April 11, 2017

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

New Data Outlines Housing Affordability Challenges

Two new data studies detailed the continued challenges in finding affordability options for homeowners and renters.
One in every four U.S. county housing markets were less affordable than their historic affordability averages during the first quarter of 2017, according to new research from ATTOM Data Solutions. In this research report, an affordability index below 100 means that the share of averages wages needed to buy a median-priced home is above the historic average for a given market.  ATTOM Data Solutions determined that the national affordability index in the first quarter was 103, down from 108 in the previous quarter and down from 119 a year ago to the lowest level since the fourth quarter of 2008. A total of 95 counties out of 379 counties analyzed for this research, or 25 percent, recorded an affordability index below 100 during the first quarter—the highest share of markets below the normal affordability index of 100 since the fourth quarter of 2009. Separately, new research from Zillow has determined that rental affordability is worst in minority neighborhoods than in predominantly white communities. Nationally, renters in predominantly black neighborhoods can expect to spend 43.7 percent of their income on rent, according to Zillow, while renters in Hispanic communities can expect to spend 48.1 percent of their income on rent. In comparison, renters in predominantly white communities can expect to spend 30.7 percent of their income on rent.

FHFA Working Paper Examines Impact of Appraisals on First-Time Homebuyer Costs

The Federal Housing Finance Agency (FHFA) recently released a working paper examining whether first-time home buyers "overpay" for their homes compared to repeat buyers and whether such overpayments correlate with errors in the appraisal process. The paper is a preliminary report designed to stimulate further discussion and does not take an official position of behalf of FHFA. The paper was written by Jessica Shui and Shriya Murthy from FHFA's Office of Policy Analysis & Research.  The report analyzes data on over 1.5 million Fannie Mae and Freddie Mac loans to test three assumptions: 1) first-time home buyers generally purchase homes with "less-desirable attributes" than repeat buyers; 2) first-time home buyers, on average, pay more for similar homes than repeat buyers; and 3) because first-time home buyers are less experienced than repeat buyers, their propensity to overpay is more likely to be impacted by errors in the home's appraisal.

Bills to Regulate PACE Loans Introduced in House and Senate

Lawmakers in both chambers of Congress recently introduced companion bills that would subject Property Assessed Clean Energy loans (PACE loans) to federal mortgage regulations.
Through PACE loans, state and local governments provide homeowners with up to 20-year loans to finance energy efficiency home improvements, secured by tax liens attached to the property. In the event that the property is sold before the PACE loan is paid in full, the loan may transfer to the next owner of the property. Critics have claimed that many PACE lenders do not adequately underwrite the loans to ensure that homeowners can repay them and often neglect to fully explain the loans' terms to consumers.

Bill to Classify Muni Bonds as High-Quality Liquid Assets Introduced in the Senate
Senators Mark Warner (D-VA) and Mike Rounds (R-SD) recently introduced legislation that would allow large banks to count some of their municipal bond investments, including tax-exempt housing bonds, as high-quality liquid assets (HQLAs) under federal bank liquidity standards. The legislation, which has not yet been assigned a bill number, is expected to be referred to the Senate Banking Committee. The Warner/Rounds bill is nearly identical to a bill (The Municipal Finance Support Act of 2017, or H.R. 1624), that was introduced last week in the House of Representatives by Luke Messer (R-IN). NCSHA previously summarized H.R. 1624, and how it would impact tax-exempt housing bonds.

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