The job market continues to show improvement, and interest rates remain historically low, yet the homeownership rate in the U.S. remains near a 50-year low.
The National Association of Realtors recently released a new white paper titled, “Hurdles to Homeownership: Understanding the Barriers” which lays out five reasons for the low homeownership rate. NAR released its paper in recognition of National Homeownership month at the Sustainable Homeownership Conference at the University of California, Berkeley.
“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,” NAR President William Brown said. “Those who are financially capable and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.”
|The research, commissioned by NAR, was prepared by Rosen Consulting Group, and jointly released by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business.
“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,” NAR Chief Economist Lawrence Yun said. “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,” Yun said.
Here are what NAR says are the five main barriers to homeownership:
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 the young adults who witnessed the hardships of their family and friends, NAR explained.
Credit standards did not normalize after the Great Recession, NAR’s study showed. 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.
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. 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.
Read the full article at: https://www.housingwire.com/articles/40385-nar-here-are-5-reasons-for-low-homeownership-rate