LA’s first prefab tiny home village for the homeless opened this year as a ‘test case’ for the city – see how it’s doing now

Tiny homes at the Chandler Street Tiny Home Village.
Tiny homes at the Chandler Street Tiny Home Village.

  • Hope of the Valley Rescue Mission’s Chandler Street Tiny Home Village first opened in February.
  • The village was created to temporarily house North Hollywood’s unhoused residents.
  • See how the Los Angeles’ first tiny home community is doing now, and how it’s inspired similar developments.
  • See more stories on Insider’s business page.
In February, an unassuming and “forgotten” corner of North Hollywood, Los Angeles, was transformed into a colorful village of tiny homes run by nonprofit Hope of the Valley Rescue Mission.

Chandler Boulevard Bridge Home Village
The Chandler Boulevard Bridge Home Village.

Source: Insider

City officials first scouted the teardrop-shaped infill lot when they were looking for a place to build “bridge” homes, or shelters meant to aid in finding unhoused residents a permanent home.

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The entrance to the Chandler Street Tiny Home Village

Now, 43 residents call the Chandler Street Tiny Home Village their (temporary) home, just a few months after the community’s February grand opening.

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Tiny homes at the Chandler Street Tiny Home Village.

Lehrer Architects, which designed the tiny home community with the city’s Bureau of Engineering, had a $3.49 million budget for the project. But foundational work – including street leveling and sewer lines – became the most expensive component of the project.

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The laundry facility at the Chandler Street Tiny Home Village.

Despite this cost, the beta project’s shelters “add real value” to the once vacant lot, according to Lehrer Architects.

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The entrance to the Chandler Street Tiny Home Village.

Source: Lehrer Architects

Chandler Village was the first tiny home community Hope of the Valley had planned for Los Angeles.

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The bed inside a tiny home at the Chandler Street Tiny Home Village.

It’s since served as a “test case” for the city, Rowan Vansleve, CFO of Hope of the Valley Rescue Mission, told Insider.

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A tiny home at the Chandler Street Tiny Home Village.

The nonprofit has already opened its second tiny home village, pictured below, about two miles away from the initial community, riding off of the success of the Chandler site.

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The Alexandria Park Tiny Home Village.

Source: Insider

The new site, the Alexandria Park Tiny Home Village, is much larger than the original “test case” Chandler site pictured below. It’ll have 200 beds, a significant uptick from Chandler’s 75 beds

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Tiny homes at the Chandler Street Tiny Home Village.

Source: Insider

“They had taken another piece of unused land that had encampments on it and they used the learnings of that to build [the new Alexandria Park village],” Vansleve said.

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A peek through the fence into the Chandler Street Tiny Home Village.

By starting with the Chandler site, the nonprofit learned that the village’s bright colors worked well, but that any upcoming villages would need more on-site offices for case managers.

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Tiny homes at the Chandler Street Tiny Home Village.

These learnings were then applied to the new Alexandria site, and will dictate how the nonprofit’s future tiny home villages will look.

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The entrance into the Chandler Street Tiny Home Village.

This includes upcoming communities in the San Fernando Valley region of Los Angeles, which will be open in the next two months.

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Tiny homes at the Chandler Street Tiny Home Village.

But now, let’s take a closer look at the first tiny home village that started it all.

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Tiny homes at the Chandler Street Tiny Home Village.

In April, I took a tour of the Chandler Street Tiny Home Village, which has 40 tiny homes and 75 beds.

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The window of a tiny home at the Chandler Street Tiny Home Village.

Source: Hope of the Valley

After being temperature checked by a guard at the entrance of the community, I walked past a series of lockers into the fenced village.

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The entrance into the Chandler Street Tiny Home Village.

The lockers are meant to secure the residents’ items that aren’t allowed inside of the village, whether it be drugs or personal defense weapons, Vansleve told me while we toured the Alexandria Park location.

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The entrance into the Chandler Street Tiny Home Village.

An outdoor smoking area and the restroom facilities with showers sit right across from the entrance.

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The smoking area at the Chandler Street Tiny Home Village.

From there, I turned the corner and was immediately greeted by the line-up of tiny homes, an outdoor seating area, and shipping container-like buildings.

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Outdoor communal areas at the Chandler Street Tiny Home Village

The shipping container-like buildings make up the communal facilities, which include a laundry room. It’s also where the case workers are located.

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Tiny homes at the Chandler Street Tiny Home Village.

The village also offers its residents three meals a day here.

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A cup at the Chandler Street Tiny Home Village.

The outdoor communal tables are located right next to these facilities and in front of the small dog park, which sits at the center of the village.

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The dog park at the Chandler Street Tiny Home Village.

Surrounding these public amenities are the tiny homes.

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The outdoor tables and a tiny home at the Chandler Street Tiny Home Village.

Several of these tiny homes have already been personalized with flowers, flags, and posters.

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The tiny homes at the Chandler Street Tiny Home Village.

Each tiny home has an entry door that can be locked, a luxury some of the residents might not have had prior.

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The lock on the door of a tiny home at the Chandler Street Tiny Home Village.

