September 21, 2016

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

Household Incomes Grow at Fastest Rate, Ever

Housing Recovery no Longer Dependent on Rates
The household income grew at the fastest rate on record, said Council of Economic Advisers Chairman Jason Furman in a blog post on the White House website. The report, he said, "shows the remarkable progress that American families have made as the recovery continues to strengthen. Income grew for households across the income distribution, with the fastest growth among lower- and middle-income households." He also noted that the poverty rate fell faster than at any point since 1968, and the rate of those without health insurance also declined. The official poverty rate fell 13.5% with 43.1 million in poverty, 3.5 million less than in 2014, the bureau said.

U.S. Households Make Long-Awaited Gains in Housing Recovery

Fewer Households are Paying too Much for a Place to Live, According to New Census Data
Middle-class families are starting to see their biggest housing challenges ease. Housing affordability is finally improving after years during which the struggle to pay rent swelled to crisis levels for many poor and middle-class Americans, according to an analysis of American Community Survey data recently released. Jed Kolko, chief economist at job-site Indeed and senior fellow at the Terner Center for Housing Innovation at the University of California, Berkeley, said just over 49% of renters were cost-burdened in 2015, meaning they spent more than 30% of their incomes in rent, compared with about 50% a year earlier—the lowest level since 2008. Indeed, across the board, there are signs that affordability challenges are beginning to ease. Some 33.6% of households were cost-burdened in 2015, meaning they spent more than 30% of their incomes on housing costs, down from 34.6% a year earlier, the fifth straight year of declines.

Why Mortgage Delinquency Rates are Dropping

According to MGIC Investment Corporation, the rate of mortgage delinquencies has dropped in a number of areas recently. The company, which provides private mortgage insurance (PMI), reported that delinquencies have dropped by more than 20 percent. Meanwhile, the Mortgage Bankers Association (MBA) reports that the same is true of mortgages made to purchase commercial and multifamily dwellings. The Association's Commercial/Multifamily Delinquency Report gathered information from several of the biggest investor groups in the country, including mortgages, banks, life insurance providers, Freddie Mac, and Fannie Mae. These groups combined hold more than 80 percent of the mortgage debt that was borrowed for multifamily dwellings or commercial businesses. It is worth noting that these numbers do not include any loans made for construction or land development, even though those loans are often included under the definition of commercial real estate loans.

Affordability Concerns, Uncertainty about Down Payment Requirements Ensnaring Renters, Latest HOME Survey Shows

Lofty home-price growth and tight supply are leading to softening confidence among renters about whether it’s a good time to buy a home, according to the latest installment of the National Association of Realtors® Housing Opportunities and Market Experience (HOME) survey. The survey also found that a misconception about how much of a down payment is needed to buy could be unnecessarily delaying some qualified young adults from entering the market. In NAR’s third quarter HOME consumer survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations, including a series of questions related to down payments and the amount of money they believe they need to purchase a home. Heading into the autumn months, the share of homeowners and renters who believe now is a good time to buy remains at a solid majority but has crept downward since the beginning of this year. Seventy-eight percent of homeowners (80 percent in June; 82 percent in March) and 60 percent of renters (62 percent in the previous two quarters) said it’s a good time to buy. In the inaugural HOME survey in December 2015, 68 percent of renters said it was a good time to buy.

Paycheck to Paycheck
A Snapshot of Housing Affordability for School Workers

From the teachers who are tasked with educating a community’s children to the bus drivers who are responsible for safely transporting children to and from school, school employees are essential elements of every community across the country. Finding affordable housing near their workplaces remains a struggle for many of these school workers, who earn modest incomes despite the fact that the economy has been in recovery for several years. This edition of Paycheck to Paycheck focuses on the affordability challenges faced by both teachers and non-instructional school workers by highlighting five of the 81 occupations in the Paycheck to Paycheck database: bus driver, child care teacher, groundskeeper, social worker and high school teacher. As for any other sector of the economy, the ability of school workers to live near their places of employment is an important aspect of developing strong, inclusive communities. Communities that have high housing costs (and lack programs to offset those costs) can struggle to retain the staff that works to create a safe and supportive environment.

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