The granddaddy of housing construction data, the U.S. Census Bureau’s “Characteristics of New Housing” report, just came out for 2011, and it features numerous stats on the single-family home market.
Perhaps the most interesting data, though, involves financing, and how radically it’s changed from 2006.
Regarding home financing, the report found:
- 20 percent of homes were financed by the FHA in 2011, a 500 percent increase from 2006, while conventional financing tumbled 45 percent from 90 percent of the market in 2006 to just 62 percent in 2011.
- Cash purchases were also way up, nearly doubling from 4 percent in 2006 to 7 percent in 2011.
So why does this matter? With the FHA’s increased market share, it shows how dramatically different our financial situation is from just five years ago. There are still prospective buyers out there looking for homes, but banks are not lending like they were before; so, those buyers have sought other avenues of financing, and the FHA has serviced an overwhelming number of them.
The rise in cash purchases is equally indicative of today’s financing environment, but in a much different way. As Forbes described it in a recent article, buyers who use cash purchases could attain financing; they simply don’t want to. They are mainly foreign investors, who don’t want to go through the hassle of qualifying for a mortgage, and older, wealthier buyers…who don’t want to go through the hassle of qualifying for a mortgage, particularly in today’s environment of hyper checks and balances.
At least this can be said of today’s home financing – it’s unique!