Consumer sentiment shot way up 5.7 points to an astounding 79.9!  Historically this is a low number and I can't really figure out who cares if it is 79.9 or 85.6 but someone with control of a wad of money does.  Keep this in mind as I ramble on.

 

In March of 1993 I entered the wonderful world of real estate.  I was still fairly young and inexperienced in worldly things but noticed quickly that all my co-workers were abuzz with talk of the incredibly low interest rates.  Some who had been in the business for over 20 years never had seen rates so low.  "Hurry and get your clients qualified," or "you better lock your clients now" was the water cooler talk for 2 plus years.  Yea, back then the talk was kind of what it has been like for the past three years with one very large exception.  But I will have to let that linger.

 

There was a time not that long ago when people actually compared manufactured housing to site-built housing in rural areas of America.  I think the big push was between 1990 and about 2002.  Sometime between 2002 and 2003 most manufactured housing mortgages where supplied by a company, then known as Greentree and another, Conseco finance.  These companies merged, filed bankruptcy, un-merged, merged again, and sold off interests to a new company called Greentree.  How do they do that?  I don't know but I bet that knowledge is worth a couple of million.  Back in 2000 the fed rate was pretty low and our buddy Greenspan decided he better start raising the rate to slow that economy back down, and history showed us that by January of 2001 he was dropping the rate at twice the pace he increased it in 2000 then of course came 9-11 and he had to cut it even more.  BUT... the year 2000 pretty much killed the manufactured housing industry and then with the collapse of manufactured housing financing it was on its death bed, then when interest rates for 30 year fixed mortgages hit 5.5% they were done for good.  Until now!

 

Greenspan will raise the Fed 2 more times before he retires.  The economy is actually doing good and people are noticing, that consumer sentiment number is going to keep climbing.  And the 40-50 year low interest rates are GONE.  That's right say goodbye to your 6.whatever% rate.  Now the good news, well, sort of good news.  Those interest rates 13 years ago were in the high 7s.  People were overjoyed to get a 7.75% rate.  You will be also in about 12 to 18 months.  So plan for it now and make arrangements.  Also, many people will no longer be able to qualify for these rates with high property sale prices as well, so, if you want to buy a 5 acre parcel out in the west desert for about $3,000 and then place a 3000 sq ft double or 4000 sq ft triple wide on it at a cost of about $120,000 you are back to nice, affordable housing.

 

Sorry about rambling about manufactured housing.  My whole point is that interest rates are going to rise, period.  They will keep going up over the next 5 years until they stabilize at the historical average around 9.0%.  If you think I'm wrong fine, just don't bet the farm on it.