Is there trouble brewing on the horizon for new home
construction? Probably.
But how can that be if most of the East Coast modular home factories have
4 – 5 week backlogs? The answer to that on is easy. Hurricane
the rest of the country, you are just beginning to feel the pinch of the
housing downturn, especially modular home factories building mostly single
family homes.
Is Modcoach running around telling everyone the sky is
falling? Am I shouting ‘fire’ in a movie theater? Absolutely not but what I am
saying is that you need to be aware of what is coming our way.
TOP FIVE CAUSES for housings’ slowdown.
Builders on the front lines say there’s no single cause for
the worsening housing outlook, rather a number of market forces are hitting
home builders at once:
• The perplexing millennial generation — Millennials
have shown far less interest in buying single-family homes than those who came
before. Instead, young workers are increasingly pursuing rental or
non-traditional housing, options that don’t show up on building permits and
contribute far less to the economy than new home construction.
• Tightening supply of homes — Though housing starts
are falling, the demand for homes hasn’t gone away. While year-to-date new home closings
are falling, the median price is rising. People still need housing but many are
unwilling to pay the price for a newly built one.
• New mortgage rules — The tightening supply can be
traced in part back to new lending rules created in the wake of the Great
Recession that made it tougher for home buyers to qualify for mortgages. Those
same rules also apply to developers, who must fight their own battle to secure
financing for any project.
• Regulatory costs — Tightening the building codes every year
along with additional state and local regulations are causing many homes and
projects to be delayed. Expect to see Net Zero to be a requirement for every
new home in the
within the next 10 years.
• Rise of apartments — Even without the higher cost of
development, the single-family home market faces increasing competition from
thousands of new maintenance-free luxury apartments built over the last few
years, many of which now offer the same amenities of owning a home without the
weight of a 30-year mortgage.
These are just the top five causes. Dig a little deeper and
soon you will be running next to me shouting “The sky might be falling, the sky might be falling.” Its time for regulators, lenders and government to realize that by
tightening their grip on new housing they are slowing choking it to death.
