Millions of conventional site built houses are still underwater, according to recent reports by RealtyTrac, Bloomberg and the S&P/Case-Shiller index.
As the recovery of depressed prices from the housing/mortgage bubble have slowed recently, leaving millions of Americans in homes that are “underwater” on their loans.
An “underwater” mortgage is defined as a real estate home with a loan that is greater than the house’s value.
“I’d expect to see this process of digging out of the hole slow down in 2014, because we expect home price appreciation to slow down in 2014,” RealtyTrac vice president Daren Blomquist told CNBC.
That “appreciation,” Blomquist explained, is generally a rise from the depressed levels of the post 2008 mortgage/housing meltdown.
“U.S. homeowners are continuing to recover equity lost during the Great Recession, but the pace of that recovering equity slowed in the first quarter, corresponding to slowing home price appreciation,” said Blomquist. “Slower price appreciation means the 9 million homeowners seriously underwater could still have a long road back to positive equity.”
Home prices climbed 13.2 percent in the year through January, the smallest recovery since August, per the respected S&P/Case-Shiller index.
The conventional housing market shakeup since the Great Recession is causing both home seekers and investors to look at factory built homes in a new light.
Sam Landy, President and CEO of UMH Properties said, “…the government went into affordable housing and didn’t invite our industry. They would have done much better with us than with conventional homes and financing gimmicks.”
“We may be better off aligning ourselves as home-builders than as an affordable housing specialty. We are the most efficient providers of housing. Our factory built houses are better quality and cost less per square foot than equivalent site built homes.” Landy stated.
Cavco Industries was recently featured on NBC TV’s American Dream Builders. Chairman Joe Stegmayer echoed similar thoughts to that of UMH’s CEO.
“I think we all know the reasons factory built makes sense: control of quality, reduced raw material waste, energy efficiency, rising labor costs, the lack of available labor in some areas, inefficiency of on-site construction for modestly priced homes built individually or even in small developments. The list goes on. “
“Manufactured homes cannot be all things to all people, but included among the many markets we serve are the two largest and fastest growing demographics, the baby boomers and the millennials. There is opportunity for everyone to work with these promising markets.” Stegmayer said.
The bottom line for many is that housing is no longer seen as vehicle for guaranteed appreciation. For millions, it could make more financial sense to purchase a lower cost, high quality, energy-saving manufactured or modular home and invest the money saved compared to the cost of buying conventional construction. ##
(Image Credits: underwater mortgages = news365today, Photo Joe Stegmayer in a Cavco Industries Homes, MHProNews.com)