In the 1990s and into the 2000s there were concerted efforts to extend credit to those with modest means in an attempt to keep the American dream of homeownership alive, to give people hope. The Federal Reserve’s key interest rate was the lowest in 45 years, but lenders got loose with loan standards, which led to homeownership peaking at 69.2 percent in 2004.
However, home prices begin falling as the subprime mortgage industry imploded: bundles of questionable loans were sent around like hot potatoes until the potatoes turned rotten, leading to the Great Recession in 2008. Foreclosures increased, lending standards tightened, home prices bottomed out, employment fell, and many people turned their backs on owning a home, leading to a rise in the rental market.
Although the recession was declared over in June 2009, the recovery of the housing market, which is a major ingredient of a strong economy, has been painfully slow. First-time home buyers historically comprise 40 percent of home sales, but that number has fallen to 30 percent, leading to slack new household formation as Millennials slowly emerge from their parents’ basements and head to rental properties.
Employment has been increasing but wages are flat, and as the demand for rentals increase, so do the rents, putting homeownership further out of reach of many would be homebuyers.
Kovach: “Manufactured housing is ideally suited to tap into this rental market. As we reported last year, the National Association of Realtors (NAR ®) reported that some 85% of renters in a survey said they want to be home owners.
The reason we in MH can make this happen is because we can save them money and give them the lifestyle they want. But it won’t happen without a planned effort that changes perceptions.”
John Bostick, CEO and president of Sunshine Homes, encourages manufactured home professionals to get behind Kovach’ MH Alliance-Partners in Progress-effort to help spread the good news about quality MH to the public at large. He says,”We either define ourselves or others will define us. When others define us, it is often to our detriment.”
Others have been defining the industry for way too long. It’s time to turn the tables. Average rent nationally is around $1200 a month. Average price of a new manufactured home is $64,000. Do the math.
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(Image credit: rentdirect)
