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New Study: 5 Root Causes for U.S.’s Depressed Homeownership Rate
Published
9 years agoon
BERKELEY, Calif., (FNN NEWS) — Despite steadily improving local job markets and historically low mortgage rates, the U.S. homeownership rate is stuck near a 50-year low because of a perverse mix of affordability challenges, student loan debt, tight credit conditions and housing supply shortages.
That’s according to findings of a new white paper titled, “Hurdles to Homeownership: Understanding the Barriers” released today in recognition of National Homeownership Month at the National Association of Realtors® Sustainable Homeownership Conference at University of California, Berkeley.
Led by a group of prominent experts, including NAR 2017 President William E. Brown, NAR Chief Economist Lawrence Yun and Berkeley Hass Real Estate Group Chair Ken Rosen, today’s conference addresses the dip and idleness in the homeownership rate, its drag on the economy and what can be done to ensure more creditworthy households have the opportunity to buy a home.
“The decline and stagnation in the homeownership rate is a trend that’s pointing in the wrong direction, and must be reversed given the many benefits of homeownership to individuals, communities and the nation’s economy,” said Brown, a Realtor® from Alamo, California. “Those who are financially capable and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.” One of Brown’s main objectives as president of NAR is identifying ways to boost the homeownership rate in a safe and responsible way.
The research, which was commissioned by NAR, prepared by Rosen Consulting Group, or RCG, and jointly released by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business, identifies five main barriers that have prevented a significant number of households from purchasing a home. They are:
Post-foreclosure stress disorder: There are long-lasting psychological changes in financial decision-making, including housing tenure choice, for the 9 million homeowners who experienced foreclosure, the 8.7 million people who lost their jobs, and some young adults who witnessed the hardships of their family and friends. While most Americans still have positive feelings about homeownership, targeted programs and workshops about financial literacy and mortgage debt could help return-buyers and those who may have negative biases about owning.
Mortgage availability: Credit standards have not normalized following the Great Recession. Borrowers with good-to-excellent credit scores are not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards. Safely restoring lending requirements to accessible standards is key to helping creditworthy households purchase homes.
The growing burden of student loan debt: Young households are repaying an increasing level of student loan debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with high rents and home prices. As NAR found in a survey released last year, student loan debt is delaying purchases from millennials and over half expect to be delayed by at least five years. Policy changes need to be enacted that address soaring tuition costs and make repayment less burdensome.
Single-family housing affordability: Lack of inventory, higher rents and home prices, difficulty saving for a down payment and investors weighing on supply levels by scooping up single-family homes have all lead to many markets experiencing decaying affordability conditions. Unless these challenges subside, RCG forecasts that affordability will fall by an average of nearly 9 percentage points across all 75 major markets between 2016 and 2019, with approximately 5 million fewer households able to afford the local median-priced home by 2019. Declining affordability needs to be addressed with policies enacted that ensure creditworthy young households and minority groups have the opportunity to own a home.
Single-family housing supply shortages: “Single-family home construction plummeted after the recession and is still failing to keep up with demand as cities see increased migration and population as the result of faster job growth,” said Rosen. “The insufficient level of homebuilding has created a cumulative deficit of nearly 3.7 million new homes over the last eight years.”
Fewer property lots at higher prices, difficulty finding skilled labor and higher construction costs are among the reasons cited by RCG for why housing starts are not ramping up to meet the growing demand for new supply. A concentrated effort to combat these obstacles is needed to increase building, alleviate supply shortages and preserve affordability for prospective buyers.
“Low mortgage rates and a healthy job market for college-educated adults should have translated to more home sales and upward movement in the homeownership rate in recent years,” said Yun. “Sadly, this has not been the case. Obtaining a mortgage has been tough for those with good credit, savings for a down payment are instead going towards steeper rents and student loans, and first-time buyers are finding that listings in their price range are severely inadequate.”
Added Rosen, “A healthy housing market is critical to the overall success of the U.S. economy. Too many would-be buyers have been locked out of the market by the factors found in this study, and it’s also one of the biggest reasons why economic growth has been subpar in the current recovery.”
Today’s homeownership event in Berkeley brings together leading housing economists, policy experts, real estate practitioners and public officials to discuss current market conditions, housing policy, improving access to credit, affordable housing options and inequality.
