Press Release
Date of Release:
Feb 3, 2004
World Associates,
Inc.'s - Housing Market Report - California 2004
Los Angeles, February
3, 2004: As economists and planners scramble for answers to California's housing
crisis, citing a shortfall of inventory and skyrocketing home costs, factory-built
housing is emerging as an efficient, cost-effective option.
The Infill Housing
Program implemented by Superior Real Estate, a wholly owned subsidiary of World
Associates, Inc. (OTC Bulletin Board WAIV) is a perfect fit for prevailing market
conditions. The most recent data about the California housing market is summarized
here for the benefit of shareholders and others who may have an interest in the
company.
"A sustained
demand for new housing, coupled with continued low mortgage-interest rates, will
cause builders to begin construction on just under 193,000 new homes and apartments
in 2004, the largest amount of new housing produced since 1989," the California
Building Industry Association (CBIA) reported in its 2004 Outlook.
But CBIA CEO Robert
Rivinius concedes that figure still won't meet consumer need. State officials
estimate about 230,000 new housing units are needed annually to keep pace with
California’s population growth, which averages about 600,000 new residents
a year. Because of years of underproduction, the state has about a million homes
and apartments less than it needs, CBIA reports. And Mr. Rivinius warns 2005 housing
starts are likely to fall far short of the predicted 2004 level.
Meanwhile the state's
inventory of existing homes is fast disappearing, according to the California
Association of Realtors (CAR). With homes selling after an average of only 27
days on the market, the supply of homes currently for sale could be depleted in
only 1.8 months. That's substantially lower than the 10-month average maintained
since the association began keeping records in 1982.
The imbalance between
supply and demand continues to drive housing costs to new highs. In its "State
of the Housing Market 2004" report, CAR predicts the median price for a single-family
home statewide will increase 13% this year to $417,500.
"Strengthening
economic conditions should drive job growth and household income upwards, adding
fuel to the housing market," says Leslie Appleton-Young, CAR's vice president
and chief economist. "Repeat homebuyers will continue to dominate the market
in 2004, rolling their equity gains on prior home sales into subsequent home purchases."
For new homebuyers,
however, the dream of home ownership is further than ever from becoming a reality.
CAR reports the state's housing affordability index slipped to 25%, a 5% decrease
from a year ago. The index computes the percentage of Californians able to afford
a median-priced home, assuming a typical 30-year, fixed-rate mortgage at current
interest rates and a 20% down payment.
If that downward
trend continues, Appleton-Young says, home ownership will be out of reach for
much of California's middle class within 20 years. Alex Creel, senior vice president
of government affairs, says CAR is making housing affordability a top priority
in 2004. For example, he says, the association will soon introduce tools for Realtors
to use to advocate for affordable housing in their communities.
The big picture
Economists fear
California's housing crisis is the forerunner of a national trend. Speaking to
the National Association of Home Builders during their International Builders
Show at the end of 2003, Franklin D. Raines, chairman and CEO of Fannie Mae, the
nation's largest source of financing for home mortgages, warned that America could
face a critical shortage of affordable housing in this decade without strong measures
to ensure that supply keeps pace with demand.
Fannie Mae recently
announced that a new program offering 5% down payments on 30-year, fixed-rate
mortgages will include loans for factory-built housing. In the National Housing
Opportunity Pulse, a survey released in September by the National Association
of Realtors (NAR), two out of three Americans in the nation's 25 top markets voice
concern about the cost of housing in their communities and say they would be more
likely to vote for a candidate who works to make housing more affordable. They
give local, state and federal governments a middling C grade for their progress
on providing affordable housing.
According to the
National Low-Income Housing Coalition, the issue is generating enough controversy
that President Bush and six of nine Democratic candidates for the presidency include
affordable housing goals in their election campaigns.
The affordable
alternative
Factory-built homes,
which require much less time to put up and cost significantly less than site-built
housing, are growing in popularity among real-estate professionals and consumers
alike.
The Freedonia Group
Inc. of Cleveland, an independent research organization, predicts the nationwide
demand for factory-built housing components will grow 5.3% annually through 2006
– a dramatic upward revision of its 2005 report, which estimated annual
growth at 1.2%. Freedonia researchers say this growth will be driven by an increase
in use of factory-built housing parts, but predict that prefabricated housing
will lead market gains.
"Manufactured
homes, the most common and affordable type of factory-built housing, have helped
bring the dream of home ownership within reach of young families, working people
and first-time home buyers who would otherwise be priced out of the housing market,"
writes Chet Boddy, a Mendocino realtor, in a recent column in Coast Real Estate
Magazine. "Because factory-built houses are built all or partly within factory
walls, construction continues year-round. Also, there is less waste and none of
the pilferage, vandalism and weather damage common with site-built construction.
After delivery to the site, all factory-built housing can be assembled, closed
in and occupied in a matter of days."
Mr. Boddy says
prefabricated components must be built extra strong to hold up during shipping
and assembly. "The resulting tight construction makes the houses stronger
and more energy efficient," he says, "which makes the houses better
able to withstand earthquakes and severe storms."
In its most recent
state-of-the-industry bulletin, the California Manufactured Housing Institute
(CMHI) reports factory-built housing represents 6% of new homes sold in the Golden
State each year. About 70% are sited on lots in existing urban, suburban and rural
neighborhoods. State laws allow manufactured homes on any residential lot, CMHI
says, providing they're compatible with local development and architectural standards.
CMHI's report notes
that factory-built homes are growing in popularity among local governments and
redevelopment agencies for urban in-fill and redevelopment projects due to their
cost effectiveness and flexibility of design. Computer-aided design makes it possible
to custom-design factory-built models compatible with the surrounding neighborhood
that will fit into any lot with relative ease.
In California,
options might include stucco or wood siding, roofs of tile or composition shingles,
and dramatic windows. Interiors may feature living rooms with vaulted ceilings,
formal dining rooms, kitchens with breakfast nooks, master suites with walk-in
closets and dressing areas, and spacious bathrooms with garden tubs and stall
showers.
World's Infill
Housing Program
World Associates
is responding to the need for efficient, affordable housing in southern and central
California. Through its wholly owned subsidiary, Superior Real Estate, the company
puts up factory-built homes on lots in market-tested areas where demand is already
strong, preferably in communities offering water, golf or equestrian amenities
and the high-quality cultural and educational facilities that boost property values.
The program is
financed through an innovative business plan that allows investors to participate
in smaller residential projects for a fixed term at very little risk.
For more information
about World Associates and Superior Real Estate:
http://www.worldassoc.com/
info@worldassoc.com
