Nov 2, 2022
Mortgage Interest Rates Are At A 20 Year HIGH
WILL OUR VALUTION GROWTH COME?
Per YAHOO Finance this morning from various articles: “It’s no secret the mortgage market is getting hammered. Just look at last week’s stats on new home sales and pending ones and you immediately see the ramifications of 7% mortgage rates on housing activity. Overall, mortgage activity is at its lowest point since before the turn of the millennium in 1997. The dramatic increase in rates – driven by the Federal Reserve’s aggressive fight on inflation – has crushed homebuyer demand, while home sellers continue to lose confidence as price reductions become more common. Housing affordability had fallen to its worst level in 37 years and we still have additional rate hikes still coming.”
See chart below. It is plotting the 30-year average mortgage rate (source Freddiemac.com) compared to Bennington student growth (count) each year (source NE Dept of Education). Now, you could have new student growth due to something else besides new housing growth such as kids just entering kindergarten, maybe adoption, etc.., but it appears there is some inverse correlation. The Omaha area 3-month average for Single Family Construction permits are also down 22% from last year per the Omaha Chamber.
Again, the question is do you believe we will get the valuation growth as estimated by the underwriter (11% for the first five years (2023 to 2027), an 8% increase for the next six years after that (2028 to 2033) and a 5% increase until such bonds are retired in 2053?
If not, the school is required to raise the tax levy to whatever is necessary to pay the debt.