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Housing’s New Normal: Low Interest Rates, Shifting Demand – MH Opportunity?

November 4th, 2016 Comments off
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Credit: CoreLogic, The Urban Institute.

At the recently held Data, Demand and Demographics: A Symposium on Housing Finance in Washington, D.C., CoreLogic Chief Economist Frank Nothaft shared a strong statement with housing insiders in attendance.

If you’re waiting for any dramatic shifts in housing, interest rates, or anything like them, you’re likely to be left waiting.

I think mortgage rates are going to be with us for a long period of time,” Nothaft said. “The expectation in capital markets is no rate change from the Federal Open Markets Committee (FOMC) today. We may see an increase in federal funds rate in December.

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Frank Nothaft. Credit: CoreLogic.

HousingWire reports that Nothaft also stated that the recent FOMC announcement could provide more of an indication on the willingness of FOMC members to increase rates before the year is out.

But even if the FOMC does raise rates, mortgage interest rates will stay low, but perhaps not as “dirt cheap” as they are right now.

I think we’ll see rates rise from dirt cheap to a very low level as we move into next year, still remaining below 4% all through next year,” Nothaft said. “We’re evolving into a new era in mortgage rates.

Nothaft also provided predictions on four other trends that he feels will emerge over the next several years that will shape what he has coined the “new normal.

 

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Credit: CoreLogic.

  • A shift in household composition

With the largest age cohort in the U.S. population, ages 24 and 25 and the average age for the first time homebuyer, age 31, moving closer together, the millennial buyers are coming, soon.

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Credit: As shown.

  • A shift in the head of household

Nothaft sees a shift to 75 percent of new households being minority-headed over the next 10 years. Hispanics are projected to lead the way.

  • Home sales will continue to rise.
  • But homeowners will be holding on to their homes, which could constrain growth.

An Opportunity for the Manufactured Housing Industry

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Credit: MHLivingNews.

MHProNews and MHLivingNews continue to cover the challenges as well as the numerous advantages that the manufactured housing industry provides in the U.S., making affordable, quality housing easily available to most of the population.

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L A ‘Tony’ Kovach, credit, MHVillage.

MHProNews and MHLivingNews publisher L.A. “Tony” Kovach provides deep insight into this opportunity in Obstacles and Opportunities in Affordable Housing – October 2016, and the understanding that the solution to affordable housing is hiding in plain sight.

With new attitudes about housing, millennials are looking for viable economic solutions that also provide the opportunity for sustainability.

Hybrid Prefab Homes president Otis Orsburn sees a tremendous opportunity for his segment of the industry to fill that need.otisorsburnhybridprefabhomes-dailybusinessnewsprefabricatedmodularhomeindustry-mhpronews

Our retail shoppers are typically millennials that embrace technology and are looking for more bang for their buck without sacrificing green, sustainable and energy saving features. They wonder aloud why all homes aren’t built in the hybrid manner,” Orsburn told MHProNews in his A Cup of Coffee With… feature.

Leaders in business also clearly understand the opportunity, such as Warren Buffet and Berkshire Hathaway, which owns Clayton Homes, and Sam Zell, Chairman of Equity LifeStyle Properties, or independents such as John Bostick, with Sunshine Homes.

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To see an exclusive interview with Sam Zell, click here or the image above.

Giants and independents alike are “doubling down” on the manufactured housing industry, with Zell being quoted as saying during this interview “Everyone calls them trailer parks. Pencil head, it’s not a trailer park.

Sunshine Home’s John Bostick knows the challenges facing manufactured housing, as well as the immense opportunities when he reminds professionals that “Easy doesn’t pay well.” What Bostick means is that it is only through effort that manufactured housing will advance to its potential. ##

(Image credits are as shown above.)

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

Home Prices Gain Nearly Ten Percent

July 7th, 2016 Comments off

home_pr_increase___etftrends_creditAccording to what CoreLogic’s Home Price Index, home prices posted a year-over-year gain in May of 5.9 percent, and an increase over April, 2016 of 1.3 percent, above CoreLogic’s expectations of an 0.9 percent rise.

CoreLogic Chief Economist Frank Nothaft said year-over-year home prices have risen by 5-6 percent for 22 consecutive months, as reported by nationalmortgagenews. He added, “The consistently solid growth in home prices has been driven by the highest resale activity in nine years and a still-tight housing inventory.”

In May, Oregon and Washington posted the highest price increases, 11% and 10%, respectively, while three eastern states experienced depreciation: Connecticut 0.9%, New Jersey at 0.2% and Pennsylvania at 0.1%.

