Your Source for May 2014 Industry News
May 12, 2014
Housing Recovery Weak for Millenials
The US housing market continues on a slow pace toward recovery, but many say it won’t heat up until millenials start buying houses in much greater numbers. Millenials face many obstacles when it comes to owning their first home. The number of homes considered affordable in many major metro area is shrinking as prices rise. Millenials also carry a huge student loan burden, which makes qualifying for a loan under new debt-to-income ratios that are part of Qualified Mortgages. The largest hurdle is personal income, made worse by the high Millenial unemployment rate. Its on the rise, generally, but at a much slower rate than housing costs. With all these factors in play, saving for a down payment is nearly impossible for many. First-time home buyers usually make up 40% of the market, but their numbers have recently fallen as low as 26% in January 2014. Only time will tell if Millenials are able to pull themselves out of their current morass and join the ranks of homeowners in large enough number to move the housing market and economy forward.
The Fiscal Times – Housing Recovery Leaves Millenials Out in the Cold
Market Watch – Why Millenials are Hurting the Real Estate Recovery
May 5, 2014
GSE Reform Could Raise Mortgage Costs
Any of the four major GSE reform measures that have been proposed are expected to make mortgage more expensive, say industry sources. At issue are capital requirements, which would fall on private institutions to maintain. Under the Johnson-Crapo plan, private financial entities would issue and insure mortgage-backed securities. In the event of a downturn, they would be required to take the first 10 percent of losses before government insurance relief becomes available. Estimates say that for an average borrower, mortgage payments could rise between $75 and $300 a month.
Housing Wire – GSE Reform Will Drive Up Mortgage Rates
Washington Post – Why Housing Reform Could Make Your Mortgage More Expensive
Home Ownership Rate Falls to Lowest in Nearly 20 Years
The home ownership rate fell in the first quarter of 2014 to 64.8 percent, the lowest rate since the third quarter of 1995. The drop in home ownership can be tied to higher house prices as well as increased mortgage rates. Another piece of the puzzle is potential borrowers who feel that they would not be able to secure financing, even though banks are slowly loosening credit standards in an effort to originate more loans. Millenials rate of ownership is much lower at 36.2 percent, due to the fact that many of them carry large amounts of student debt and the group has a very high rate of unemployment.
The M Report – Homeownership Rate Tumbles to 19-Year Low
Bloomberg – US Homeownership Rate Falls to Lowest Since 1995