Strap up your suspenders and hitch up the truck, lets go get us a double wide! Simply put, bare land, and mobile homes *which are considered bare land in terms of lending, do not qualify for FHA or most traditional lending. Inflation has not yet reached this sector of the real estate market. Simply put, there is just not financing available to the masses. Banks, and the federal government in particular are not willing to take risks on assets, like double wide mobile homes, which can rapidly depreciate leaving the lender with no collateral when the hoards of unqualified loan recipients default. If you are searching for affordable housing, or even a viable investment property, which is less risky than traditional housing investments, bare land or land with trailers may be the instrument for you.
Housing prices continue to rise, despite an apparent
glut in the amount of new homes on the market, and a continuous production of
new and unlived in homes. The average
price of housing in the mainland United States is presently $356,000
as of march 2016. This is in stark contrast to the average price in March 1996
of $196,000 (Census.gov).
This data is pertinent only if we know the average income of families purchasing, and competing for housing resources in those times, which were $53,891 (money.cnn.com) and $35,492 (census.gov) respectively. Something seems amiss, since that income difference represents a 81.63% increase in the price of housing, and only a 51.83% increase in wages. How can this possibly be? This data yields a deficit of 29.79%, which must be paid by someone. Perhaps this 29.79% short fall is the impetus for the burgeoning homeless camps on the western side of the United States, and wave after wave of refugees seeking salvation from the failing U.S. territory of Puerto Rico who are showing up in record numbers in Florida.
This data is pertinent only if we know the average income of families purchasing, and competing for housing resources in those times, which were $53,891 (money.cnn.com) and $35,492 (census.gov) respectively. Something seems amiss, since that income difference represents a 81.63% increase in the price of housing, and only a 51.83% increase in wages. How can this possibly be? This data yields a deficit of 29.79%, which must be paid by someone. Perhaps this 29.79% short fall is the impetus for the burgeoning homeless camps on the western side of the United States, and wave after wave of refugees seeking salvation from the failing U.S. territory of Puerto Rico who are showing up in record numbers in Florida.
Housing has always been viewed as a “rock solid”
investment. That can certainly be
argued, post 2008. Since the early and
late 2000’s when the FHA (federal housing administration) expanded its loan
programs, lowering requirements and encouraging financing for those who could
never afford a home before (washingtonpost.com). This was could certainly be viewed as an
altruistic move, however, not a long term financially viable one. The immediate result was a housing boom, and
in 2007 after even more easing of loan restrictions a final inflationary push
precluding a bust. For those of us who
lived through the ‘housing bubble’ and the ensuing pop, leading to the collapse
of the mortgage backed securities industry, and several hundreds of billions of
tax dollars being spent to bail out investment banks for their own short
sighted practices, it was viewed as a poor investment. The investment return was born on the backs
of the laborers, home owners, and future tax payers not yet conceived. People who worked hard to do everything ‘the
right way’, in the end, were forced to pay for the of crony capitalist practices of the financial sector.
Current mortgage practices are just as fast and loose
as ever. No credit? NO problem!!!! The
present FHA practices, are even more lenient than those that lead to the crash
in 2008. With little more than a two
credit lines, and a stated income, you too can pre-qualify for a loan,
and be on your way to home ownership (fha.com).
This has driven home prices up, yet again. However, if you were to look at the price of
bare land, or mobile homes, it has not inflated. How can that be?
There are several articles that illustrate the disparity between land value, and land value with a structure present. Marketwatch.com illustrates this point in its article highlighting the incongruity between agricultural price deflations and housing price deflation during the 2008 housing market collapse (marketwatch.com).
There are several articles that illustrate the disparity between land value, and land value with a structure present. Marketwatch.com illustrates this point in its article highlighting the incongruity between agricultural price deflations and housing price deflation during the 2008 housing market collapse (marketwatch.com).
References
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