 But the big one, the really big one, is about 00:23:05.710 --> 00:23:08.349 the doors. The doors. The HUD code requires at 00:23:08.349 --> 00:23:10.660 least two exterior doors. That seems normal. 00:23:10.779 --> 00:23:12.859 My house has a front door and a back door. It 00:23:12.859 --> 00:23:15.819 is for a bigger house, but not always for a small 00:23:15.819 --> 00:23:18.880 apartment or a little cottage. Here, it is mandatory 00:23:18.880 --> 00:23:22.380 no matter the size. And crucially, Every single 00:23:22.380 --> 00:23:25.339 bedroom door must be within 35 feet of an exterior 00:23:25.339 --> 00:23:28.220 door. Ah, so you're never trapped deep inside 00:23:28.220 --> 00:23:31.019 the maze of a house during a fire. Exactly. No 00:23:31.019 --> 00:23:34.859 dead ends. Egress is paramount. This single design 00:23:34.859 --> 00:23:37.960 requirement, the 35 -foot rule, saves lives. 00:23:38.339 --> 00:23:40.680 So when you combine these flame -resistant materials 00:23:40.680 --> 00:23:43.799 with mandatory close -by escape routes, you get 00:23:43.799 --> 00:23:46.039 a statistically very safe structure. What about 00:23:46.039 --> 00:23:47.680 energy efficiency? That's the other stereotype, 00:23:47.819 --> 00:23:49.240 right? That they are freezing in the winter and 00:23:49.240 --> 00:23:51.980 roasting in the summer? walls, no insulation. 00:23:52.279 --> 00:23:54.660 Again, that might have been true for a 1970 mobile 00:23:54.660 --> 00:23:58.259 home. It is absolutely not true for a 2026 manufactured 00:23:58.259 --> 00:24:00.839 home. So what changed? The modern high performance 00:24:00.839 --> 00:24:03.599 manufactured home is basically an energy fortress. 00:24:03.920 --> 00:24:05.980 We're talking about energy star requirements 00:24:05.980 --> 00:24:08.440 that are often better than a standard built new 00:24:08.440 --> 00:24:11.089 home. Okay, throw some R values at us. All right. 00:24:11.109 --> 00:24:14.069 For context, an R value measures how well insulation 00:24:14.069 --> 00:24:17.430 resists heat flow. Higher is better. A typical 00:24:17.430 --> 00:24:19.990 wall in an older house or even a basic new one 00:24:19.990 --> 00:24:23.529 might be R13 or R19. And in these homes? The 00:24:23.529 --> 00:24:25.990 Energy Star requirement for these homes uses 00:24:25.990 --> 00:24:29.289 2x6 walls, not 2x4s, which allows for thicker 00:24:29.289 --> 00:24:32.829 insulation. They have R21 in the walls. So significantly 00:24:32.829 --> 00:24:35.490 more insulation than an older home. Right. And 00:24:35.490 --> 00:24:39.390 the roof, R40. That's like wearing a down parka 00:24:39.390 --> 00:24:42.769 on top of the house. It's massive. And the floor, 00:24:42.990 --> 00:24:45.470 which is often a source of heat loss, is R33. 00:24:46.089 --> 00:24:48.829 This whole concept is called life cycle affordability. 00:24:49.049 --> 00:24:51.410 Life cycle affordability. The idea is that if 00:24:51.410 --> 00:24:53.250 you're a low income family, the last thing you 00:24:53.250 --> 00:24:56.390 need is a cheap house with a $400 a month electric 00:24:56.390 --> 00:24:59.309 bill. So they over insulate to keep the monthly 00:24:59.309 --> 00:25:01.849 running costs as low as possible over the entire 00:25:01.849 --> 00:25:04.529 life of the home. It really seems like the industry 00:25:04.529 --> 00:25:06.569 has systematically solved the engineering problems. 