Top National News
Conditions Are Ripe for Household Formation
Data from several analysts points to a sharply positive shift in U.S. household formation that has triggered rising demand for all types of housing over the past couple of years, including multifamily and single-family rental and ownership. The analysts wrote in a report on housing demand: “We believe steady, if unremarkable, monthly job growth is creating a similar household formation environment for 2013 which should support our positive housing outlook.” The researchers note that conditions are ripe for adult children to move out of their parents’ homes and for college graduates to rent their first apartments. Amid the upturn, multifamily housing permit growth has outstripped single-family permit growth. “Assuming job growth remains at or above the current pace,” the analysts conclude, “we expect these trends to continue.”
From “Conditions Are Ripe for Household Formation”
Housing Wire (07/15/13) Hopkins, Megan
On Floods and Rising Insurance Premiums
A Congressional mandate that National Flood Insurance Program premiums be brought into line with real risk levels means increases are on the horizon, but it will be difficult to gauge the affordability of future premiums until the Federal Emergency Management Agency (FEMA) finishes updating flood hazard maps so rates can be revised. Meanwhile, FEMA is phasing out subsidized rates for policyholders whose homes were built prior to local flood maps being drawn — a move that will impact 20 percent of policyholders. Uncertainties regarding flood insurance rates are posing a challenge for mortgage lenders required under the Dodd-Frank Act to determine a borrower’s ability to make payments over the life of the loan, as they have yet to account for the fact that some coastal property owners not currently paying for flood insurance may have to once the maps are revised.
From “On Floods and Rising Insurance Premiums”
The New York Times (07/14/13) P. RE4 Prevost, Lisa
Rising Mortgage Rates Hit Home Affordability
The rebound in the U.S. housing market has emerged thanks to historically low interest rates, intervention from the Federal Reserve, and higher home prices that have bolstered borrowers’ financial standing. Now, as mortgage rates creep higher, housing affordability will almost certainly decline. This, in turn, could hamstring recovery. Between early May and the end of the second quarter, the Mortgage Bankers Association noted that average interest for a 30-year fixed loan surged to 4.68 percent from 3.59 percent. However, because the metric is softening from such an unusually high level, MBA argues that affordability will continue to be favorable by historical norms even in the face of escalating mortgage rates and property prices. As of now, the most recent figures do support a strong recovery. The Commerce Department reported that sales of new homes climbed in May to the highest annual rate since July 2008. Meanwhile, Standard & Poor’s Case-Shiller index of property values showed home prices in April registered the highest annual gain in more than seven years.
From “Rising Mortgage Rates Hit Home Affordability”
USA Today (07/13/13) Foley, Meghan
Senate Banking Leaders Strike Deal on FHA Reform
The top-ranking Democrat and Republican on the Senate Banking Committee have released a joint statement confirming their compromise deal to revamp the FHA. Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) said that the proposed legislation is the first step toward comprehensive housing-finance reform and that more information would be made available next week. On July 11th, House Republicans released a GSE reform bill that also included changes to the FHA. That measure, with House Financial Services Committee chairman Rep. Jeb Hensarling (R-Texas) as the lead sponsor, proposes that FHA be split off from HUD and rolled back to serve first-time and moderate-income borrowers exclusively.
From “Senate Banking Leaders Strike Deal on FHA Reform”
American Banker (07/12/13) Blackwell, Rob
Regulators Propose Exemptions from Appraisal Requirements
On July 10th, six regulatory agencies issued a proposal that would exempt three types of higher-priced mortgages from appraisal requirements. The plan would exempt loans secured by existing manufactured homes (and not land), certain types of “streamlined” refinancings, and loans of $25,000 or less. The agencies are seeking comment by Sept. 9 on the exemption proposal. If finalized, the rule would take effect on Jan. 18, 2014.