Along with Brown, Yun and Rosen, the notable list of speakers are: Katherine Baker, California State Assembly, 16th district; Matt Regan, senior vice president of public policy, Bay Area Council; Chuck Reed, former San Jose Mayor and special counsel, Hopkins & Carley; David Bank, senior vice president, Rosen Consulting Group; and Jim Gaines, chief economist, Texas A&M University Real Estate Center;
Additional speakers are Joel Singer, CEO and state secretary, California Association of Realtors®; Nancy Wallace, co-chair, Fisher Center for Real Estate & Urban Economics and professor, UC Berkeley Haas School of Business; Laurie Goodman, co-director, Housing Finance Policy Center, Urban Institute; Carol Galante, I. Donald Terner Distinguished Professor of Affordable Housing and Urban Policy; faculty director, Terner Center for Housing Innovation; Co-Chair of Fisher Center for Real Estate and Urban Economics; and former FHA Commissioner; John C. Weicher, director, Center for Housing and Financial Markets at the Hudson Institute, and former FHA Commissioner.
“Hurdles to Homeownership: Understanding the Barriers” is the second of three papers scheduled for release in 2017 by RCG. Among the findings of the first white paper, “Homeownership in Crisis: Where Are We Now?,” released earlier this year, RCG estimated that more than $300 billion would have been added to the economy in 2016, representing a 1.8 percent bump to GDP, if homebuilding returned to a more normalized level consistent with the historical trend. The third paper – published later this year – will highlight a series of creative policy ideas to promote safe, affordable and sustainable homeownership opportunities.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.2 million members involved in all aspects of the residential and commercial real estate industries.
SOURCE | National Association of Realtors
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High prices drove US home sales down 2.2% in September
Published
7 years agoon
October 22, 2019
WASHINGTON (AP) — U.S. home sales fell 2.2% in September, as rising home prices and lower inventories have stifled homebuyers.
The National Association of Realtors said Tuesday that homes sold last month declined at a seasonally adjusted annualized rate of 5.38 million units, ending two months of sales gains. Existing-home sales are up 3.9% from a year ago, but September’s stumble shows the limits of the boost that declining mortgage rates had been providing.
As average mortgage rates have fallen nearly a whole percentage point in the past year to 3.61% in September, economists say higher prices and a lack of listings have put a ceiling on the growth seen this past summer.
“Even today’s low mortgage rates and healthy jobs situation can’t overcome the lack of inventory of homes below $300,000,” said Robert Frick, an economist at Navy Federal Credit Union. “Fortunately, the long-term outlook for housing is better, as housing starts and permits are increasing, meaning there will be more homes on the market in the months ahead.”
Homebuyers have been hamstrung by a shortage of available properties this year, especially at the lower-priced end of the market. Inventory is down 2.7% from a year ago. Land and labor shortages have also constrained building, so a tightening supply of homes has pushed prices up at a pace faster than income.
The median sales price climbed 5.9% from a year ago to $272,100, outpacing wage gains as the strongest price appreciation since January 2018.
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Orange County Property Appraiser to Host 2019 State of Orange County Real Estate Event
Published
7 years agoon
August 19, 2019
ORLANDO, Fla. – Orange County Property Appraiser Rick Singh, CFA, will deliver the 2019 State of Orange County Real Estate (#SOCRE2019) on Thursday, August 22, 2019.
Singh will share vital information and data on trends in Orange County’s complex real estate market. Afterward, a panel of industry experts will take a deeper look at how Orange County can meet current and future challenges.
Joining Singh on the panel this year are Dr. Alesia Scott-Ford, the Jacksonville Field Office Director for the U.S. Department of Housing and Urban Development; Jason Eichenholz, Co-Founder and Chief Technology Officer for Luminar Technologies; Fred Kittinger, Senior Associate Vice President for Government Relations for the University of Central Florida; and Jeff Fagan, the 2019 Orlando Regional REALTOR® Association (ORRA) President.
Following Singh’s presentation, the panel will explore such hot topics as:
- Will affordable housing challenges impact our region’s ability to attract new business and new talent?
- How can autonomous vehicles help solve Central Florida’s traffic gridlock?
- With most of our workforce spending more than 50% of their income on housing, what real estate market changes are on the horizon?
- With the opening of Creative Village, how is UCF assisting the downtown students in securing housing?
When: Thursday, August 22, 2019
Networking: 5 p.m.
Main Program: 6 p.m.
