Tiếng Việt
Even though we do not wish this to happen, a housing bubble is occurring in the United States again. According to CNN, with the 30-year fixed mortgage rate currently at 7.63%, Americans must spend an average of 35% of their income to pay for a mortgage. The fact is this number is even higher than the peak of the housing bubble in the 2000s.
Why does this happen? The main reason for the high borrowing cost is the upsurge in the inflation rate, which led to the US Federal Reserve Board to raise the Federal Funds interest rate from near zero at the beginning of 2022 to almost 5.5% today. Another reason is the unprecedented levels of federal deficits which hit $2 trillion in 2023. Federal deficits are paid by selling bonds on the market to raise cash. Therefore, US home borrowers, who opened about $2 trillion of new debt over the last 12 months, now have to compete for funds by paying higher interest rates to attract the investors’ attention.
Despite the substantially higher mortgage rates, housing prices have reduced by only 10% over the last year and are historically high. According to the Case-Shiller Home Price Index, in the middle of this year, the median sales price of a property was approximately $420,000, which was significantly more than its peak in the early 2000s and nearly $100,000 higher than it was before the pandemic. Mortgage debt now represents 71% of all household debt.
This current situation is a big challenge for homebuyers in the US when they are facing higher mortgage rates and higher housing prices. One of the solutions now is to move into a low-cost housing model which is the Tiny House. The Tiny House is a “social movement where people downsize the space they live in” and nowadays, one of the most popular types is a tiny house on wheels. These homes are built on trailers and can be easily relocated, offering a unique way to live and travel, as well as permitting and tax advantages.
The statistics published by Tony Mariotti on Ryby Home in 2022 showed that there are about 10,000 tiny homes in the United States and this housing model accounts for 0.36% of the total residential listings in the country. A tiny house, on average, costs $52,000, which is 87% less than the average cost of a normal-sized house. As a result, the interest in Tiny House has increased, as shown in the below Google search frequency chart over the recent 11 years.
Taking advantage of the housing bubble in the US, it is expected that the opportunity for the Tiny House industry is blooming in this country. North America (including the USA and Canada) is projected to contribute 57% of global growth in the Tiny House market by 2027 (Technavio, 2023). A large contribution to this growth is the low cost of the Tiny House compared to conventional housing solutions. As the demand for tiny homes increases, the Tiny House manufacturers are moving to optimize their production by sourcing materials from lower-cost countries such as Vietnam to provide their customers with affordable and competitive products.
And Noble Network is here to help. We can support the Tiny House manufacturers to find and connect with reliable suppliers in Vietnam until you are satisfied. Don’t hesitate to contact us if you need any support to do business with the Vietnamese market.