“Achieving this level of privacy and security is not possible in a traditional shelter,” Michael Lehrer and Nerin Kadribegovic, Lehrer Architects’ founding partner and partner, respectively, told Insider in an email interview in February. “The evocation of a child’s drawing of a ‘house’ and even Monopoly’s homes reinforces the idea of ‘home.'”

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The bed inside a tiny home at the Chandler Street Tiny Home Village.

The interior has all of the basic amenities needed to live in a tiny home in Los Angeles, including a bed, a heater …

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Inside a tiny home at the Chandler Street Tiny Home Village.

… an air conditioning unit, windows, shelves, and a desk.

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The air conditioning unit inside a tiny home at the Chandler Street Tiny Home Village.

The units were all created by Washington-based Pallet, which specializes in creating prefab tiny homes that can be quickly assembled to create homes for people who may have been unhoused due to natural or personal disasters.

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Inside a tiny home at the Chandler Street Tiny Home Village.

“What we felt was really missing from the housing spectrum was a dignified shelter option that honored their individuality and allowed them to have autonomy in their rehabilitation process,” Amy King, founder and CEO of Pallet, told Insider in January.

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Tiny homes at the Chandler Street Tiny Home Village.

Source: Insider

Parts of the community, including some of the tiny homes, have been painted bright reds, yellows, and blues to keep the village feeling colorful and non-“institutional,” according to Vansleve.

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The smoking area of the Chandler Street Tiny Home Village.

Source: Insider

However, it wasn’t the community’s bright colors that caught my attention. It was the people.

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Two people at the Chandler Street Tiny Home Village.

The village’s residents were friendlier than my own neighbors: almost every person I walked by smiled and said “hello.”

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Tiny homes at the Chandler Street Tiny Home Village.

And before I left, I had a chat with someone in the village who told me about their daughter, son in college, and interest in other cultures.

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A desk and chair inside a tiny home at the Chandler Street Tiny Home Village.

The conversation reminded me of something Vansleve told me during our chat at the new Alexandria Park location: “I look at people on the street [in their late 60s, early 70s] and some of them could be my mum. They’ve experienced incredible amounts of trauma and they’re left on the street. I think it’s a moral issue.”

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Communal areas at the Chandler Street Tiny Home Village.

Think of Chandler Street Tiny Home Village as a transitioning place for its residents.

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A tiny home at the Chandler Street Tiny Home Village.

The goal of the village, and Hope of the Valley’s upcoming sites, is to provide its residents with stability and a temporary home while helping them eventually transition into more permanent housing.

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Inside a tiny home at the Chandler Street Tiny Home Village.

When a new resident arrives, the community’s employees, which include case workers, will help the new individual with a list of personal needs.

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The Pallet logo on a tiny home at the Chandler Street Tiny Home Village.

“Here it’s more supportive, more in-depth,” Priscilla Rodriguez, a case manager at the Chandler Street Tiny Home Village, told Insider. “When somebody comes in, they could be at the very beginning.”

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Tiny homes at the Chandler Street Tiny Home Village.

From there, case workers will help the residents receive necessary paperwork like an ID, a social security card, or a birth certificate.

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Tiny homes at the Chandler Street Tiny Home Village.

The team will also help its residents find income. This could be unemployment benefits at first, but will hopefully lead to a job or Supplemental Security Income.

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Tiny homes at the Chandler Street Tiny Home Village.

The case workers even help with life skills, which could include teaching them how to keep their tiny homes clean or encouraging them to bathe everyday.

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The tiny homes at the Chandler Street Tiny Home Village.

Workers will also connect the residents to doctors and physicians for both mental and physical healthcare.

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The laundry facility at the Chandler Street Tiny Home Village.

“Some of them wanted to bring their tents into their home because they’re not used to coming out of that setting and transitioning back into permanent housing,” Rodriguez said.

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The tiny homes at the Chandler Street Tiny Home Village.

This is the “transition” case workers like Rodriguez are trying to help with.

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Tiny homes at the Chandler Street Tiny Home Village.

“They are going to be housed on their own one day, and we want to help support them in every way so that way when they get there, they feel confident to be there and to keep that house on their own,” Rodriguez said.

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A window inside a tiny home at the Chandler Street Tiny Home Village.

The program lasts for 90 days, but can be extended for an additional 90 days if they find the resident is making good headway and improvements, and is “actively working” with the case managers to meet goals.

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The outdoor tables and tiny homes at the Chandler Street Tiny Home Village.

“All we need from them is just to connect with us,” Rodriguez said. “Just tell us what you need.”

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The dog park at the Chandler Street Tiny Home Village.

Every resident in this current batch has already received an extension because the village and program is so new. But moving forward, the goal is for residents to meet the 90-day timeline.

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The tiny homes at the Chandler Street Tiny Home Village.

Each resident gets to dictate the pace at which they move, and right now, many of them are showing “tremendous progress.”

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Tiny homes at the Chandler Street Tiny Home Village.

The majority of the 43 residents currently being housed at the Chandler site are on track to be housed independently, which is the ultimate goal of the program.

