PWC report. Renters who want to own are climbing an uphill battle toward saving for a down payment. Ninety-nine percent of U.S. cities saw rents increase last year, with 75% seeing double-digit rent raises. Although average wages are up 23% in the last five years, rent growth has far outpaced these gains at more than 36.9% in the same period. NO. 3 SWOLLEN HOME PRICES: Home prices surged because of the pandemic. The Mortgage Bankers Association (MBA) reports that mortgage applications are at their lowest in 25 years. Buying power is down for families across the board. In 2019, a family needed an income of around $52,000 to purchase a median-priced home with a monthly payment of $1,220. Today, that number has shot up to almost $100,000, with a monthly payment increase of an additional $1,000. NO. 4 LOW INVENTORY: Multiple offers over list price. Full cash offers. Packed open houses. 2022 was a seller’s market. Although the market
is normalizing, there is still not enough inventory to match demand, which has kept prices elevated. Rick Sharga, executive vice president of market intelligence at ATTOM Data, says the 3.3-month supply of homes on the market “is about half of what we’d like to see normally.” NO. 5 INVESTORS AND INSTITU- TIONAL BUYERS: Tim Henderson for Pew reported that “Investors made 29% or more of the home purchases last year in Arizona, California, Georgia, Texas, and Nevada, and investor purchases doubled or more from 2020 for Florida, Nevada, Vermont, and Washington.” Increasing activity from investors (small and institutional alike) has contributed to rent hikes and diminished affordability in Sun Belt markets. These concerns vary depending on the market, but the theme remains the same: Homeownership and renting grow increasingly expensive. Given these factors, there is one particular kind of investment property we will be keeping an eye on in 2023.
LAST STAND AT AFFORDABLE HOUSING: MOBILE HOMES Almost 18 million people, 5.6% of the U.S. population, call a mobile home “home.” The Manufactured Housing Institute (MHI) reports that in 2021, manufactured housing accounted for 9% of new, single-family home starts. Because the average sales price of a new manufactured home (without land) is just $108,100, mobile homes are an affordable alternative for many Americans. Mobile homes are a hot market to watch in 2023 because they meet a real need in the market (affordable housing), and they present a variety 2. Asymmetric financial returns 3. Relative low cost of acquisition 4. Reduced maintenance 5. Value-add rich environment 6. Limited supply, with restrictive barriers to building Andrew Keel notes three big names who invest heavily in the space: Warren Buffett through his company Clayton Homes (largest of investment upsides: 1. Recession resistant
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