Can't we just disrupt housing with mobile homes?

People spend $12 trillion a year on housing. In the US, housing is ~17% of GDP.^[1] If you want to make trillions, you need to capture a big white space. Global residential real estate is worth $170 trillion—the biggest vertical.^[2] So, why can't we just disrupt it to drive down prices?

Economics of housing:^[3] Housing supply limitations primarily raise land prices. For existing homes, land averages ~35% of the value (data mainly from single-family homes). For new construction (both single-family and multifamily), land is typically 20% or less, with construction costs accounting for 50-80% of the total, making it the majority cost. While extreme demand can inflate home prices beyond production cost, new construction seems less affected, suggesting building rate is a key price factor. New York and San Francisco are not typical of the overall US housing market.

Over decades, firms have tried and failed to disrupt housing with prefabs (e.g. most recently, prefab startup Catera failed after raising billions).

Prefabs are expensive due to:^[4]

varied soil, zoning, and regulation.
High transport costs limit prefab housing to a one-day drive radius, necessitating multiple smaller factories instead of a single, cost-efficient gigafactory with economies of scale.
Prefab assembly significantly contributes to the price and suffers from Baumol's cost disease.

Mobile homes don't have these problems and could offer high-volume, low-cost housing compared to traditional homes. Of course, mobile homes (trailer parks) are often a misnomer because the homes can't actually be moved (or it's cost-prohibitive to move them) which reduces competition and drives up prices- often leading to predatory pricing against very poor people.^[5] But at 6% of the US housing stock, they are the biggest source of unsubsidized affordable housing already^[6] and have a number of advantages:

Demographic: It suits the rising trend of smaller, single-person households.
Economics: Mobile homes could cost as little ~$10k and are adaptable to low-cost land. High land costs and restrictive local laws make urban housing expensive. However, cheap greenfield land exists outside cities; for example, 1/10 of an acre needed for a house can cost $1-10k. Rural Colorado land can be as low as $500 per acre, a fraction of the cost of a square foot in Manhattan.^[7]

Adding another 10M mobile homes at ~$20k would only cost $200B. People might not want to live in mobile homes year round but adding that much housing might really drive down prices still.

Maybe the reason why mobile homes haven't taken off is that the technology wasn't there previously but that has come online recently. Maybe soon, technological advances in solar power, satellite internet, and water recycling could make 'autonomous housing' comfortable and viable for remote work.

Tesla is a trillion dollar company and its CEO already lives in a $50K prefab house in Texas that can be towed by a Model X.^[8] Imagine Tesla would really go for it in terms of mobile homes and use new technology for off-grid living:

Internet: Starlink provides high-speed internet, eliminating the need for traditional connections, even in rural areas.^[9] There's already a starlink for RVs program ^[10] and Tesla cars will connect to Starlink's new cellular-broadcasting satellites.^[11]
Energy: Off-grid solar with Powerwall storage provides 24/7 energy. Solar roof and Powerwall cost ~ $15k.^[12] Currently ~1kW, but this will decrease.^[13] It'll have lots of clever ways to improve energy efficiency (e.g. infrared heating, etc.).
Transport: No need to connect to public transport links—you only need a road nearby, which you're never from: In the US, the furthest point from a road is near Yellowstone, at 18.76 miles; in the UK, the furthest is in Scotland, at 6.4 miles.^[14] If/when driverless cars work, living further out becomes more appealing. Even a ~1-hour commute to the city improves greatly, as your autonomous Tesla allows you to work while commuting. As remote work becomes common post-covid,^[15] you don't need to go to the office often anyway.
Water & wastewater: No need for a water connection or proximity to water, as a dehumidifier will extract, purify, and store drinkable water from the air.^[16] Your mist shower uses minimal water: only about 2.5 L (half a gallon).^[17] Washer and dishwasher use about 10 L (2 gallons).^[18],^[19] A waterless composting toilet eliminates the need for sewer connection.^[20]
Retail & garbage: Amazon Prime drones deliver groceries and shopping, picking up compacted trash on their return.^[21]
Financing & Marketing: At first, Tesla will sell this to the rich, who will pay a premium 'to summer in their secluded Tesla eco-cottage', or as an off-grid home office or garden shed that can be Airbnb'ed to supplement income. But this will cross-subsidize the development of a cheaper basic model of Tesla Home. At scale, this might cost ~$10-100k including land, Solar Roof & Powerwall battery, and Tesla car. You only pay ~$500/month for the mortgage and you don't need to pay for utilities, internet, transport, or local tax (you only use roads). Banks will lend you more at very low interest rates with just a small down payment, because if you default they can just track the home and foreclose. Foreclosure is cheaper, because standardization increases the resale value. With competitive interest rates, you pay off your mortgage quickly. The home could also be parked in the driveways and generate Airbnb income.

The mobile homes would be standardized (but somewhat customizable and modular), which are really cheap already. The basic model will have economies of scale and be even cheaper—a modern and cool 'iPhone for housing' product with fun low-cost gadgets and modular tech that tries to offset what it lacks in terms of space with luxury accessories, like:

Cleaning robot
High-end temperature, humidity, and air filtration control: Teslas already have air filtering and a biodefence mode- the house will also have this. Noise cancellation and white noise
All-in-one cooking machine slow-pressure cookers, is marketed as a healthy, energy-efficient cooking alternative (costing as little as an energy-saving lightbulb) and offers accompanying food delivery subscriptions.

Mobile homes are of course currently limited by regulatory, financial, and perceptual hurdles. But if the price came down significantly and they'd become more desirable, it would be harder to justify not allowing people to use them, if people are not even living in anyone's backyard. Lots of people already live in their cars,^[22] often boondocking. Many people who live in mobile homes are old and/or poor ^[23] (also cf the film Nomadland).

Land use reform, addressing limits like urban containment, is essential for mobile homes to expand affordable housing options.^[24] Policy wins here might be more tractable than fighting against the NIMBYs. There are some successes already: For instance, in 2021, Portland legalized one movable home (RV/THOW) per residential lot following a successful pilot. Removing the chassis requirement could decrease manufactured home costs by $5,000–$10,000, up to 9 percent of the total average prices.^[25] “Removing the chassis mandate aims to bypass exclusionary zoning, not just save steel. While this could trigger a massive supply shock, the effect will be muted by high-land-value localities substituting aesthetic rules for mobile-home prohibitions to maintain the status quo.”^[26]

Further reading