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Tiny homes at the Chandler Street Tiny Home Village.

“We really are showing that the program is working,” Rodriguez said.

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Tiny homes at the Chandler Street Tiny Home Village.

In order to qualify for a bed at the village, an outreach worker, often from the Los Angeles Homeless Services Authority, has to verify that the potential resident is homeless and resides within a few miles of the village.

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Inside a tiny home at the Chandler Street Tiny Home Village.

The Chandler site has been so popular there’s already a waitlist for the beds.

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Tiny homes at the Chandler Street Tiny Home Village.

The team will accept anyone into the village, even if they have substance abuse or mental health issues, physical disabilities, or legal problems.

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The tiny homes at the Chandler Street Tiny Home Village.

“We’re just people who were trying to help these participants better their life,” Rodriguez said. “They’re not trying to harm the community in any way, they’re trying to get themselves back into that community.”

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The tiny homes at the Chandler Street Tiny Home Village.

And despite the ongoing pandemic, the Chandler Street Tiny Home Village hasn’t had any COVID-19 outbreaks.

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Communal areas at the Chandler Street Tiny Home Village.

The tiny homes each typically shelter up to two people, but due to the virus, only couples are allowed to share a unit.

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The tiny homes at the Chandler Street Tiny Home Village.

And every one to two weeks, the village offers COVID-19 testing on-site.

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The fence and a sign at the Chandler Street Tiny Home Village.

Several residents have already received their first round of vaccines as well.

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Inside a tiny home at the Chandler Street Tiny Home Village.

Many of the residents have also been complying with face mask wearing, social distancing, and sanitizing protocols, according to Rodriguez.

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Tiny homes at the Chandler Street Tiny Home Village.

Despite the work Chandler Street is doing for the homeless community, the program has experienced some protests and hecklers.

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Tiny homes and outdoor tables at the Chandler Street Tiny Home Village.

The hecklers “just want to cause a scene saying we’ve got drug addicts and criminals in here,” according to Rodriguez.

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Tiny homes at the Chandler Street Tiny Home Village.

“It’s sad to see the pushback because any one of us could be here at any point,” Rodriguez said. “You never know what it’s gonna take to make you homeless, especially during a covid year.”

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Tiny homes at the Chandler Street Tiny Home Village.

Despite this, the village and its program has so far been a success, and has already attracted international attention.

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The tiny homes at the Chandler Street Tiny Home Village.

As a “test case” for future tiny home communities, and since most residents are on track to be permanently housed, the concept has served as an inspiration for people around the world.

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Communal areas at the Chandler Street Tiny Home Village.

The Chandler site has even seen out-of-country visitors who have been interested in incorporating a similar idea in their own city or state.

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A tiny home at the Chandler Street Tiny Home Village.

“It’s making a big impact,” Rodriguez said. “They see that we have had a lot of success with this program, so I definitely see it expanding … hopefully all over the country and in other nations as well.”

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Inside a tiny home at the Chandler Street Tiny Home Village.

Read the original article on Business Insider

5 warning signs in the real-estate market that recall the mid-2000s housing bubble

housing
  • Several gauges of housing market activity mirror trends seen just before the bubble burst in 2008.
  • Experts see the current boom as far safer than the prior rally, citing stronger lending requirements.
  • Still, here are trends ranging from home prices to construction activity that resemble 2005 and 2006.
  • See more stories on Insider’s business page.

Housing-market monitors keep repeating the phrase “since 2005,” except when it’s “since 2006.” That’s worrying – both superlatives refer back to the peak of a historic real-estate bubble.

Low mortgage rates and massive demand have powered a supercharged rally for US housing over the last year. Americans snapped up nearly all the available supply of new and previously owned homes amid huge population shifts from cities to suburbs. Chronic underbuilding after the financial crisis left contractors struggling to meet the new demand with adequate supply. That imbalance has since pushed selling prices skyhigh.

The boom’s frenetic nature has led many to compare the current market with that seen just before the infamous 2008 crash. Experts have been quick to note that, while some similarities exist, the latest price surge has more to do with a lack of inventory than dubious lending standards.

“I don’t see the kind of financial stability concerns that really do reside around the housing sector,” Federal Reserve Chair Jerome Powell said last month. “We don’t see bad loans and unsustainable prices and that kind of thing.”

But just because the market looks different on a macro level doesn’t mean there aren’t strong similarities to the period just before the bubble burst. Here are five housing-market signals flashing the same signs seen about 15 years ago.

(1) CoreLogic Home Price Index

Possibly the most basic indicator of just how much demand has outstripped supply is nationwide price indexes.

The headline price gauge for housing-data authority CoreLogic soared 11.3% year-over-year in March, according to a Tuesday report. That marks an acceleration from the February rate of 10.4% and the fastest rate of price growth since March 2006. On a month-over-month basis, prices rose 2% from their February levels.

The financial analytics firm sees that momentum cooling over the next year. A persistent wearing-away of home affordability will likely curtail some purchases, and accelerated construction will shore up supply in the months ahead, CoreLogic said. Still, year-over-year price growth should reach 3.5% as lingering demand keeps the rally alive, Frank Martell, the president and CEO of CoreLogic, said in a statement.

