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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.

Pennsylvania School District may Opt for Modular Additions

February 21st, 2014 Comments off

An increase in enrollment projections exceeding expectations in the Cumberland Valley School District in south central Pennsylvania is leading officials to consider an $88 million budget addition over the next eight-10 years. While middle school and high school enrollment will exceed capacity within eight years, at the elementary school level one-third of the classrooms are above 99 percent capacity, according to cumberlink.com. One option would be to add modular classrooms, which would save the district from immediately incurring debt, and gradually build permanent facilities as more concrete numbers emerge. As MHProNews.com understands, current low interest rates may dictate a quicker decision. ##

(Photo credit: Kristina Iodice/thegazette.com–modular classroom)

Center for Housing Studies says Housing Recovery is Real

July 29th, 2013 Comments off

While the Census Bureau says home ownership is at its lowest point in 15 years, Harvard University’s Joint Center for Housing Studies reports “After across-the-board declines in 2011, all major house price indexes registered significant increases in 2012.” As documentation, the Center says the March 2013 median house price was up 11.6 percent over March 2012, and as of April 2013, home prices have risen in all except two states and in 94 of 100 major metropolitan markets. Between Q4 2011 and Q4 2012, the number of underwater borrowers dropped 1.7 million to 10.4 million, which represents 23 percent of all mortgage holders. Further, as philly.com informs MHProNews, the rise in prices resulted from increased sales and fewer listings. April 2013 marked the 34th consecutive month of rent increases as ranked by the Consumer Price Index, and last year rental households grew by 1.1 million. Eric S. Belsky, the joint center’s managing director, says, “Even as historically low interest rates have helped make the monthly cost of owning a home more favorable than any time in the past 40 years, the national homeownership rate fell for the eighth straight year in 2012.” He adds, noting the challenges still ahead, “Long-term vacancies are at elevated levels in a number of places, millions of owners are still struggling to make their mortgage payments, and credit conditions for home buyers remain extremely tight.”

(Photo credit: knoxnews)

Plenty of Hardship in the Land of Plenty

July 6th, 2013 Comments off

Adding to a story we posted July 4, 2013 from Harvard University’s annual Joint Center for Housing Studies, the report reveals 42.3 million families (37 percent of the nation’s total) pay more than 30 percent of their income for housing, including 20.6 million who pay more than 50 percent of their income for housing. Between 2007 and 2011, 2.4 million homes changed from owner-occupied to renter-occupied, well above the 900,000 rental unit starts during these four years. 258,000 new rentals came onto the market in 2012, the highest number since 2004, as MHProNews has learned from thewestsidegazette. Meanwhile, the report states racial disparity in homeownership continues: White homeownership stands at 73 percent, but only 44 percent of African-Americans and 46 percent of Hispanics are homeowners. In addition, in 2011 despite historic low interest rates, African-Americans were denied mortgage loans 37 percent of the time, while the rate for white borrowers was 14 percent.

(Image credit: firstbanktrust)

Home Prices Rise for 15th Straight Month

July 2nd, 2013 Comments off

May saw the largest increase in the CoreLogic Home Price Index (HPI) since Feb. 2006, rising 12 percent over May 2012, and 2.6 percent higher than April, marking the 15th consecutive month of year-over-year increases. For June 2013, as nationalmortgagenews informs MHProNews, the CoreLogic Pending HPI indicates home prices are expected to increase 13.2 percent year-over-year from June 2012, and 2.9 percent on month-over-month basis. Noting the blazing rise of home prices, especially in the West, Anand Nallathambi, president and CEO of CoreLogic, says, “Across the country, pent-up demand and continued low interest rates are fueling strong demand for a limited inventory of properties. We expect that trend to continue to drive up prices throughout the balance of the summer months.”

