Not many people know that the Great Depression had a W-shape. An article in the Wall Street Journal last week outlined this, and went over how the Fed is trying to prevent a backlach recession. Today, a WSJ article pointed this principle towards the housing market.
Though home prices are still in a deep rut, prices can lag behind home building and home buying, which have been improving lately. A recovery in home prices would help consumers feel richer and stem losses on bank balance sheets from bad mortgage bets — which can ultimately help lead to a broader economic recovery.
As home prices seem to be rising, the pessimists are beginning their predictions, and they may be right! The recent 12% rise in house prices was very promising, but there are still a good amount of foreclosures expected.
Another big problem is in the higher end of the housing market, where there haven’t been as many distressed sales as in the lower end, suggesting prices haven’t fully corrected. The top tier of the market by price has fallen only about 27%, compared with about 45% for the lowest tier, while the middle of the market is down about 33%, according to Ivy Zelman, chief executive of Zelman & Associates, a housing-research firm.
Mobile Home sales have been stalled lately, with very few deals actually being completed. The problem is that the banks are too tight, in response to their crisis and the heat they’ve taken for having loose lending practices over the past 5 years. Now, their newfound conservatism with lending has made it nearly impossible to finance or refinance a mobile home across America. If the housing market does have a W-shape, then the mobile home market will just be a flat line at the bottom of that W because there is no capital going into mobile homes.
With a large population of retired Americans living in mobile homes, the financing and refinancing options should become available soon. The mobile hom emarket is starved for financing, and it’s only a matter of time before a smart investor siezes the opportunity. But, who will be this mobile home angel investor? Warren Buffett just pulled out of the mobile home market, or atleast it seems he will. That will likely scare off some investors from the mobile home market, simply because of Buffetts reputation. However, the need for a mobile home finance and refinance will still remain, and someone will fill the void, and that investor will rake it in.