“With prospective buyers continuing to be motivated by historically low mortgage rates, we anticipate sustained demand in the summer and early fall,” he said.

(2) S&P CoreLogic Case-Shiller Index

Separately, a more city-focused measure of home-price inflation notched a similar reading last week. Home prices in metropolitan areas gained 12% year-over-year in February, according to the S&P CoreLogic Case-Shiller Home Price Index, the headline index of US home prices for more than three decades. The reading signals the strongest price growth since 2006 and edged slightly higher from the prior annual gain of 11.2%.

Inflation was broad-based. All 20 cities saw home prices climb, and 19 cities saw year-over-year price growth accelerate from January to February. Prices rose the most in Phoenix, San Diego, and Seattle, according to S&P.

(3) Selling prices for new vs. previously owned homes

Digging deeper into home sales reveals an unusual phenomenon unseen since the previous boom. For the first time since 2005, Americans spent more on previously owned single-family homes than on new construction, according to March housing data from the Census Bureau and the National Association of Realtors.

The dynamic signals Americans are prioritizing buying any available home instead of hunting down a new unit.

To be sure, monthly sales data is volatile and the premium for new homes could reemerge in April data. But with supply still under pressure and CoreLogic’s Tuesday report showing prices broadly climbing higher last month, the phenomenon might linger for some time.

(4) Home starts

As gauges of market demand soar to 15-year highs, so have measures of upcoming supply. Housing starts surged nearly 20% in March as contractors rushed to address the lack of new homes for sale. The leap places the annual rate of starts at its highest since 2006 and serves as the largest month-over-month gain since 1990. Permits for new residential construction also increased, albeit at a slower rate.

The rebound was somewhat prompted by winter storms curbing construction activity in February. But for the most part, a historic shortage of available homes fueled the pickup in building. Just 1.07 million existing homes were up for sale in March. That sum, at the current purchase rate, would be snapped up in only two months.

Homebuying has slowed from its pandemic-era peak, giving contractors slightly more time to meet the elevated demand. With millennials hitting peak homebuying age and lumber prices expected to decline, some economists see the rebound in construction paving the way for more moderate price growth.

(5) Home equity take-out

The sustained acceleration of home price growth has also lead owners to take out equity at the same rate seen in the mid-2000s. Homeowners refinancing their mortgages pulled roughly $50 billion in equity out of their homes throughout the fourth quarter of 2020, according to data from Freddie Mac and the Urban Institute.

Mortgage rates, while still at historically low levels, reversed their pandemic-era decline through the first quarter as investors braced for the economic recovery to give way to higher borrowing costs. Those higher rates erased the rate-reduction incentive for refinancing, making equity take-out the top reason to refinance, the Urban Institute said in a report published April 27.

Although equity take-out on its own is normal, the sharp uptick seen last year could be cause for concern. Some economists have criticized the Fed’s ultra-accommodative policy for encouraging risk-taking across various markets. Increased equity take-out presents new financial risks for participating homeowners since a decline in home prices from their skyhigh levels could cut deeply into their balance sheets.

And while equity take-out sits at its 2005 level, it is still well below the 2006 peak. Yet with mortgage rates expected to climb over the next few years, take-out refinancing could accelerate further.

Read the original article on Business Insider

The Fed is watching housing ‘carefully’ and hopes builders catch up to the red-hot market, Chair Powell says

Jerome Powell waits to testify before the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. Federal Reserve in Washington, U.S., November 28, 2017.   REUTERS/Joshua Roberts
Federal Reserve Chair Jerome Powell.

  • The Fed is “carefully” watching the housing market as huge demand sends prices soaring, Chair Jerome Powell said.
  • The central bank doesn’t see “the kind of financial stability concerns” that fueled the 2008 crash, he added.
  • Powell said he hopes homebuilders react “and come up with more supply,” which would also boost job growth.
  • See more stories on Insider’s business page.

The housing market boom has caught the Federal Reserve’s attention.

By several measures, the US housing market is running at its hottest level since the mid-2000s bubble that nearly crashed the global financial system. Prices have surged at decade-high rates, and homebuying, while slowed from recent highs, remains elevated. What began as a pandemic-era rally has since raised concerns that soaring prices are eroding home affordability just as the US economy rebounds.

The market frenzy is being “carefully” monitored by the Fed, but there’s little reason to fear another nationwide crash, Fed Chair Jerome Powell said in a Wednesday press conference. The subprime lending and speculative purchasing that fueled the 2008 meltdown aren’t nearly as abundant this time around, making for a “very different housing market” than that seen a little over a decade ago, he added.

“I don’t see the kind of financial stability concerns that really do reside around the housing sector,” Powell said. “We don’t see bad loans and unsustainable prices and that kind of thing.”

Much of the boom is driven by demand significantly outstripping supply. Home inventory sits near record lows, and while housing starts recently leaped to the fastest rate since 2006, it will take some time for construction to equate to new supply.

