Finance & Economy

Real Estate

2M homeowners aren’t paying their mortgage: Get the latest data and insights from housing expert Ivy Zelman

June 23, 2021

2M homeowners aren’t paying their mortgage: Get the latest data and insights from housing expert Ivy Zelman

Ivy Zelman

CEO and Co-Founder, Zelman & Associates

Land grabs, labor costs, supply chain troubles, eviction moratoriums...there is a lot to keep track of in the housing industry right now.

Land grabs, labor costs, supply chain troubles, eviction moratoriums...there is a lot to keep track of in the housing industry right now. No one is more up-to-date than Ivy Zelman, CEO and Co-Founder of the foremost housing research firm in the nation, Zelman &Associates. Watch the latest webcast for Ivy's take on the current state of the single-family, single-family rental, and multifamily markets and her predictions for the future.

In this Walker Webcast, Willy interviews Ivy Zelman, CEO and Co Founder of Zelman Associates. Willy begins the episode by asking Ivy to discuss her favorite aspects of working in the housing sector. Within the Zelman ecosystem, they are seeing the most opportunity in the improvement market. The combination of inflation and limited supply of homes on the market have driven up costs considerably. Ivy reveals that prices reflect specific areas, markets and lifestyles. Since January, the new home market has decelerated 23% on a seasonal basis.

The new home market reflects a definite affordability challenge for the average American. We are already beginning to see builders reckoning with the moderation of the market, and Ivy predicts this will only get worse. She explains how builders are currently reacting to these trends and gives insights into the challenges that come alongside the profession. The current land grab could likely lead to impairments down the road. Additionally, the construction labor shortage is another great challenge for builders today. Sourcing of materials is challenging all across the board right now, especially for those sourcing from Asia. This is also deterring people from doing any upgrades in their homes for the time being.

Then, they discuss the BFR (Build for Rent) and SFR (Single Family Rental) markets. Ivy stresses the building for rent has the same challenges as building for sale, including land and labor issues. Theoretically, however, having a business model involving a cash flowing asset is more attractive through cycles than the traditional home buying space.As real estate is very much a local business, such claims are very dependent on area and markets. The percentage of single-family home renters is up considerably, Zelman’s research proving to be at near-record levels.

Currently, there are about 2 million single-family mortgages which remain in eviction forbearance. When forbearance was first announced, there was significant concern of moral hazard, and now the number of those struggling has reduced by at least half. The good news is that those who can’t meet their monthly payments have a good standing in a housing market starving for inventory. Assuming the forbearance expires in September,it will still take some time to get the plumbing running again to make foreclosures a possibility. For this reason, Ivy doesn’t predict a flood of foreclosures appearing on the market any time soon.

Willy and Ivy then pivoted to a discussion on technology. In prior generations, technology was more heavily invested in helping business owners with their services. In this cycle,technology has pivoted towards helping the consumer. Companies such as Zillow are creating what is referred to as the flywheel, where they utilize eye buying. Looking at the brokerage industry prior to Zillow, builders, brokers and single-family operators have been forced to up their game. Their benefits,she predicts, will continue to drive secular growth for those service-oriented companies. Eliminating consumer friction is certainly another advantage they will continue to reap the benefits from.  

Ivy transitions to the troubles in increase the stock of affordable housing. There isn't a governor in the country right now who isn’t focused on more affordable and manufactured housing communities. The challenge here lies with the fact that people don’t want these communities in their neighborhoods. Local zoning committees face huge issues in trying to get these approved. While Fanny has done a lot to try to provide backing,local jurisdictions simply won’t approve the lots. The federal government has very little say in local governments, so Ivy sees no resolution in sight for the issue.

As the episode draws to a close,they discuss the projected rate increases and the bond buying program. So much of the country right now is dependent on these low rates. Roughly 60% of those in the country with a mortgage have a rate below 4%. Ivy worries that if rates do in fact rise, lots of Americans will suffer tremendously.


Learn more about Zelman Associations.
Connect with Ivy Zelman on LinkedIn and Twitter. 

Read Transcript

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