There are few financial achievements and personal accomplishments greater than owning a home. It’s where memories are born and families establish their roots.
In celebration of National Homeownership Month, NAR and America’s 1.2 million Realtors® will be touting the endless wealth and personal benefits of being a homeowner. The timely discussion kicked off today here in Washington at the U.S. Department of Housing and Urban Development’s event, “A New era of Homeownership.”
NAR Chief Economist Lawrence Yun joined HUD Secretary Ben Carson and his colleagues Kevin Kane (HUD) and Matt Ammon, Joel Kan (Mortgage Bankers Association), Jonathan Spader (Harvard Joint Center for Housing Studies) and Christie Peale (Center for NYC Neighborhoods) to discuss the aftermath of the recent housing crisis and its impact on consumer behavior.
Secretary Carson started the event by promoting the economic and financial benefits of owning a home. He remarked that the housing market is the foundation of the economy and spark for vast investment, lending and finance. It’s also a place where memories are made for individuals, families and pets. “Four thousand new homeowners today will be assisted in their closing by FHA programs,” he said.
Much of the panel discussion centered on the reasons why the homeownership rate is near a 50-year low and what can be done to reverse the trend. Yun discussed how the lack of homebuilding has contributed to a severe housing shortage that is driving up prices far past incomes. As a result, many would-be millennial buyers have limited selection to choose from in their price range. This unfortunately reality is helping to keep the homeownership rate subdued.
“Rising prices are hurting affordability. A four-to-one ratio in price growth vs. income growth is really squeezing potential buyers,” said Yun. “Increasing housing supply will help return the homeownership rate to a safe and sustainable level.”
During his remarks, Spader stressed that stability is one of the core benefits of homeownership. His research and others show that a majority of millennials do eventually want to own a home. A combination of a lack of a credit history, saving for a down payment, student debt and insufficient income are challenges that are also holding them back.
According to Kane, one significant development so far this year is that new owner households outnumbered new renter households for the first time since 2006. He said with millennials getting older and having children, it’s possible we may be moving back towards a higher homeownership rate in the near future.
Moderator Diana Olick from CNBC asked Kan about the current status of GSE reform. He said there are three main things that must be guaranteed: protecting the taxpayers, private funds to keep markets running and access to credit. “There needs to be a balancing act between the three to ensure a safe housing finance system.”
On the topic of access to credit, Yun said 40 million adults in the U.S. don’t have credit scores. Alternative credit scoring that factors in monthly payments, such as for cellphones, should be considered to help minorities build credit and eventually get a mortgage.
Addressing some resources to help prospective buyers borrow responsibly, Peale said housing counseling is a very cost-effective way to invest in a community. She highlighted the need for clear language for homeowners seeking mortgages and how the Consumer Financial Protection Bureau has helped the process.
As Yun simply put it, with nods from the panel and crowd, “We need to promote safe and sustainable homeownership.”
Members of the media are invited to attend the upcoming Sustainable Homeownership Conference on June 9 at University of California’s Memorial Stadium in Berkeley. In celebration of National Homeownership Month, the conference brings together experts to examine housing trends and real estate’s positive impacts. NAR’s Brown and Yun and Berkeley Hass Real Estate Group Chair Ken Rosen are among the prominent experts scheduled to speak. Contact me (email@example.com) to register.