Powell acknowledged the imbalance and highlighted that a bounceback in supply could also serve the labor market’s recovery.

“My hope would be that over time, housing builders can react to this demand and come up with more supply, and workers will come back to work in that industry,” he said.

Some of the current market strains can be tied directly to fallout from the 2008 crisis. The intense homebuying activity seen throughout the 2000s drove a boom in new construction. The rally lasted for years until dubious lending brought the market toppling down. Construction came to an almost-complete stop, and while it trended higher through the 2010s, it failed to retake levels seen during the prior decade’s surge. That building deficit is just now coming back to bite prospective homebuyers.

“We’ve been underbuilding for years,” Gay Cororaton, director of housing and commercial research for the National Association of Realtors (NAR), told Insider’s Hillary Hoffower.

While the Federal Reserve has little direct influence on the housing market, the central bank’s promise to hold interest rates near zero for the foreseeable future places downward pressure on mortgage rates. Lower borrowing costs help lower the barrier to entry for potential buyers, as would the previewed jump in supply.

Signs point to demand holding up even as supply recovers. Nearly 9% of Americans plan to buy a home in the next six months, according to The Conference Board’s latest consumer confidence report. That’s the largest share since 1987.

Read the original article on Business Insider

The housing market is the hottest it’s been since right before the 2008 crash – but there’s far less bubble risk this time around

buying home
  • Home price growth and construction are the hottest they’ve been since 2006 – the peak of a housing bubble.
  • Despite the similarities of some housing data from 15 years ago to today, experts see two very different markets.
  • Conditions driving this market boom are “fundamentally, radically different,” an economist told Insider.
  • See more stories on Insider’s business page.

Housing data is hitting levels unseen since 2006 in at least three different ways, begging the question of whether this is another bubble. Experts say this isn’t that – it’s economics.

Another housing bubble 15 years after the last one would be very bad news, as the epic pop of that market in 2008 threatened the stability of the entire global financial system. But while today’s price inflation is similar to then, the drivers behind this market rally look different.

Nationwide home prices grew 12% year-over-year – their fastest pace since 2006 – this past February, according to the S&P CoreLogic Case-Shiller Index. Gains were broad-based, with all 20 cities tracked by the index experiencing price growth above their respective median levels.

Separately, CoreLogic’s own home-price index also recorded the highest annual leap since 2006 in February. That gauge tracks home prices across the country, while S&P’s index measures prices in 20 metropolitan areas.

Also, for the first time since 2005, the median sale price for previously owned single-family homes is higher than that for new construction. In other words, the premium Americans typically pay to be the first to live in a new house has been completely erased as homebuyers have rushed to buy any home on the market.

“The conditions underlying what happened way back then, during the bubble of ’05 and ’06, and what’s driving price growth today are just fundamentally, radically different,” Frank Nothaft, chief economist for CoreLogic, told Insider.

Where dubious lending and market euphoria powered the mid-2000s surge, today’s boom is almost entirely due to a nationwide supply shortage. The monthly supply of homes sits near record lows of about 3 months, leading sellers to demand increasingly large sums for their properties. That compares to more than 12 months of supply in 2009.

Today’s market is also backed by a strong underwriting process and isn’t engulfed in a subprime mortgage crisis, Nothaft explained. The price growth we are currently experiencing, he continued, “is rooted in economics.”

Record low mortgage rates and the heightened focus on space have sent buyer demand through the roof, but a pullback from prospective sellers and a lack of newbuilds have resulted in a national decline in homes for sale.

“When you put all these pieces together, increase in demand and limited supply, it pushes prices up and that’s what we’re seeing in the marketplace,” Nothaft added.

Learning from post-crisis mistakes

Other gauges aren’t just at their hottest levels since 2006, but their hottest levels full-stop. The median selling price for existing homes touched a record high of $329,100 in March, according to the National Association of Realtors. And though the supply of previously owned homes has edged higher in recent months, it’s still close to February’s all-time low of 1.03 million units.

“We’ve been underbuilding for years,” Gay Cororaton, director of housing and commercial research for the National Association of Realtors (NAR), told Insider.

The shortage can be traced back to that 2008 housing crash and its long-term fallout. The buying frenzy seen throughout the 2000s had fueled a boom in new construction as builders rushed to meet unprecedented demand. But once the bubble burst, contractors pulled back on building in an effort to prop up demand. Construction rebounded slowly through the last decade, leaving the market with diminished inventories once the pandemic-era boom began.

Daryl Fairweather, chief economist at Redfin, told Insider that the last decade saw a massive drop-off in homebuilding. Fewer homes were built by a factor of 20 going all the way back to the 1960s, she said.

But the latest data suggests contractors are finally heeding the market’s call. Home starts leaped nearly 20% last month to the highest level since, you guessed it, 2006. The reading also marks the largest month-over-month increase since 1990, underscoring the urgency faced by homebuilders.

Americans also seem prepared to keep the market boom alive for at least a while longer. The share of consumers planning to buy a home in the next six months rose to 8.9% in April from 8.1%, according to The Conference Board’s Consumer Confidence Index. That’s the highest proportion since 1987.