00:25:06.710 --> 00:25:08.730 They've solved the safety problems. They've solved 00:25:08.730 --> 00:25:11.180 the energy problems. But they just can't. solve 00:25:11.180 --> 00:25:13.119 the branding problem. Which brings us to the 00:25:13.119 --> 00:25:17.059 confusing cousin, the modular home. Right. I 00:25:17.059 --> 00:25:19.640 feel like modular and manufactured are used interchangeably 00:25:19.640 --> 00:25:21.980 by 90 % of the population. I was probably guilty 00:25:21.980 --> 00:25:24.539 of it before this. But you're saying they are 00:25:24.539 --> 00:25:26.480 totally different species. They are biologically 00:25:26.480 --> 00:25:28.880 related, but they are legally distinct. Both 00:25:28.880 --> 00:25:31.579 are built in a factory. Both are trucked to the 00:25:31.579 --> 00:25:34.559 site in sections. But here is the crucial difference. 00:25:34.819 --> 00:25:38.150 The code and the chassis. Okay, break it down 00:25:38.150 --> 00:25:40.849 for us. A manufactured home is built to the national 00:25:40.849 --> 00:25:44.009 HUD code, and it stays permanently on that steel 00:25:44.009 --> 00:25:47.130 chassis. We've covered that. A modular home is 00:25:47.130 --> 00:25:49.990 built to the local building code, the IRC, the 00:25:49.990 --> 00:25:52.190 same code your neighbor's site -built house was 00:25:52.190 --> 00:25:54.630 built to, and it does not have a permanent chassis. 00:25:55.160 --> 00:25:57.420 So the modular home arrives on a flatbed truck. 00:25:57.660 --> 00:26:00.539 They lift the boxes off with a crane and then 00:26:00.539 --> 00:26:02.420 the truck drives away with the wheels and the 00:26:02.420 --> 00:26:05.380 frame. Exactly. The house itself is placed by 00:26:05.380 --> 00:26:07.500 a crane onto a permanent concrete foundation. 00:26:07.759 --> 00:26:10.619 It could be a basement, a crawl space, a slab. 00:26:10.920 --> 00:26:13.700 Once it is set and sealed, it is legally identical 00:26:13.700 --> 00:26:16.119 to a site built home. And the banks treat it 00:26:16.119 --> 00:26:19.420 that way. Yes, that's the key. You can get a 00:26:19.420 --> 00:26:23.900 normal 30 year mortgage. It appreciates in value 00:26:23.900 --> 00:26:26.299 with the rest of the real estate market. It is 00:26:26.299 --> 00:26:29.000 not chattel. So if I want the quality and efficiency 00:26:29.000 --> 00:26:32.099 of a factory built house, but I don't want to 00:26:32.099 --> 00:26:34.339 get caught in that finance trap, I should be 00:26:34.339 --> 00:26:36.640 looking at a modular home. If you can afford 00:26:36.640 --> 00:26:39.779 the land, the cost of a foundation, yes, absolutely. 00:26:40.140 --> 00:26:43.130 And there's a fascinating anecdote about... modulars 00:26:43.130 --> 00:26:45.250 that came out of Hurricane Andrew. Oh, right. 00:26:45.369 --> 00:26:47.529 This was in the notes. The hurricane in 92. Yes. 00:26:47.890 --> 00:26:51.650 1992, a monster category five storm. It absolutely 00:26:51.650 --> 00:26:54.589 devastated South Florida. And FEMA went in afterward 00:26:54.589 --> 00:26:56.990 to do a postmortem to assess the damage and see 00:26:56.990 --> 00:26:58.869 what held up and what didn't. And what did they 00:26:58.869 --> 00:27:02.220 find? They found that modular homes and masonry 00:27:02.220 --> 00:27:04.000 homes like concrete block fared significantly 00:27:04.000 --> 00:27:06.680 better than the standard wood frame site -built 00:27:06.680 --> 00:27:09.059 homes. Wait, why would a modular home be stronger 00:27:09.059 --> 00:27:11.539 than a regular house built on site? It goes back 00:27:11.539 --> 00:27:13.619 