From “Regulators Propose Exemptions from Appraisal Requirements”
American Banker (07/11/13) Berry, Kate
Champion Home Builders Uses Modular Homes to Help Bring Life Back to Once Popular Detroit Neighborhood
Champion Home Builders has been selected by Star Development Corp. to build three dozen homes for Detroit’s historic Penrose neighborhood, as part of the second stage of community revitalization there. This phase of development will consist of 12 duplexes and 14 single-family homes, all of which are energy efficient and include appliances, Energy Star lighting, and vinyl double-hung windows. All of the units will be priced at an affordable housing rental rate and will include basements and garages, while following the original turn-of-the-century design that characterizes the neighborhood. The single-family houses will range from 1,400 to 1,500 square feet and will have two or three bedrooms. Champion also built the first 36 homes in the neighborhood as well as the Penrose Art House, a neighborhood art and community center. “We deeply value projects that impact the community, like the redevelopment of Penrose as we understand the cost impact our process can have in helping to make these projects financially viable,” said Champion CEO Jack Lawless. “Through our modular building process, Champion is able to save time and labor costs throughout the [60-day] building timeline. Without sacrificing quality, modular building takes approximately 50 percent the time of traditional building.” Star Development Corp. CEO Sam Thomas said, “We chose to partner with Champion based on the company’s deep understanding of high-quality, cost effective building,” adding that “knowing that Champion is able to build homes on such an abbreviated timeline is an invaluable asset to our company, given that we can then turn the redevelopment around much faster than if we were to build the homes onsite.”
From “Champion Home Builders Uses Modular Homes to Help Bring Life Back to Once Popular Detroit Neighborhood”
Virtual Strategy Magazine (07/11/13)
Giles Facility Home Gains National Attention
Giles Industries, a builder under the Clayton Homes brand, found itself in the national spotlight when its energy-efficient “My Pad” was featured at the annual shareholders meeting of parent company Berkshire Hathaway. The 1,178-square-foot home, priced below $50,000, was on display as the new reflection of manufactured housing. It boasts a number of luxury amenities, including nine-foot ceilings, a programmable “nest” thermostat, a shower head with an integrated Bluetooth speaker, and Whirlpool’s new “Black Ice” appliance collection. “My Pad” was originally manufactured at the Giles Industries flagship New Tazewell, Tenn., facility and was reassembled in Omaha, Neb., prior to the event after being transported across the country. It proved to be a crowd-pleaser, attracting lines of visitors consistently throughout the day.
From “Giles Facility Home Gains National Attention”
Claiborne Progress (06/05/13)
Reality Star Si Robertson Touts Clayton Homes as a ‘Good Call’
As part of its Enjoy Life campaign, Clayton Homes has rolled out a “Good Call” promotion endorsed by stars of the reality TV show Duck Dynasty. The promotion features a sweepstakes that will give four winners representing different geographic regions of the country the opportunity to meet some of the Duck Dynasty cast on location in West Monroe, La. “We want everyone to enjoy life as much as the Robertson family does,” says Clayton Homes CEO Kevin Clayton. “The Enjoy Life campaign celebrates hardworking American families with high quality, affordable housing so they can focus on family and the things that matter most in life.”
From “Reality Star Si Robertson Touts Clayton Homes as a ‘Good Call'”
Rock Hill Herald (SC) (06/26/13)
Centerbridge Forms Carefree Communities
New York-based Centerbridge Capital Partners has launched a new business to own and operate senior manufactured housing communities as well as destination RV resorts. The new entity, Carefree Communities Inc., already boasts an estimated asset value of $650 million and includes more than 16,000 sites across North America following its acquisitions of the Regency Heights senior retirement community in Clearwater, Fla., and several RV resorts. Colleen Edwards, a Centerbridge investor who will help manage Carefree, cited data from the National Association of Realtors showing that housing demand among the 45-to-74-year-old demographic is already strong and is projected to spike another 14 percent over the coming decade. “Baby boomers own the majority of seasonal and vacation homes and Carefree occupies markets where baby boomers like to retire,” she noted.
From “Centerbridge Forms Carefree Communities”
Dow Jones/LBO Wire (07/12/13) Or, Amy
Modular Homes Business Opening Fairfield Office
Modular builder Connecticut Valley Homes is expanding into Fairfield, Conn., which will host a satellite office for the firm’s East Lyme base. “The opening of this office … will allow clients to have a beautiful and convenient place to plan their new home,” remarked Connecticut Valley Homes President Richard Wildermuth in a press statement. The company has produced more than 1,500 custom modular homes and commercial projects since being founded
From “Modular Homes Business Opening Fairfield Office”
Fairfield Citizen (07/11/13)