With millennials reaching peak homebuying age, supply bouncing back, and mortgage rates expected to move up slightly, economists don’t expect the housing rally to pop, but instead settle into more sustainable growth.

“I think we will return more to the trend that we were seeing pre-pandemic,” Nothaft said, which showed steady national price growth in the single digits. In February 2020, home prices increased by 4.1% year-over-year.

For millennials, who are entering or at peak homebuying age, that would represent a return to a pre-pandemic dynamic of record low mortgage rates but a housing market that still felt out of reach. It may not be a bubble, but it isn’t exactly attainable, either.

Read the original article on Business Insider

Million-dollar luxury home sales are soaring even as many buyers struggle to find a house

luxury house
Even though wealthy Americans are snapping up luxury homes, there’s an abundance of them on the market.

Luxury home sales are soaring.

They increased by 41.6% in the first three months of 2021 over the first three of 2020, according to a recent Redfin report that defined luxury homes as those selling for an average of $975,000. It’s a sharp contrast from sales for what Redfin deems “affordable” homes (those selling for an average of $184,400), which only increased by 7% in the same time frame.

It’s emblematic of the wealth divide that has deepened in America since the pandemic began, with the wealthy doing just fine and lower-income earners struggling to the point of falling into poverty. This K-shaped recovery is manifest in the housing market.

The report stated that home sales growth is typically similar across price tiers, but the pandemic’s exacerbation of economic inequality has caused it to diverge. “Affluent Americans with the flexibility to work from anywhere are taking advantage of low mortgage rates and buying up high-end houses – particularly in popular vacation destinations -which is contributing to the surge in luxury-home sales,” it reads.

The luxury housing market hasn’t been riddled with the same problems plaguing the more affordable housing market. The latter has seen cutthroat competition rife with ubiquitous bidding wars, as desperate buyers have resorted to all-cash offers, waiving inspections, or forgoing appraisals to win them. It’s resulted in a shortage of homes, Insider’s Taylor Borden reported, with current homeowners afraid to sell their houses for fear of being unable to find another.

America is short 2.5 million homes, per a recent Jefferies note. The National Association of Realtors estimated in March that existing housing inventory could run out in two months.

But while multimillion-dollar luxury properties are also seeing heated competition with multiple offers and selling for more than the asking price, Redfin’s Chief Economist Daryl Fairweather told Housing Wire, there are enough of them to go around.

Miami saw the biggest increase in luxury home sales (101.1%), which could partially be explained by the number of Wall Streeters who have moved there during the pandemic. California gobbled up the next round of luxury home sales, with San Jose leading the way, followed by Oakland and Sacramento.

It seems that the wealthy are in search of sunshine and space, and they are once again exempt from the many pandemic-related economic problems afflicting many Americans.

Read the original article on Business Insider

Here’s how fast homebuilding is catching up to the record-low number of houses for sale

UBS STARTS
Source: UBS.

  • Housing starts surged 19.4% in March to their highest level since 2006, the Census Bureau said.
  • The rebound was fueled by a massive supply shortage and a return to work after harsh winter storms.
  • The supply-demand imbalance sent prices soaring during the pandemic and cut into home affordability.
  • See more stories on Insider’s business page.

Insider has been warning of a potential inventory crisis in the housing market since last summer. It’s just gotten worse since then, with a record low number of homes for sale.

Builders are racing to catch up.

New residential construction surged more than anticipated in March as builders rushed to address the massive supply-demand imbalance in the housing market.

Home starts leaped to a seasonally adjusted annual rate of 1.74 million units last month, the Census Bureau said Friday. That’s up 19.4% from the revised February reading. Economists surveyed by Bloomberg expected starts to rise to a rate of 1.61 million. The reading places housing starts at their highest level since 2006 and marks the largest month-over-month gain since 1990.

The strong rebound was partially driven by a return to work after harsh winter storms hampered construction in February. Permits for residential construction also gained in March, though at a more modest rate.

“We may have overestimated the immediate storm-rebound by a little, and so expected more rebound to come in starts in April,” UBS economists led by Samuel Coffin said in a note. “But with permits on target in March, we continue to see the underlying trend in single-family activity at about a 1.2 million unit annual rate.”

The upswing in home construction comes as the market sits mired in a historic supply shortage. Low mortgage rates spurred a buying spree throughout the pandemic, as did a mass exodus from cities to suburbs. The pace of home sales cooled somewhat in February, but inventory remains at a record-low 1.03 million, according to the National Association of Realtors. At the current rate of purchases, that supply will only last for two months.

The shortage has shown up in home prices, which have shot higher in recent months. Prices gained 10.4% in February from the year-ago period, marking the largest one-year bounce since 2006. Prices also rose 1.2% month-over-month in February, signaling that, while the sales rate has slowed, costs are still climbing. The loftier prices stand to price potential homebuyers out of the market and make housing less accessible overall.

Still, filling the hole in the housing market isn’t as simple as going out and building more. The pandemic’s fallout disrupted all kinds of supply chains, including those critical for home construction. A widespread lumber shortage is estimated to be adding about $24,000 to the price of new homes, according to the National Association of Home Builders.

