September 13, 2016

In Case You Missed It: A Look at Recent National Housing Policy News

Why So Few Economists Are Prepared to Say Recession Risks Are Fading

Historically, recessions have disproportionately struck near elections
Business investment has been slumping this year, and a leading suspect is the election. By many key measures, the economy has looked fine in recent months. After gradually sliding for most of 2015, industrial production has bounced up. Consumer spending has done well. The economy added 151,000 jobs last month. Initial jobless claims are near a four-decade low.
Yet most economists, when asked to assess the odds of a recession in the next year, have continued to place the odds at about one in five. Not a prediction of imminent doom, but double the odds of a year ago.

Why the Homeownership Rate Will Never Return to Pre-Crisis Peak

Over the past four decades, the U.S. has seen a dramatic increase in the proportion of homeowners to the U.S. population, peaking just short of 70% in the first quarter of 2005, according to the U.S. Census Bureau. Since then, homeownership has declined to the low 60s. The rate of homeownership is likely to continue to decline further into the mid-to-low 50s as changes in demographic trends, increased regulation and stagnant real incomes all work to make the dream of homeownership more difficult to achieve. The housing boom of the 2000s was a bubble supported not just by easy credit, but also by a wave of Americans entering peak childbearing and household-spending years. As these relatively affluent households age and migrate away from single-family homeownership, there is an insufficient supply of new homeowners to replace them. While the recovery of U.S home prices from their nadir in 2012 was largely driven by a lack of supply, the longer term challenge facing the industry will be a dearth of demand — namely, homebuyers and mortgage credit.

Surprising Gender Gaps In Homebuying, Mortgages 

Single Women May Wind Up Paying More, Despite Dependability
Gender, marital status and mortgages don’t get a lot of research attention in real estate, but two new reports examine the exceptional role of single women in the home purchase marketplace and the challenges they face in getting a loan. A couple of highlights:

  • Single women are statistically better at paying their mortgages than men – they default less – yet they are charged more for their loans and are denied credit more often. Though they have lower incomes on average than single men, they tend to make larger down payments, according to researchers at the Housing Finance Policy Center of the Urban Institute.
  • Single women are now the second largest group of buyers in the marketplace, accounting for anywhere from 15 percent to more than 20 percent of all home purchases in recent years. Single men, by contrast, have accounted for about 9 percent of purchases since 2012. Married buyers once represented more than four-fifths of the market, but that has declined over the past several decades. In 1985 married couples made 81 percent of all purchases; last year it was 67 percent. You might assume that unmarried couples have taken up the slack, but that’s not the case. Last year, according to a new research note titled “All the Single Ladies” by Jessica Lautz, managing director of survey research at the National Association of Realtors, unmarried partners accounted for just 7 percent of total sales.

MBA's Stevens Weighs Pros, Cons of Clinton, Trump Administrations

Regardless of who wins in November, the mortgage industry will see significant changes, but Hillary Clinton and Donald Trump would take different approaches to housing and regulatory issues, according to Mortgage Bankers Association President and CEO David Stevens. Stevens declined to indicate a preference for either candidate during an exclusive interview with National Mortgage News, reiterating that the organization is non-partisan and does not endorse political candidates. But he did outline the different ways in which the major party candidates would influence the industry. "There are advantages and disadvantages to either party and either candidate based on how they're talking about housing so far," Stevens said. "There's potential strengths in the platforms on both sides."

HELOCs Are Making a Rebound: Experian

Home equity line of credit originations are in the midst of a comeback, fueled by the rise in home prices, according to a white paper released by Experian. As of the fourth quarter of 2015, HELOC originations were at $43.03 billion, 111% higher than five years earlier, Experian reported in the paper released Thursday. Meanwhile, only 0.49% of consumers with an open HELOC were between 90 and 180 days past due, in line with pre-recession levels. Experian also estimated that roughly $29 billion in HELOC debt originated between 2005 and 2008 has been paid down over the past year, a reflection of the fact that many of these lines of credit are entering repayment. But those who were delinquent on their HELOCs were more likely to be delinquent on other loans, such as auto loans or bank cards, Experian found in its research.

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