Why it’s so hard to mass produce houses in factories – zoning, land costs, and building inefficiencies make homes expensive – why haven’t we been able to Henry Ford homes? We’ve been working on this for over a hundred years now, and at one point in the 70’s 50% of homes sold were manufactured. The largest home builder in the country was a manufactured home company. That company didn’t make it through the next recession. The inefficiency of shipping these homes, resistance from middle class HOAs, and company weakness during recessionary times (large factories are expensive to maintain) caused the manufactured home industry to cater toward mobile home parks and now capture about 10% of the market. Currently there are few companies still trying to solve the factory built housing problem. This podcast interviews the CEO of a California based company that is using efficiencies from the Electric car manufacturing world to produce prefabricated flat panels that can be shipped easily and put together on site. The end goal is to have an “IKEAesque” product that can easily be shipped and put together in panels.
Mortgage Rates – increased slightly this week as the price of Mortgaged Backed Securities declined for the second consecutive week. Rates are up approximately 1.25% from this time last year.
Home Sales – Inventory remains tight: inventory was down 23.3% year over year in March to the lowest level on record outside of the start of the Pandemic. This signals tight inventory and support for home values. During March 44% of homes received multiple offers.
Jobs – the number of people filing for unemployment for the first time increased by 5,000 last week to 245,000. This puts the 4 week moving average at 240,000 per week, the highest since November 2021. Continuing unemployment claims increased by 61,000 to 1.865M – also the highest reading since Nov. 2021. Hiring has slowed down and it is increasingly difficult for folks to find work who have recently been laid off.
Homeownership – Millennials born between 1981 and 1996 have just crossed the 50% homeownership rate! The headline points to the lag behind previous generations, it’s important to remember that Millennials are making other life decisions later in life as well. In the 60’s people got married in their early 20’s and for Millennials that is early 30’s. One of the major reasons people purchase homes is when they create a family. The survey showed that 2/3rds of those renting down have enough for down payment while 25% said they will rent for ever. There is still a misconception that people think you need to put 20% down to purchase a home – make sure you educate your clients that low down payment options are available!
Freight – the March Cass Freight Index showed that expenditures dropped 1.5% in March and are down 3% year over year. Shipments declined by 4% in March. This is a positive indicator for inflation.
Mortgage Applications to purchase homes fell 10% last week and are down 36% year over year. Refinance applications declined 5.8% last week and are down 56% year over year.