A decades-long slowdown in construction activity also contributed to the supply strains. The financial crisis and its damage to the US housing market led contractors to curb some building activity to prop up demand. Those actions are now coming back to haunt the housing market, which is estimated to be short some 4 million units, The Wall Street Journal reported, citing Freddie Mac data.

“We should have almost four million more housing units if we had kept up with demand the last few years,” Sam Khater, chief economist at Freddie Mac, told The Journal. “This is what you get when you underbuild for 10 years.”

Data suggests contractors are up for addressing the issue. Apart from the Friday housing-starts report, the National Association of Home Builders’ sentiment gauge edged higher in a preliminary April reading. A component measuring expected traffic of potential buyers rose to its highest level since November, signaling contractors are expecting steady demand throughout the building boom.

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Home prices are up 17% over the past year, while inventory remains low: Redfin

US housing market
  • The housing market is flooded with demand, but there’s a shortage of inventory.
  • A new report by Redfin found that the median home-sale price rose 17% year over year during the four-week period ending on April 11.
  • Compared to the same four-week period in 2019, the total number of active listings was down 47%, an all-time low.
  • See more stories on Insider’s business page.

With buyer demand high and inventory low, home prices in the US continue to rise.

A new report by the Seattle-based real estate brokerage, Redfin, found that for the four-week period ending on April 11, the median home-sale price shot up to $341,250, a 17% year-over-year increase.

Homes that were sold during the four-week period sat on the market for a median of 23 days, the shortest length of time since 2012. And, 43% of homes sold over listing price, the highest percentage recorded by Redfin.

The high prices are a result of limited inventory.

When compared to the same four-week period in 2019, the number of new listings to hit the market was down 13% and the total number of active listings was down 47%, an all-time low.

Looking at the lack of inventory on a broader scale, Freddie Mac estimated that by the end of 2020, there was a housing shortage of around 3.8 million units in the US, and the crisis doesn’t seem to be easing.

In February, a report by real estate analytics corporation Black Knight found that housing inventory was down 40% year over year. The report also found that new listings in January were down 16% year over year and in February, they were down 21%.

The data points to a tough reality for some prospective homebuyers on a budget: It’s a tough time to buy a house.

As previously reported by Insider, the average homebuyer now needs to make an offer above the asking price to score a property. And, over 50% of Redfin home offers are facing bidding wars.

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Housing starts soar to 15-year high as builders sprint to fill market shortage

home house construction
Workers are shown building luxury single family homes in Carlsbad, California,

  • Housing starts surged 19.4% in March to their highest level since 2006, the Census Bureau said.
  • The rebound was fueled by a massive supply shortage and a return to work after harsh winter storms.
  • The supply-demand imbalance sent prices soaring during the pandemic and cut into home affordability.
  • See more stories on Insider’s business page.

Insider has been warning of a potential inventory crisis in the housing market since last summer. It’s just gotten worse since then, with a record low number of homes for sale.

Builders are racing to catch up.

New residential construction surged more than anticipated in March as builders rushed to address the massive supply-demand imbalance in the housing market.

Home starts leaped to a seasonally adjusted annual rate of 1.74 million units last month, the Census Bureau said Friday. That’s up 19.4% from the revised February reading. Economists surveyed by Bloomberg expected starts to rise to a rate of 1.61 million. The reading places housing starts at their highest level since 2006 and marks the largest month-over-month gain since 1990.

The strong rebound was partially driven by a return to work after harsh winter storms hampered construction in February. Permits for residential construction also gained in March, though at a more modest rate.

The upswing in home construction comes as the market sits mired in a historic supply shortage. Low mortgage rates spurred a buying spree throughout the pandemic, as did a mass exodus from cities to suburbs. The pace of home sales cooled somewhat in February, but inventory remains at a record-low 1.03 million, according to the National Association of Realtors. At the current rate of purchases, that supply will only last for two months.

The shortage has shown up in home prices, which have shot higher in recent months. Prices gained 10.4% in February from the year-ago period, marking the largest one-year bounce since 2006. Prices also rose 1.2% month-over-month in February, signaling that, while the sales rate has slowed, costs are still climbing. The loftier prices stand to price potential homebuyers out of the market and make housing less accessible overall.

Still, filling the hole in the housing market isn’t as simple as going out and building more. The pandemic’s fallout disrupted all kinds of supply chains, including those critical for home construction. A widespread lumber shortage is estimated to be adding about $24,000 to the price of new homes, according to the National Association of Home Builders.

A decades-long slowdown in construction activity also contributed to the supply strains. The financial crisis and its damage to the US housing market led contractors to curb some building activity to prop up demand. Those actions are now coming back to haunt the housing market, which is estimated to be short some 4 million units, The Wall Street Journal reported, citing Freddie Mac data.

“We should have almost four million more housing units if we had kept up with demand the last few years,” Sam Khater, chief economist at Freddie Mac, told The Journal. “This is what you get when you underbuild for 10 years.”