to the transport. The same reason a manufactured 00:27:13.619 --> 00:27:16.160 home is so rigid. To survive the trip on the 00:27:16.160 --> 00:27:18.740 highway, a modular module contains about 20 to 00:27:18.740 --> 00:27:21.420 30 percent more lumber for bracing than a typical 00:27:21.420 --> 00:27:23.839 stick -built room. More wood. More wood, more 00:27:23.839 --> 00:27:26.700 glue, more fasteners. Everything is glued and 00:27:26.700 --> 00:27:29.900 screwed, not just nailed. It is a super rigid, 00:27:30.099 --> 00:27:33.180 over -engineered box. So when those 150 mile 00:27:33.180 --> 00:27:36.480 per hour hurricane winds hit, that rigidity held 00:27:36.480 --> 00:27:38.359 it together, whereas many of the site -built 00:27:38.359 --> 00:27:41.779 homes just folded. So the highway prepares the 00:27:41.779 --> 00:27:44.059 house for the hurricane. That is actually kind 00:27:44.059 --> 00:27:46.579 of poetic. It is, isn't it? Okay, let's zoom 00:27:46.579 --> 00:27:48.220 out and look at the economics in the real world. 00:27:48.779 --> 00:27:51.980 We have this theoretical affordable housing solution. 00:27:52.480 --> 00:27:54.700 Does it actually work in the most expensive places? 00:27:55.460 --> 00:27:57.839 The notes bring up the San Francisco Bay Area 00:27:57.839 --> 00:28:00.400 as a case study. The Bay Area is the ultimate 00:28:00.400 --> 00:28:02.940 stress test for any housing economic theory. 00:28:03.140 --> 00:28:06.180 The price of land is astronomical. I've seen 00:28:06.180 --> 00:28:08.420 the headlines. Tear down shacks. Literally just 00:28:08.420 --> 00:28:11.140 a pile of boards selling for $2 million. Right. 00:28:11.259 --> 00:28:13.480 So looking at the data from the source, which 00:28:13.480 --> 00:28:16.240 was from May 2011, and the ratio is still generally 00:28:16.240 --> 00:28:18.900 hold up today, the median home price in Santa 00:28:18.900 --> 00:28:21.940 Clara was nearly $500 ,000. Okay. But a brand 00:28:21.940 --> 00:28:25.039 new... Top of the line premium manufactured home 00:28:25.039 --> 00:28:28.079 was $250 ,000. Exactly half price. Half price. 00:28:28.299 --> 00:28:30.980 But here is the catch. Where do you put it? You 00:28:30.980 --> 00:28:34.000 can't afford a plot of land in Santa Clara. So 00:28:34.000 --> 00:28:35.680 you put it in a manufactured home community, 00:28:35.880 --> 00:28:38.680 a park. Like the Casa de Amigos community that 00:28:38.680 --> 00:28:41.039 was mentioned in the notes in Sunnyvale. Exactly, 00:28:41.180 --> 00:28:44.420 Casa de Amigos. In that model, you buy the house, 00:28:44.539 --> 00:28:48.319 the physical structure, for your $250. But you 00:28:48.319 --> 00:28:51.480 pay a monthly site fee, which is basically rent, 00:28:51.619 --> 00:28:54.200 to the park owner for the little patch of land 00:28:54.200 --> 00:28:56.319 underneath it. So it's a hybrid ownership model. 00:28:56.440 --> 00:28:58.500 You own the box, but you rent the dirt. You own 00:28:58.500 --> 00:29:00.809 the box, you rent the dirt. And this is a really 00:29:00.809 --> 00:29:04.170 controversial model. On one hand, it dramatically 00:29:04.170 --> 00:29:07.190 lowers the barrier to entry. You don't need a 00:29:07.190 --> 00:29:08.930 million dollars to live in Silicon Valley. You 00:29:08.930 --> 00:29:10.670 can get in for the price of the house. You can 00:29:10.670 --> 00:29:12.809 send your kids to those great schools. But on 00:29:12.809 --> 00:29:14.650 the other hand, you're incredibly vulnerable. 