MHProNews has learned CoreLogic forecasts an increase of home prices in June as compared to May of 0.8%, and a 5.3% increase year-over-year in May of 2017. ##

(Home prices rising-credit=etftrends-posted DailyBusinessNewsMHProNews)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews)

Home Prices have Risen Monthly for over Three Years

April 8th, 2015 Comments off

home_pr_increase___etftrends_creditAs housingwire informs MHProNews, the latest report from CoreLogic says home prices nationwide rose 5.6 percent in Feb. 2015 over Feb. 2014, but increased only 1.1 percent from Jan. 2015 to Feb. 2015, indicating home price growth may only be temporary. Analysts are concerned that stagnant wage growth may hold back growth in the housing market.

Chief economist for CoreLogic Frank Nothaft says, “Since the second half of 2014, the dwindling supply of affordable inventory has led to stabilization in home price growth with a particular uptick in low-end home price growth over the last few months. From February 2014 to February 2015, low-end home prices increased by 9.3% compared to 4.8% for high-end home prices, a gap that is three times the average historical difference.

CoreLogic forecasts home prices will rise 0.6 percent from Feb. to March, and 5.1 percent from Feb. 2015 to Feb. 2016. Home prices have risen for 39 consecutive months. ##

(Image credit: etftrends— housing prices rising)

matthew-silver-daily-business-news-mhpronews-com  Article submitted by Matthew J. Silver to Daily Business News-MHProNews.

Frank Nothaft: New Multifamily Housing Units Being Absorbed

September 16th, 2014 Comments off

Housing Starts in U.S. Declined by 5.9% Amid February SnowThe past four quarters all the growth in household formation has been among renters, according to worldpropertychannel.com, as the rate of absorption for unsubsidized, unfurnished apartments has been at its fastest pace in a decade. As of Sept., 2014, construction of apartment buildings with at least five units hit the highest monthly rate since 2006. Freddie Mac’s Chief Economist Frank Nothaft said, “The apartment market has been vibrant, reflecting the desire of many Millennials to live in an urban setting and retain locational flexibility. Unfortunately, if they’re looking to live in the larger cities, that’s where rents are rising the fastest, especially in the West or Northeast regions of the United States.” Condominium construction is on the low end of the scale, as MHProNews understands. ##

(Photo credit: bloomberg/businessweek.com–new multifamily construction)

Despite Cautionary Data, Housing Market Improves Modestly

July 23rd, 2014 Comments off

Freddie Mac’s Multi-Indicator Market Index (MiMi) dipped .06 points to -2.59 last month, indicating a flat housing market, although on the year the housing market has improved by .86 points, according to housingwire.com. The all-time low was -4.42 in Nov. 2010, MHProNews has learned. Other housing market indicators are more favorable, as Freddie Mac’s Chief Economist says: “Unemployment rates are coming down, more borrowers are paying their mortgages on time, and mortgage rates remain low. So we remain cautiously optimistic the housing recovery will continue, albeit slowly, until we see more tightening in the labor markets to give personal incomes a much-needed jolt.” ##

(Image credit: firstbanktrust.com)

Housing Market Stymied by Rising Home Prices, Poor Jobs Report

February 19th, 2014 Comments off

While a tepid jobs report greeted the new year, leading to a slow start for the housing market, mortgage rates actually fell from early January to early February in the U. S., resulting in opportunities for refinance activity, according to worldpropertychannel.com. Noting that job and income growth are necessary for the housing market to come back strongly, Frank Nothaft, Freddie Mac’s vice president and chief economist says, “It appears mortgage rates may have given the market a reprieve for a month or so and provided some borrowers another chance at refinancing, especially those folks that may be holding older mortgages. However, if rates continue their upward trend, it will be difficult for many families to purchase a home without seeing some income growth.” However, as MHProNews.com has discovered, increasing home prices have reduced homebuyer affordability. ##

(Image credit: Fotosearch.com–question mark houses)

Freddie Mac Borrowers Choose Quicker Pay-Off

November 13th, 2013 Comments off

A report from government-service enterprise (GSE) Freddie Mac indicates of all the borrowers refinancing Freddie loans in Q3 2013, 37 percent chose shorter loan terms, a five percent increase from the previous quarter and the highest level recorded since 1992. According to housingwire, 32 percent of HARP (Home Affordable Refinancing Program) borrowers refinanced into shorter-term loans; 40 percent of those not going through HARP also obtained mortgages with faster pay-off schedules. Only four percent chose to lengthen their loan term, as MHProNews has learned. Frank Nothaft, chief economist for Freddie Mac, said, “Mortgage rates on 15-year fixed-rate loans averaged nearly a full percentage point below 30-year loans during the third quarter, providing a financial incentive for homeowners to term shorten. HARP refinancers have an additional incentive to shorten as some origination fees are waived. By obtaining lower interest rates, borrowers will save approximately $6 billion in interest over the next 12 months, which they can put towards savings, paying down debt or supporting additional expenditures.”

(Image credit: moneycontrol)