The weather in Unadilla, New York, a small town about 40 miles east of Binghamton, was pretty typical one afternoon in August 2010: sunny skies and temperatures in the low 80s. But as one of the residents of Unadilla’s Meadow Valley Manufactured Home Park looked out her window, she didn’t like what she saw. She was chagrined by the alarming deterioration of the vacant home next door and, even more, by the decline in the lot around it. Weeds crept up to the windows, over stairs and railings, and the situation threatened her home with deer ticks and fires. One day, a rat the size of a small dog had emerged from beneath the home to greet her.

The situation was intolerable, but her options were limited. In “mobile home parks,” residents generally own their homes but rent the land from a third-party investor/owner. In Meadow Valley’s case, the park had been in foreclosure for more than a year and requests from the residents to have the abandoned home removed went unanswered.

But then, the publicity of a foreclosure auction created an opportunity. Two entrepreneurial nonprofits—the PathStone Corporation of Rochester, New York and ROC USA—helped the homeowners form a cooperative to take ownership of the park. (One of this article’s co-authors, Paul Bradley, is ROC USA’s president.) At the foreclosure auction on the courthouse steps, the co-op made the winning bid of $785,000 and won the right to buy the park—and to exercise control over matters like abandoned homes.

ROC USA Capital, the nonprofit’s lending subsidiary, provided the new co-op with predevelopment and acquisition loan products that made the purchase possible. It also executed a servicing agreement with PathStone for ongoing co-op training and technical assistance. PathStone will provide Meadow Valley services for at least ten years.

Less than two years into resident ownership, life at Meadow Valley has changed dramatically. The rat-infested home is gone. The co-op has also fixed septic systems, cleared overgrown land, dug ditches to redirect storm water, rehabilitated retention ponds, and addressed shortcomings in the community water system. Residents are investing in the community, too, according to co-op President Jim Barnhart. “People are blacktopping their driveways now, where they didn’t before because they didn’t own it,” he said. “It’s really kept well now. We’re proud of it, and we’ve had comments on it. We’ve worked hard on this.”

Moreover, members have organized community-wide social gatherings for the first time, and (as is the rule rather than the exception in co-ops) have gotten to know one another as friends and not merely neighbors.

Most of us don’t think much about the people who live in manufactured homes, and when the culture notices them, it usually does so with derision. But there is an interesting and important asset-building story playing out here. The United States is home to some 50,000 manufactured housing communities with an estimated 2.7 million families who own their homes but rent the land underneath them. This housing stock—both in parks and on owned single lots—represents the largest segment of unsubsidized affordable housing in the nation. Two-thirds of these homeowners are low income.

The quality of the homes themselves has, since federal building codes were introduced in 1976, improved dramatically. The change from “trailers” to “manufactured homes” is not merely a marketing ploy—it represents a shift away from post-World War II travel trailers used to temporarily house a new industrial workforce to factory-built homes that many passersby would be hard-pressed to differentiate from homes built by contractors on site. Today’s manufactured homes have the same amenities as traditional housing and are, on average, far more energy efficient. Nationally, the average new single-section (often called “single-wide”) home sold for $40,600 in 2011. New two-section homes sold for an average of $74,200, according to the U.S. Census Bureau. By comparison, the average sale price for a site-built home (including land) in 2010, the last year for which Census data are available, was $272,900.

The manufactured home and site-built residential markets diverge when one examines how manufactured homes are sold, financed, and sited. The process of buying a new manufactured home is more akin to buying a car than a site-built house. Buyers work through dealers or retailers to choose a home and its features. Typically, financing is arranged by the retailer, and buyers have limited access to conventional residential financing. Because most state laws and lenders do not consider manufactured homes to be real estate, they are financed and treated as chattel or personal property—more like cars than houses. It’s not unusual for park residents to pay loan rates at twice the conventional mortgage rate, or more. The inherent instability of owning a home that is considered chattel on rented land contributes to the higher borrowing rates for buyers.

