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I think the bias against manufactured housing is two-fold. #1 is that is much less labor intensive (and that makes it a lot less costly), the "cost profile" means that manufactured housing tends to have low "loan and value" . Lenders don't like to finance stuff for people with small asset bases...
Secondary reason to be biased against manufactured housing is the specifics of the LAND often being other than owned -- i.e. "mobile home parks". Leads to funky situation where the "home" is technically only eligible for "personal property loan" OR you have to buy a "condo pad" to get a "real mortgage". Those "pads" are pretty easy to crank out, and an unscrupulous operator could over build in record time...
{Don't forget too that historically depreciation of manufactured housing unless it is high end / vacation location (and vacation homes are a bad risk now...), are more like a vehicle than a home. The high end ones are just now coming into vogue, especially those that are super efficienct / "green". I hope that the architects and investors that are pushing them get their lobbyists lined up. Ought to be easy with the Hollywood crowd having the Speaker's ear...}
"For wealthier Americans, the free-fall in stocks is not only ravaging their portfolios—it's taking a huge bite out of the value of their homes."
"'The high-end market relies on equities,'" says Walter Molony, spokesman for the National Association of Realtors. "'If stocks are doing well, so too does high-end housing.'"
"Though only 2 percent of the overall housing market, high-end home sales have seen a dramatic drop, according to Molony. Homes valued at $750,000 or more plunged a whopping 47 percent in the year ended in November. By comparison, homes valued at $400,000 or less fell by only 3 percent during the same period."
Pretty weakly researched article. Honestly the percentage of jumbo loans in areas of California was far above ANY other part of the country. When you look at places that have traditionally had lots of pricey home, from the CT , NJ, and NY area, to waterfront in FL, to resort areas in CO there are relatively few jumbos. Same is true for the pricey zip codes around Chicago. Ask any real estate agent or mortgage broker that has access to a loan amount based marketing system and you will be surprised how uncommon jumbos are. Even in areas with very high selling prices few buyers sign-up for jumbos. A lot of the buyers have always been "move up" types that are taking equity from previous appreciated properties and sinking it into a bigger or more desirable home. There are also a fairly substantial number of folks that can move assets out of other categories and into their home. It is true that appreciated stocks are a rarity now, and THAT is probably what the NAR spokeman is referencing. Similarly if folks had assets in low yielding 'safe' thinks like bonds or money market funds they could have decided it made more sense to sink that money into a home, with raising property values a HELOC would have provided as least as much liquidity as most high net worth indivuals would need.
It it hard not to lump folks into the same category by where they live, but there are BIG differences between true "high net worth households" and folks that merely lived in an expensive house. The former probably faced some setbacks, but still has a big ol' nest egg that will outlive 'em, while the latter may have been treading water like a maniac just to make the minimums on all their bills!
The lead of the article and my reference to reason #6 was the decline in stocks which have hit the wealthy in the wallet.
As for the idea that the wealthy pay cash and are therefore not effected by jumbos, the wealthy tend to be smart with their money. Many of them can't "move up" now, because the house is worth as much or less than it was when they bought it. And even if they had the money to buy up, how many do you really think want to take a chance on a depreciating asset at that price point?
The articles below show that resort areas in CO, tony neighborhoods in CT and even Beverly Hills (which was "unaffected" until recently) are all being hit pretty damn hard. Not sure which waterfront in Florida you were referring to, but if being on the water prevented home prices from declining, Miami would be a "safe haven" investment right now. It isn't.
"There is no denying that the Aspen economy — which depends on real estate sales and development along with tourism — is in a world of hurt. The dollar volume of Pitkin County real estate sales was down nearly 50 percent in 2008 compared to 2007."
"Typically the affluent are insulated from downturns that hit the little guy. This time it was reversed — the rich were hit first. They lost big when their companies’ stock plummeted, their investments withered, or both."
"Taets believes the type of people that visit Aspen will ultimately weather the economic storm safely, but big financial losses will alter their spending habits."
“You’re probably not in much of a mood to spend $10 million on a second home in Aspen,” he said."
"Greenwich's 2008 median home price dropped 7% to $1.95 million - - the largest percentage decline since 1977 - - with single family homes sales plummeting to 460 from 726, Prudential said, Bloomberg reported."
"Rare is the year that you see large home price declines in Greenwich, as we are dealing primarily with high-end to very-high-end home buyers," Felson said. "Many Greenwich home buyers are people who have the means to pay in cash, these are the check writers, and the fact that they're pulling back the reins shows that they believe economic conditions will be difficult over the next year. These buyers often also are key corporate decision makers, so we can get a read on their confidence from this data."
"Home prices in Beverly Hills, Santa Monica and Malibu -- which continued to soar well into 2008 -- finally tanked at the end of the year, losing between 26% and 30% of their value in just a few months, the latest data show."
When you see sales volume INCREASE and prices DECLINE then you can call me back with 'news of doom'. Until then the obvious conclusion is that people that NEED to sell (because they bought WAY more than they could afford) are forced into selling their messed up teardowns, money-pit outdated monsters, and tract homes crammed into inappropriate sites just to have an upscale address to whatever sucker the banks can find.
When it comes Aspen, and other resort areas that are NOTORIOUSLY over-peopled by TOO many "agents" hoping to make a bundle off a multi-million one-shot listing the reality is that are NOT places to make a real living as real estate agent. Ever! That fact aside, even the article you cited has these gems in it:
"Ritchie noted that Aspen’s average sales prices continue to rise despite the “terrible” sales volume. ... Two-thirds of transactions have historically been cash deals, he said, and most property is unencumbered by debt." Like I said, this is EXACTLY what truly rich people really do. They think of their vacation homes all most as "luxury collectibles" -- you don't finance a Picasso!
OK, this refers to London - (just getting ready for realtors yelling "Apples!!!! Oranges!!!!! etc etc etc) but it's an interesting article none the less.
Are American luxury homes so "different" or somehow "immune"???
"London isn’t the only prime residential property market to lose value because of the credit crisis. In the Hamptons, the New York seaside resort favored by financiers and celebrities, median prices were 14 percent lower at $690,000 in January than a year earlier according to New York property appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate"
Again, when VOLUME declines and prices stagnate it is not a surprise! If there is a huge volume of sales and prices fall THEN I will believe that the rich are now renters...
However, the stall in sales seems more likely than not to lead to a drop in prices. Supply and demand, love it or lump it. Why are sales taking off in the West all of the sudden? Because after a stall in sales, prices finally succumbed.
VOLUME UP, PRICES WAAAAAAY DOWN. California in a nutshell.
Coming soon to a zipcode near you.
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