Feb. 16: Prefab housing is improving; renters moving toward home ownership

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. See more

Unbelievable prefab home:

 

Wow, in a word, is the response to this Texas prefab home. This contemporary home originated in a factory, designed by Mette Aamodt in partnership with Andrew Plumb, of Plumb architects.

Commissioned to design and construct in a mere 12 months, a project like this one is normally 2-3 years in the making. Their solution came from information technology in the form of parallel processing, which divides a task between multiple processors to run a program faster, much like the panelized, prefabricated building system that ultimately allowed the firm to frame the foundation and envelope of this house in just two weeks. Click here to view photos of the modern Texas prefab home.

 

New York Feds economic research:

 

The New York Fed’s Survey of Consumer Expectations (SCE) provides information about consumer expectations through three broad categories: inflation, labor market and household finance. The SCE contains monthly insight about how consumers expect overall inflation and prices for food, gas, housing, education and medical care to change over time. It also provides Americans’ views about job prospects and earnings growth, as well as their expectations about future spending and access to credit. The SCE also provides measures of uncertainty in expectations for the main outcomes of interest. Expectations are available by age, income, education, numeracy and geography.

 

Based on the survey of 1200 people from a rolling panel each month, consumers feel more positive about the housing market in the next 12 months, as median expected home price change dropped slightly to 3.00% in January, according to the SCE.

 

Consumers in the Northeast region have the most faith in the housing market, expecting a moderate 2.59% change in future home prices. People in the South region came in second with a 2.90% expected home price change, followed by the Midwest and West, with a 3.00% and 3.27% median point prediction, respectively.

 

Younger consumers under 40 years-old are the most optimistic among all age groups, with a median prediction of 2.82%, while consumers over age 60 see the most volatility in the market, with an expected home price change of 3.00%. However, it’s worth noting that predictions from the older age group have declined 77 basis-points since November 2015, indicating growing confidence among consumers age 60 and older.

 

Median expected growth in household income over the next 12 months decreased month-over-month, from 2.28% to 2.22%, contributing to a narrower gap between household income growth and home price change in January. The gap has narrowed substantially over the past two years.

 

Renters’ confidence building toward homeownership:

 

Starter-home prices have continued to climb with limited supply of affordable homes. In fact, the U.S. inventory of starter homes is down 39 percent from three years ago, according to data from brokerage Redfin. So why did the U.S. homeownership rate rise in the second half of 2015 after steadily declining for almost two years? An increase in apartment rents, which rose 4.6 percent nationally in the fourth quarter from a year earlier, is helping drive both young people and second chancers to buy instead. So what are these buyers to do?

 

In walks FHA loans, which are making a huge difference since its insurance premiums were cut last year. Originations of FHA-backed mortgages, used predominately by first-time buyers, insured 22 percent of all loan originations, up from 17 percent the year before, according to Ellie Mae data. That lowered the cost of getting a home loan and brought in at least 75,000 new borrowers with credit scores of less than 680, according to a November report from the U.S. Department of Housing and Urban Development.

 

The rate of FHA lending, which had been in decline through most of 2014, tripled the month after the insurance premium was cut, according to CoreLogic. FHA purchase originations increased more than 30,000 a month last year from 2014, said Sam Khater, deputy chief economist for CoreLogic Inc. That means that more than 250,000 first-time homebuyers were added to the market.

 

The FHA estimates that borrowers save $900 a year on average as a result of the lower premium. The move made FHA-backed mortgages more competitive with other loans that have low-down-payment options, as low as 3 percent, they require private insurance with risk-adjusted premiums based on credit scores, debt-to-income ratios and other factors.

 

The homeownership rate in the third quarter was 63.7 percent, up from 63.4 percent in the previous three months and the first quarterly rise in two years, according to the U.S. Census Bureau, which is scheduled to release fourth-quarter data next week.

 

If you have potential buyers with little money down or less than pristine credit scores, make sure you have a trusted lender who offers the FHA program. It may make the difference between a home renter and a home buyer.

 

Somewhere out there it’s a scorcher:

 

Jonathan Smoke, chief economist of realtor.com stated “Our traffic, searches and listing views exhibited the January ‘pop’ we saw last year, which made for a strong spring. In addition, a large number of prospective buyers have been telling us since the second half of 2015 that they plan to purchase in the spring and summer of 2016.” Currently, buyers have few choices but Smoke expects listing inventory for January to trend down 7% over December, following the usual winter pattern. The median age of inventory is now 100 days, which means it’s taking homes 6% longer to sell in January than in December, but that’s still 4% faster when compared with January 2015. The median listing price for January is estimated at $227,000, remaining virtually flat over December, but still up 8% year over year.

 

By analyzing listing views and age of inventory in the nation’s largest markets, Smoke’s team identified the top 20 markets utilizing views which were accessed two to five times more often than the national average, and houses move 30 to 50 days more quickly than the rest of the U.S. They have also seen days on market drop by a combined average of 7% year over year.

 

Once again, San Francisco retains the first spot this month as California maintains its dominance with seven of the top 10 markets. Props to Nashville, the biggest gainer, moving up six spots to end at No. 7. Also, Texas and Florida now feature multiple markets on the list. The top 10 markets listed, beginning with #1, are San Francisco, CA, San Jose, CA, Dallas, TX, Vallejo, CA, San Diego, CA, Sacramento, CA, Nashville, TN, Stockton, CA, Denver, CO, and Los Angeles, CA.

 

 

No dictionary has ever been able to define the difference between “complete” and “finished”. However, in a linguistic conference, held in London, England, and attended by some of the best linguists in the world, Samsundar Belgian, a Guanese, was the clever winner.

His final challenge was this: “Some say there is no difference between ‘complete’ and ‘finished’. Please explain the difference in a way that is easy to understand.”

His response was: “When you marry the right woman, you are ‘complete’. If you marry the wrong woman, you are ‘finished’. And, when the right one catches you with the wrong one, you are ‘completely finished’.

His answer received a standing ovation.

 

Rob

 

(Copyright 2016 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman. To subscribe please visit www.knowledgeforrealestateagents.com.)