In Unadilla, and in resident corporations like it across the country, forming a co-op to buy and manage the community is the first step in a transition to family stability and asset building for the park’s homeowners. According to research conducted in 2006 by the Carsey Institute at the University of New Hampshire, homeowners in resident-owned communities enjoy better house-price performance, faster home sales, and lower lot rents than their counterparts in investor-owned communities. The Carsey study showed New Hampshire co-ops have lower and more stable lot rents after three years of co-op ownership. Homes in co-ops sold, on average, for $53,077—$7,234, or 16 percent, more than homes in investor-owned parks. Those homes were, on average, almost 9 percent bigger, five-and-a-half years newer, and 8.5 percent more valuably assessed than those in investor-owned parks. They also sold an average of 23 days faster (60 versus 83 days on market).

The Unadilla homeowners now enjoy the benefits of cooperative ownership. Stabilized rents allow homeowners to invest in their homes and community, enhancing property values, potential home resale values, and more importantly residents’ quality of life. The empowerment of ownership spurs homeowners to take better care of and reinvest in their homes and yards and to help neighbors who aren’t able to do the same.

The push toward resident ownership began in New Hampshire in 1984 when 13 families in Meredith Center Trailer Park were poised to lose their homes to a developer who wanted to buy the park and evict them. The New Hampshire Community Loan Fund helped the families form a cooperative and loaned them the money to buy the park. Today, New Hampshire is home to 102 resident-owned communities (ROCs) housing more than 5,000 families. Unfortunately, only about 1,000 of 50,000 parks nationwide are resident-owned.

The success of resident ownership is best illustrated by the stories of the homeowners and the leaders who emerged from these transformed communities. Dottie Hillock helped lead the ROC conversion of South Parrish Road Cooperative in Winchester, New Hampshire, 20 years ago with the help of the Community Loan Fund (co-author Bradley was the Community Loan Fund’s technical assistance provider to South Parrish Road Co-op at the time). Since the purchase, Hillock’s community has seen major infrastructure improvements and stable rent for two decades—members’ payments have increased just $30 per month since going co-op in 1992. That’s the same amount by which rents had increased in the three years before they purchased.

“We even give members a break and take $10 off the rent if they pay by the tenth of the month,” Hillock said. She added that if the residents had not formed the co-op, the current $240 rent would “probably be $350, $400 easy.”

While co-ops create stability and preserve communities, decent home financing also is crucial for realizing the wealth accumulated through ownership—without financing, residents are forced to rent, sell cheap, or, worse, abandon homes when they want to move.

In the most recent State of the Nation’s Housing report, Harvard researchers identified a supply shortage of more than five million affordable housing units for low-income families. Moreover, because more than 40 percent of affordable units are occupied by higher-income families, the availability gap is actually seven million units. This gap has widened in the last decade because as a nation, we have lost approximately 470,000 units of affordable housing. Today, more than 42 million families pay more than 30 percent of their pretax income to cover housing costs, and 20 million of them pay more than half. Further, only one in four families that would qualify for federal housing assistance currently receives it. And housing assistance funding is expected to decline in 2013 and likely will continue to decline as the country grapples with its fiscal challenges.

Meanwhile, approximately seven million owners of manufactured homes—in parks and on owned lots—with incomes that average around $30,000 live in almost completely unsubsidized housing. Almost three million of them live precariously, faced with the chronic risks of displacement through change of land use, unforeseen increases in the rents they pay for the land under their homes, and underdeveloped lending markets that make it expensive to purchase or improve their homes and difficult to sell them.

How can we best protect the interests and assets of these Americans? Easier financing terms for both homes and co-ops and support for training and technical assistance would be a start. Project subsidies for health-and-safety improvements like water and septic systems would be valuable as well. Other policy solutions would have to occur on the state level, as consumer-protection laws in this sector are still largely the domain of the states. Some of those protections include increasing notice periods for park closures, using receivership when neglect of infrastructure becomes a health risk, and creating tax incentives for resident ownership.

It is incumbent on us to preserve and stabilize this naturally affordable housing stock. It is simply unacceptable to punish families that embody the national ideal of self-sufficiency by raising the cost of being poor.

This symposium was supported by the Corporation for Enterprise Development (CFED), which hosted its biennial Assets Learning Conference on September 19-21 in Washington, D.C.