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Coming up, Harvard report optimistic about long-term outlook
But first…these stories.
Ginnie Mae Announces New MBS Program For Manufactured Housing
Ginnie Mae President Theodore W. Tozer last week announced the agency’s plans for a new mortgage-backed security (MBS) program targeting manufactured home loans. The program is designed to “provide for prudent risk management” and was created in response to recent changes in the Federal Housing Administration’s Title I Program for manufactured housing, Tozer wrote to Ginnie Mae program participants.
Effective immediately, Ginnie Mae will accept applications for participation as issuers of MBS backed by new Title I manufactured-home loans (MH MBS). Issuers that are currently approved to issue manufactured-housing securities are required to re-apply in order to participate in the new program, Tozer wrote.
The major change to the program, he explained, will be that all approved issuers will be required to maintain a minimum adjusted net worth of $10 million, as calculated in accordance with the HUD Audit Guide, plus 10% of the amount of MH MBS outstanding.
Picture brightens for Ocala’s Nobility Homes
From the Ocala Star-Banner – McClatchy-Tribune Information Services via COMTEX
Nobility Homes Inc. announced this week a second-quarter operations loss of $236,928. For the same period 2009, the company reported a $884,242 loss. The second quarter 2010 net loss after taxes was $202,029 compared to a loss of $506,440 in 2009.
Second quarter 2010 loss per share was $0.05 compared to $0.12 per share last year.
The $202,029 after-tax net loss reflects a deduction of $194,825 in non-cash losses for the company’s investment in two retirement community limited partnerships and included a tax benefit of $162,267.
Nobility’s second quarter 2010 sales were $3.71 million, up 55 percent from $2.39 million reported a year ago.
Sales and operations for second quarter 2010 were adversely impacted by the country’s economic uncertainty and the low manufactured housing shipments in Florida as well as the overall decline in the Florida and national housing markets, said Nobility President Terry Trexler in the company’s press release.
Because of declining business conditions and the uncertainty about any improvements in the current economic challenges, the company said it will continue to evaluate Prestige’s fourteen retail model centers in Florida along with all expenses within the company.
Nobility, which designs and produces manufactured homes, has headquarters in Ocala. Nobility trades as NOBH on NASDAQ.
Soft housing demand imperils recovery
Harvard report optimistic about long-term outlook
by Inman News
Demographic terms bode well for the long-term health of housing markets, but the near term is fraught with uncertainty, according to a “State of the Nation’s Housing” report released today by the Joint Center for Housing Studies of Harvard University.
Assuming that household “headship rates” hold constant at 2008 levels, overall demand should support the construction of more than 17 million new homes between 2010-20, the report said. That number includes manufactured homes, and takes into account demand for second homes and the need to replace older housing stock.
Analysts are keeping a close eye on home construction because, with the exception of the dot-com crash and 2001 recession, housing tends to lead the economy into and out of recessions.
With the economy finally adding jobs this spring and house prices down dramatically, “two essential conditions for a sustained recovery in single-family starts and sales had fallen into place,” the report said.
But it remains to be seen whether home sales will weather the expiration of the federal homebuyer tax credit, the report said. Initial signs of a recovery are also threatened by a “severe overhang” of vacant units, high unemployment, and record numbers of homes that are worth less than what’s owed on their mortgage.
The report concludes that deep cuts in homebuilding have already brought housing supply and demand back into better balance. It’s soft demand for housing, rather than a large oversupply, that’s holding back residential construction at the moment.
The recession wiped out 8.4 million jobs, which has forced some families to double up and delayed plans of many young adults to move out of their parents’ homes. Demand for housing is also down because the downturn has slowed the pace of immigration, and an estimated 1 million illegal immigrants have left the country, the report said.
Soaring unemployment and reduced immigration have slowed the pace of household formation from between 1.2 million and 1.4 million a year during the first half of the decade to less than 1 million a year, the report said.
In the long run, demographic forces are expected to lift household formation to about 1.25 million a year during the decade ahead, even if immigration remains subdued.
But whether those new households will be homeowners or renters remains to be seen.
Homeownership markets “are being tugged in different directions,” the report noted. Lower prices have made homes more affordable, but tighter underwriting standards make qualifying for a mortgage more difficult.
According to the National Association of Realtors, median home prices fell 26 percent from October 2005 to March 2010. With mortgage rates near record lows, mortgage payments on the median-priced home are closer to median gross rents than at anytime since 1980, the report noted.
For borrowers making a 10 percent down payment on a median-priced home, mortgage payments will amount to less than 20 percent of median household income, the lowest level in records dating back to 1971.
Residential fixed investment dropped 53.7 percent from 2005 to 2009, and represented just 2.5 percent of gross domestic product in 2009 — the lowest level since 1945. Builders started construction on only 445,000 single-family homes in 2009, compared with more than 1 million a year during the 1990s.
Declines in residential construction have been a drag on the economy for 3 1/2 years, before turning positive again during the second half of 2009. (According to the Bureau of Economic Analysis, investment in residential construction contracted again during the first quarter of 2010.)
The first 10 years of the new century were a “lost decade” for household income, with median income falling 5 percent from 2000 to 2008, to $49,800, the report noted. After three decades of gains, “real median household incomes will almost certainly end (the decade) lower than they started,” the report lamented.
The sheer size of the echo-boom generation — those born between 1986 and 2005 — will produce record numbers of households headed by young adults, who typically have lower incomes.
At 80.8 million strong, the echo boomer generation is already larger than the Baby Boom generation, and 42 percent are members of a minority group, the report noted. Minorities make up more than 50 percent of echo boomers in Hawaii, New Mexico, California, Texas, Arizona, Nevada, and Washington, D.C.
But Sunbelt retirement communities still face an uphill battle, the report said, because much of the boom in those areas was driven by construction and job growth.
More details on this report are available online at MHMSM.com in our news department.
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