Place, form, function, and time utility also apply when buying houses. Place is most important, so we'll deal with that first. The place where a house is located usually has more influence on why people buy than other factors. Families like to buy homes within their budgets near work or good schools. Despite this, developers in search of cheap land have created housing tracts that extend for 20 miles from the city center. Although the initial cost of rural agricultural land when bought by the acre costs less, what about the infrastructure costs of roads, curbs and gutters, sewers, gas lines? What about the time required to obtain necessary zoning changes and permits? Impact fees? Interest? Property taxes? These all add to the costs of converting undeveloped land into housing tracts.
Once a tract has been developed, it is then sold to builders. The price they pay must have all the other costs factored into it. In some areas, builders have to build parks, schools, and even low-income housing in order to get building permits. They've got the same costs of interest and land taxes to which insurance, OSHA, payroll, marketing, and financing and interest rate “buy-downs” must be added. Because of their distance from urban amenities, these homes can't command the higher prices that more conveniently situated homes can. Still, they sell fairly well because the ultimate home-owner/consumer perceives them to be a bargain compared to homes for sale that are closer in to the city center, and financing is easier.
So, the homeowner moves in to his “bargain” home and starts spending more money immediately. He may have to buy another car, with all the additional costs of fuel, maintenance, financing, fuel, etc. to use to haul kids to distant schools, or for everyone to get to work. Trips back and forth for groceries and social activities may rob the family of hundreds of hours a year. And when he sells, even though shopping and schools may have moved closer as the population grew, he will still have to pass on a “bargain” to the next buyer in order to get him to buy a house that's not in a more convenient place.
Possibly a properly managed and financed mobile home community is the most rewarding real estate investment. Depending upon State and local restrictions, within this community there can be myriad profit centers. New mobile homes can be sold and financed. Older homes can be taken in trade and re-sold. Profitable mobile home maintenance and repair services, sales and services of appliances and accessory equipment, mini-storage, lawn maintenance and landscaping services, electrical, gas, water and sewer utilities, child and elder care services, recreational facilities, boat and RV storage, mobile home rentals and/or rent to own operations, tours, etc. can be offered at a price.
Why doesn't everyone own a mobile home community? Because land use, density, and zoning restrictions in many areas make developing a mobile home park too expensive. In other areas in which a mobile home community would ease housing and enhance the tax base, local residents vote against them. In one instance, after almost two years of planning and courting of the local residents, approval for a planned mobile home community was denied by one vote of a council member because of feared political repercussions.
For this reason, quite often, the areas with the fewest restrictions also are sparsely populated; and/or located outside of normal commuting distances from work for the residents. Trying to walk the knife edge between locating a mobile home park where costs of development are feasible, yet being convenient enough to residents to make them want to live in it is tricky. I recently turned down a chance to buy a park for under $4000 per a space. It was located just a little too far away from jobs to attract residents, and had been vacant for 16 years. The original developer hadn't understood “place” utility value.
Land speculation involves the same kind of arithmetic. It has to be close enough in for growth to reach it in a reasonable time, yet be far enough out to be relatively inexpensive to buy, and to hold until it can be sold for a profit.