Data suggests contractors are up for addressing the issue. Apart from the Friday housing-starts report, the National Association of Home Builders’ sentiment gauge edged higher in a preliminary April reading. A component measuring expected traffic of potential buyers rose to its highest level since November, signaling contractors are expecting steady demand throughout the building boom.

Read the original article on Business Insider

US home prices soared at the fastest rate since 2006 in February

House for sale US
A house’s real estate for sale sign shows the home as being “Under Contract” in Washington, DC, November 19, 2020.

  • US home prices surged 10.4% year-over-year in February, the biggest such jump since 2006.
  • The market has been red hot during the pandemic, but affordability represents a new challenge.
  • Price growth will cool into 2022 as mortgage rates rise and price out more buyers, CoreLogic said.
  • See more stories on Insider’s business page.

Everyone knows it’s been hard to find an affordable house amid the pandemic, but as the data comes in, it’s becoming clearer just how hard.

The answer: Extremely.

US home prices continued to rip higher in February as supply constraints across the country and outsize demand boosted competition.

Selling prices increased 10.4% in February from year-ago levels, marking the largest year-over-year gain since 2006, according to CoreLogic data published Tuesday. Prices rose 1.2% from levels seen in January 2021. Idaho and Montana saw the biggest jumps, with year-over-year gains of 22.6% and 19.5%, respectively, according to the financial analytics firm CoreLogic.

And the outlet sees another year of more expensive housing ahead, projecting prices will rise another 3.2% by February 2022. The end of the pandemic can ease constraints on supply, CoreLogic said. On the demand side, it expects the lack of affordable housing to cut into some potential purchases.

“The run-up in home prices is good news for current homeowners but sobering for prospective buyers,” Frank Nothaft, chief economist at CoreLogic, said. “Those looking to buy need to save for a down payment, closing costs, and cash reserves, all of which are much higher as home prices go up.”

The housing market was among the few hotbeds of economic activity throughout the coronavirus pandemic. The Federal Reserve’s emergency rate cuts in March 2020 pulled mortgage rates to numerous record lows throughout last year, leading many to take advantage of more appealing borrowing costs. Prolonged work-from-home periods spurred moves from apartment-dense cities into suburbs, which also lifted housing-market demand.

The buying spree quickly snapped up most of the market’s available supply, but that streak recently showed signs of slowing. For one, expectations for a strong economic recovery saw investors dump Treasurys in recent weeks, lifting yields on government debt and in turn leading mortgage rates to swing higher. Rates now sit at their highest levels since June after rising for seven weeks straight.

The turnaround in mortgage rates and soaring prices seemed to finally bite into the housing market’s rally in February. Existing home sales fell 6.6% that month to the slowest rate since August, according to the National Association of Realtors. At the same time, supply remained a measly 1.03 million units, a level that would only satisfy two months of sales at the February rate. Should prices trend even higher, the red-hot market could cool even faster.

“Homebuyers are experiencing the most competitive housing market we’ve seen since the Great Recession,” CoreLogic CEO Frank Martell said. “As affordability challenges persist, we may see more potential homebuyers priced out of the market and a possible slowing of price growth on the horizon.”

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There are 40% fewer homes on the market than last year, report finds

for sale sign
  • There are 40% fewer homes on the market than last year, a report by Black Knight finds.
  • Housing prices have steadily climbed through the pandemic, and supply keeps dropping.
  • Experts worry that increased housing prices are putting homeownership out of reach for many.
  • See more stories on Insider’s business page.

Housing prices have skyrocketed during the pandemic, as it seems many people bought new homes. But something else is going on, too: not enough homes are hitting the market.

A report from real estate analytics corporation Black Knight puts into perspective just how dire the situation is: housing inventory is down by 40% compared to the same time last year, with new listing volumes down 16% year-over-year in January and 21% in February, amounting to a 125,000 deficit in inventory compared to 2020 levels.

“Any hopes of 2021 bringing an influx of homes to the market and lessening pressure on prices appear to be dashed for now,” Ben Graboske, Black Knight’s data and analytics president, told real estate news site HousingWire.

Housing affordability is at its lowest point since 2019 due to the low inventory and increased housing prices, and as Insider previously reported, the increased prices are largely thanks to the low supply of lumber and high demand for houses.

The National Association of Home Builders found that the average price of a family home has increased by $24,368 since last April, mostly because of diminishing building supplies when lumber mills shut down at the beginning of the pandemic for safety reasons. After the mills began to reopen, lumber prices spiked by 200%, and in March, housing-data platform Zonda found that at least 70% of builders were intentionally raising home prices to slow demand and give them more time to acquire materials.

Also in March, a report from real-estate brokerage Redfin found the average home sale price hit an all-time record – increasing 16% year-over-year to $331,590 – and that one in three homes had sold for more than its asking price in February.

The increase in housing prices was of concern to Redfin Chief Economist Daryl Fairweather, who said in the report that it’s putting homeownership out of reach for many Americans.

“That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society,” Fairweather said.

Insider’s Taylor Borden reported on March 23 that the number of homes for sale could run out in just two months, and experts expect inventory to remain at record lows.

Read the original article on Business Insider