(Image credit: etftrends)

Seriously Delinquent Mortgage Borrowers may Reduce Payments

July 2nd, 2013 Comments off

Borrowers with mortgages backed by Fannie Mae and Freddie Mac that are at least 90 days late will begin receiving offers from lenders to reduce their rates. Called the Streamlined Modification Initiative, borrowers will be able to reduce their payments by either having the loan extended from, say, 30 to 40 years, or their interest rates will be reduced—but the principal will remain. Borrowers with a high-rate loan who could not qualify for a refi during the era of ultra-low interest rates merely do a trial run of making payments three consecutive months and the modification becomes permanent. As CNNMoney tells MHProNews, other requirements include the loan must be at least 12 months old, borrowers cannot be more than 24 months in arrears and their principal balances must be 80 percent or above the value of their home. The program is set to run through Dec. 2015.

(Image credit: mortgageloanrealtor)

Homeownership Falls, Renter-Occupied Homes Rise

May 1st, 2013 Comments off

The number of Americans who own their homes fell to 65 percent in Q1, 2013, down from 65.4 percent the first quarter of 2012, and the lowest level since the third quarter of 1995. While it peaked at 69.2 percent in June 2004 because of easy credit, Paul Diggle of Capital Economics in London expects the rate to fall throughout 2013 as investors continue to take advantage of low interest rates, which pushes up prices and puts more rentals on the market. As BloombergBusinessweek tells MHProNews, the National Association of Realtors (NAR) reports the number of homes on the market fell 16.8 percent from a year earlier. While the Census Bureau says owner-occupied houses fell from 74.6 million Q1 2012 to 74.5 million this past quarter, renter-occupied homes increased to 40.1 million from 39.5 million a year ago. Overall, occupied residences rose one half million to 114.6 million Q1 2013 over Q1 2012.

(Image credit: rentdirect)

Housing Expert: Modify the Mortgage Interest Deduction

April 30th, 2013 Comments off

In an interview in Forbes, Nicolas P. Retsinas, former Federal Housing Commissioner and Director Emeritus of Harvard University’s Joint Center for Housing Studies, says the housing recovery is being spurred by new household formation, which in turn has been sparked by the improving job market, and abnormally low interest rates. He says while the administration is trying to accelerate the housing recovery, the government-sponsored enterprises (Fannie Mae and Freddie Mac) which insure, securitize, and guarantee 95 percent of all mortgage loans, are narrowing the credit tunnel because they do not want to lose money and be on the front page asking for a bail-out. Noting we over-encouraged homeownership, which in part led to the housing downturn, he says the mortgage interest deduction (MID) has become a sacred cow, but perhaps it is time to allow first-time homebuyers and those below a certain income only to use it, as it deprives the government of $100 billion annually. MHProNews has learned in a book Retsinas wrote, he says nearly all cultures have in their psyche the notion of homeownership, including two-thirds of American families. He says when the current demand for rentals subsides, the equilibrium will shift and homeownership will likely rise.

(Image credit: texaslendingtoday)

Housing Recovery should help Middle Class

April 19th, 2013 Comments off

CNNMoney informs MHProNews Federal Reserve Governor Sarah Bloom Raskin says now that the housing market is improving, middle class families who have not been able to take advantage of the low interest rates may now have that opportunity. Speaking at the Levy Economics Institute’s Minsky Conference, Raskin said, “As house prices rise, more and more households have enough home equity to gain renewed access to mortgage credit and the ability to refinance their homes at lower rates.” She said Federal Reserve research indicates a home price increase of ten percent could be sufficient to propel 40 percent of underwater homeowners into the black.

(Image credit: Joshua Scott/CNNMoney)

Housing Recovery? Perhaps Not

April 19th, 2013 2 comments

CNNMoney tells MHProNews some industry experts forecast the housing recovery may not last. While home prices have risen eight percent, investors are driving the surge, taking advantage of low interest rates and depressed home prices. When rates and home prices rise, the recovery may stall, especially as investors receive a low rate of return. In addition, a sustained housing market recovery is dependent on job growth. The 88,000 jobs added in March, the weakest jobs growth since June, is not sufficient to expand the demand for homes. Also, the $85 billion in government sequestration spending cuts will hit its peak this summer, according to Mark Zandi, the chief economist for Moody’s Analytics. He says the cuts could shave one percent from the Gross Domestic Product this year, which in turn could lead to job and income losses.

(Image credit: photobucket–flat line)