00:29:15.210 --> 00:29:17.349 Extremely vulnerable. If the POC owner decides 00:29:17.349 --> 00:29:19.190 to double the rent, what are you going to do? 00:29:19.569 --> 00:29:22.769 Or worse, if they decide to sell the entire piece 00:29:22.769 --> 00:29:25.369 of land to a developer who wants to build condos. 00:29:25.509 --> 00:29:28.029 You're in big trouble. You're in big trouble. 00:29:28.269 --> 00:29:30.990 Because remember, despite the name mobile home, 00:29:31.250 --> 00:29:34.150 moving these things is incredibly expensive and 00:29:34.150 --> 00:29:37.309 technically difficult. It can cost tens of thousands 00:29:37.309 --> 00:29:39.809 of dollars and you have to find another park 00:29:39.809 --> 00:29:42.950 that will even accept an older home. You're effectively 00:29:42.950 --> 00:29:45.849 a captive tenant. It seems like a very fragile 00:29:45.849 --> 00:29:48.730 solution to an affordability crisis. What about 00:29:48.730 --> 00:29:50.630 other countries? Is this just a uniquely American 00:29:50.630 --> 00:29:53.529 problem, this whole stigma? The trailer park 00:29:53.529 --> 00:29:56.869 stigma is fairly American and Canadian, but the 00:29:56.869 --> 00:30:00.490 technology, the factory built concept is global. 00:30:00.789 --> 00:30:03.190 The notes point to Australia as a good example. 00:30:03.369 --> 00:30:05.430 And what do they do differently down under? Well, 00:30:05.450 --> 00:30:07.250 first, the language is different, which I think 00:30:07.250 --> 00:30:09.410 is telling. They don't usually say mobile home. 00:30:09.490 --> 00:30:13.430 They say transportable, relocatable or prefabricated 00:30:13.430 --> 00:30:16.710 home. Relocatable sounds so much more. Intentional 00:30:16.710 --> 00:30:19.450 and professional. It does, doesn't it? And their 00:30:19.450 --> 00:30:21.710 primary use case is often driven by industry, 00:30:21.990 --> 00:30:24.130 not just low -income housing. Think about the 00:30:24.130 --> 00:30:26.210 mining towns in Western Australia. Right, in 00:30:26.210 --> 00:30:28.809 the middle of nowhere. A huge mine opens up in 00:30:28.809 --> 00:30:31.549 the middle of the outback. You need quality housing 00:30:31.549 --> 00:30:35.410 for 500 workers, and you need it instantly. You 00:30:35.410 --> 00:30:37.970 can't find 500 carpenters out there in the desert. 00:30:38.130 --> 00:30:40.490 So you truck the houses in from a factory in 00:30:40.490 --> 00:30:43.529 Perth. You truck them in, high quality, heavily 00:30:43.529 --> 00:30:46.750 air -conditioned. durable homes and when the 00:30:46.750 --> 00:30:49.789 mine closes down in 20 years you pick them up 00:30:49.789 --> 00:30:52.109 and move them to the next mining town see that 00:30:52.109 --> 00:30:54.289 makes so much sense that is using the mobility 00:30:54.289 --> 00:30:57.390 for its actual intended purpose exactly they 00:30:57.390 --> 00:31:00.210 also use them for what they call over 50 estates 00:31:00.210 --> 00:31:02.549 which is their version of retirement communities 00:31:02.549 --> 00:31:06.269 but the whole vibe seems to be less about warehousing 00:31:06.269 --> 00:31:09.740 the poor and more about efficient, logical housing 00:31:09.740 --> 00:31:12.480 solutions. It's amazing how much culture and 00:31:12.480 --> 00:31:15.019 language shape a technology. It is. It's the 00:31:15.019 --> 00:31:17.519 same steel chassis, the same factory -built walls, 00:31:17.700 --> 00:31:20.519 but in Australia, it's a logistical tool. In 00:31:20.519 --> 