Where: Wyndham Orlando Resort International Drive
8001 International Drive, Orlando, FL 32819
Panelist Bios:
Dr. Alesia Scott-Ford
Jacksonville Field Office Director
U.S. Department of Housing and Urban Development
Dr. Alesia Scott-Ford was appointed to the position of Jacksonville Field Office Director for the U.S. Department of Housing and Urban Development in April 2014. Dr. Scott-Ford is responsible for overseeing the delivery of HUD programs and services across North Florida as well as evaluating their efficiency and effectiveness to communities and individuals. Along with the Miami Field Office, she coordinates the department’s programs across the state. As the Field Office Director, she serves as HUD’s liaison to mayors, city managers, elected representatives, state and local officials, congressional delegations, nonprofit groups, private entities; faith-based groups, other stakeholders and individual Americans.
Jason Eichenholz
Co-Founder and Chief Technology Officer
Luminar Technologies
Jason Eichenholz is a serial entrepreneur and pioneer in laser and photonics product development and commercialization. Over the past twenty-five years, he has led the development of hundreds of millions of dollars of new photonics and photonic-enabled products. At Luminar Technologies, he is responsible for research and development, engineering of new products and bringing Luminar’s technology to market. Eichenholz is a fellow of SPIE – the international society for optics and photonics – and OSA – the optical society – and holds forty patents on lasers and photonic devices.
Fred Kittinger
Senior Associate Vice President for Government Relations
University of Central Florida
Fred Kittinger is known for bridging the gap between business and government. Currently the Senior Associate Vice President for Government Relations and Director of State and Local Government Affairs at the University of Central Florida, he represents Florida’s largest university to state and local officials. Throughout his career, he has diligently protected the interests of businesses, education, and city and state governments. Notably, Kittinger served on the ground floor team during the planning and approval phase of relocating UCF’s downtown campus to the site of the new Creative Village.
Jeff Fagan
2019 Orlando Regional REALTOR® Association (ORRA) President
Jeff Fagan is the 2019 president of the Orlando Regional REALTOR® Association, which represents more than 15,500 real estate professionals throughout Central Florida. ORRA is the 8th largest REALTOR® organization in the country. Fagan’s priorities during his term as president include affordable housing, articulating ORRA’s value to both members and the public; and expanding services to deliver additional high-quality member benefits. He transitioned into real estate after a 20-year career in poultry agribusiness and has held a Florida real estate license since 2001.
Rick Singh, CFA
Orange County Property Appraiser
Rick Singh is the first state-certified appraiser ever elected as Orange County Property Appraiser (OCPA). He was first voted into office in 2012 and subsequently re-elected in 2016. The hands-on experience he gained proved invaluable as he now oversees the operations and growth of this busy office. Rick’s vision to make OCPA more customer-focused and user-friendly through greater efficiency means better service delivered at lower costs to residents of Orange County. Not only does he lead an award-winning agency, he was personally recognized last year by the International Association of Assessing Officers with their highest individual honor, the Ian W. McClung International Award, for his dedication to advancing the appraisal profession on an international stage.
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Governor Ron DeSantis Joins Community Leaders to Dedicate Habitat for Humanity Homes in Pompano Beach
Published
7 years agoon
June 27, 2019
Pompano Beach, Fla. – Today, Governor Ron DeSantis joined elected officials, community leaders and homeowners for the dedication of the first seven of more than 70 Habitat for Humanity homes in Pompano Beach. The new housing project was dedicated and named A Rick Case Habitat Community. The Governor was joined by Florida Chief Financial Officer Jimmy Patronis, Former United States Senator George LeMieux, State Representative Chip LaMarca, Broward County Commissioner Lamar Fisher, Broward County Habitat for Humanity CEO Nancy Robin and other community leaders for the dedication.
“Affordable housing is an issue impacting many communities and working families across our state,” said Governor Ron DeSantis. “Providing greater access to affordable and workforce housing for Florida families will continue to be a priority of my administration. Today, this nine-acre site will be the largest Habitat for Humanity community ever built in Broward County and will provide affordable homeownership opportunities to families in the community.”
The A Rick Case Habitat Community in Pompano Beach will provide affordable homeownership opportunities to 77 families. Construction is expected to be completed in mid-2022. Habitat for Humanity acquired the land and developed a community-informed plan for the nine-acre site over the last several years. It is located at the SW corner of NW 15th St. and NW 6th Ave. adjacent to Blanche Ely High School and Hopewell Missionary Baptist Church, in the historic Blanche Ely neighborhood. The total project is estimated to cost over $18 million— funds that will be raised and leveraged through partnerships with corporations, foundations, government agencies, the faith community and generous individuals.
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