00:31:23.099 the U .S., it's a class marker. That's the tragedy 00:31:23.099 --> 00:31:25.740 of it. So let's try to wrap this all up. We have 00:31:25.740 --> 00:31:27.779 covered a lot of ground today. We certainly have. 00:31:27.940 --> 00:31:30.279 We started with the definition, that all -important 00:31:30.279 --> 00:31:33.720 chassis, that hidden steel frame. that legally 00:31:33.720 --> 00:31:35.779 turns a house into a vehicle. A vehicle that 00:31:35.779 --> 00:31:38.819 almost never, ever moves. We looked at the history, 00:31:38.980 --> 00:31:42.660 the 10 -foot -wide revolution of 1956 that really 00:31:42.660 --> 00:31:46.500 split the industry into campers and housing. 00:31:46.680 --> 00:31:49.140 And we looked at that pivotal date, June 15, 00:31:49.420 --> 00:31:53.200 1976, the birth of the HUD code and the moment 00:31:53.200 --> 00:31:56.359 mobile homes became manufactured homes. We busted 00:31:56.359 --> 00:31:59.259 the fire safety myth. We learned that... Statistically, 00:31:59.359 --> 00:32:01.680 these homes are often safer and more energy efficient 00:32:01.680 --> 00:32:04.259 than traditional houses. But we kept coming back 00:32:04.259 --> 00:32:06.799 to that finance trap. The fact that because it 00:32:06.799 --> 00:32:09.039 has the ghost of wheels under it, the financial 00:32:09.039 --> 00:32:11.430 world treats it like a depreciating car. And 00:32:11.430 --> 00:32:13.349 that, for me, that's the real takeaway. We have 00:32:13.349 --> 00:32:16.130 a technology here, factory -built housing, that 00:32:16.130 --> 00:32:18.609 is efficient, it's safe, it's affordable. It 00:32:18.609 --> 00:32:20.670 could be a powerful tool to solve so many of 00:32:20.670 --> 00:32:22.470 our housing crises. But it's being held back. 00:32:22.650 --> 00:32:24.910 It's being held back by a legal definition from 00:32:24.910 --> 00:32:27.910 the 1970s and a social stigma that goes all the 00:32:27.910 --> 00:32:30.589 way back to the 1950s. It really makes you wonder, 00:32:30.690 --> 00:32:33.190 if we could just get over the chassis obsession, 00:32:33.490 --> 00:32:36.190 if we could find a new legal framework, a new 00:32:36.190 --> 00:32:38.130 way to finance these homes as what they are, 00:32:38.250 --> 00:32:42.259 real estate. Could we unlock a massive amount 00:32:42.259 --> 00:32:45.140 of high quality, affordable housing? I absolutely 00:32:45.140 --> 00:32:47.279 think we could. If we stopped looking at the 00:32:47.279 --> 00:32:49.700 decorative skirt hiding the wheels and started 00:32:49.700 --> 00:32:51.940 looking at the quality of the walls and the R 00:32:51.940 --> 00:32:54.480 value in the ceiling, we might see a completely 00:32:54.480 --> 00:32:56.960 different picture. So the next time you drive 00:32:56.960 --> 00:32:59.220 past one of these communities or you see a wide 00:32:59.220 --> 00:33:02.119 load truck on the highway with half a house on 00:33:02.119 --> 00:33:04.220 it. Don't just see a traffic jam. See a piece 00:33:04.220 --> 00:33:07.440 of high tech engineering that is. fighting a 00:33:07.440 --> 00:33:10.680 very complicated legal and social battle just 00:33:10.680 --> 00:33:13.140 to exist. And maybe, you know, take a closer 00:33:13.140 --> 00:33:14.839 look at that skirting around the bottom of the 00:33:14.839 --> 00:33:16.420 next house you see. You never know what it might 00:33:16.420 --> 00:33:18.319 be hiding. Thanks for joining us on this deep 00:33:18.319 --> 00:33:19.819 dive. We will see you next time.