September 25, 2015
- Authorities partnered with NGOs to create “Community and Supportive Services” Programs (CSS) under the U.S. Department of Housing and Urban Development (HUD)’s Housing Opportunities for People Everywhere (HOPE VI) grants for public housing redevelopment. A study analyzed the programs in Nashville and Atlanta, and found several shortcomings.
- The S. Census Bureau released information from 2014, finding that there was no significant change in median household income or official poverty rate since 2013, but the percentage of people without health insurance decreased.
- A joint study by Enterprise Community Partners and the Harvard Joint Center for Housing Studies, Projecting Trends in Severely Cost Burdened Renters: 2015 – 2025 predicted that, in the coming decade, little would change with respect to 1 in 4 renters being severely rent burdened. The researchers examined a number of factors, including: a predicted 10% population increase, declining homeownership rates, and a predicted rise in demand for rental housing. They also looked at a number of possible scenarios to determine how salary gain and population growth would affect the percentage of severely rent burdened households. Even the most optimistic of scenarios would only result in a 1.4% decrease.
- According to analysis by the National Association of Realtors (NAR) Existing Home sales fell by 4.8% from July to August despite slowing price growth and a slightly lower interest rate. On the other hand NAR points out that Existing Home sales are 11% higher than August of last year.
- The Turner Center for Housing innovation at U.C. Berkley has released analysis entitled Housing Highlights from the 2014 American Community Survey (ACS) which culls the housing related data from the ACS which is released by the Census Bureau and provides statistical trend charts relating to homeownership, cost and vacancy rates. The Turner Center’s analysis finds, among other things homeownership continuing to slide it is now at 63.1% following its peak in 2006 when it was at 67.3%. But it also finds that the overall housing cost burden is at its lowest point following the bubble.
- According to a recent study by Zillow student debt only reduces chances of homeownership for non-graduates.
September 23, 2015
The Center for Responsible Lending has released a policy brief with the lengthy title, 2014 HMDA data shows that Federal rules did not have a chilling effect on lending, despite lender predictions. Borrowers of color continue to be under-served by the mortgage market. While it is not a pithy title, it does say it all. The brief opens with some finer detail:
The 2014 mortgage data submitted by lenders under the Home Mortgage Disclosure Act (HMDA) reflects a slowly recovering mortgage market, but one that troublingly continues to under-serve important market segments. The implementation of federal mortgage underwriting standards (known as Ability-to-Repay or “ATR” and the Qualified Mortgage rule or “QM”) in early 2014 did not cause a departure from mortgage lending trends in recent years. However, access to credit remains tight; people of color and low and moderate-income families continue to receive a far lower share of home purchase loans than they have historically and than would be expected based on their share of the population. These borrowers also are much more likely to be served by government-backed loan programs than by the conventional market, and are increasingly paying more for mortgages than other borrowers. (1, footnote omitted)
The brief closes, arguing that
recent mortgage lending reforms support sustainable homeownership and wealth building opportunities for lower-wealth households. However, continued problems with access to credit stem from the constrained lending of the post crisis market. Since the crisis, mortgage lending has been mostly limited to borrowers with the most pristine credit history. This constrained lending environment is reflected in the 2014 HMDA data. This environment is most harmful to lower-wealth households as well as to borrowers of color. (5)
The missing piece in this analysis is a proposal for to how to loosen mortgage underwriting so that homeownership can be achieved by more households while also making sure that they can keep making their mortgage payments over the long term.
The key to a sustainable homeownership policy is a plan to keep the wolf at bay while households deal with the unemployment, sickness and divorce that is predictably going to affect some of them all of the time. This policy brief does not chart a path forward to that goal. There is more work to be done.
- Green Cities? Urbanization, Trade and the Environment, Rainald Borck & Michael Pflüger, IZA Discussion Paper No. 9104.
- The Impact of Foreclosure Delay on U.S. Employment, Kyle F. Herkenhoff & Lee E. Ohanian, NBER Working Paper No. w21532.
- Are Bigger Companies Better for Low-Income Borrowers?: Evidence from Payday and Title Loan Advertisements, Jim Hawkins, Journal of Law, Economics and Policy, Forthcoming.
- Price Expectations and the U.S. Housing Boom, Pascal Towbin & Sebastian Weber, IMF Working Paper No. 15/182.
September 22, 2015
Enterprise Community Partners and the Joint Center for Housing Studies of Harvard University have issued a report, Projecting Trends in Severely Cost-Burdened Renters: 2015-2025. The report opens,
At last measure in 2013, over one in four renters, or 11.2 million renter households, were severely burdened by rents that took up over half their incomes. This total represented a slight reduction from the record level of 11.3 million set in 2011, but remains dramatically higher than the start of the last decade, having risen by more than 3 million since 2000. With substantial growth in renter households expected over the next decade and little sign of a turnaround in the income and rent trends that produced these record levels of cost burdens, there is little prospect for substantial improvement in these conditions over the coming decade. (4)
And it concludes,
Overall, our analysis projects a fairly bleak picture of severe renter burdens across the U.S. for the coming decade. Under nearly all of the scenarios performed, we found that the renter affordability crisis will continue to worsen without intervention. According to our projections, annual income growth would need to exceed annual rent growth by 1 percent in order to reduce the number of severely burdened renters in 10 years. Importantly, that decline would have a net impact on fewer than 200,000 households, only because continued increases in burdens among minorities would be offset by declines among whites. Under the more likely scenario that rents will continue to outpace incomes, the number of severely rent-burdened households would increase by a range of 1.7 – 3 million, depending on the magnitude.
Given these findings, it is critical for policymakers at all levels of government to prioritize the preservation and development of affordable rental housing. Even if the economy continues its slow recovery and income growth improves, there are simply not enough quality, affordable rental units to house the millions of households paying over half their income in rental costs. (16)
It is unsurprising that the policy takeaway of these two housing organizations is to prioritize the preservation and development of affordable housing. But given the pervasive nature of the problem, I wonder if it is better to just say that this is an income inequality problem and address the root cause — low-income families just don’t have enough money to make ends meet.
- The Consumer Financial Protection Bureau (CFPB) has finalized changes to Mortgage Rules as applied to small lenders that operate primarily in underserved and rural areas. This change eliminates some of the prohibitions under the Ability- to-Repay Rule thereby allowing income to debt ratios as high and 43% and balloon payments, as long as the creditor holds the loan in their own portfolio. The Rule also allows more creditors to be considered small lenders because it increases the number of mortgages a small lender can hold from 500 to 2000. It would also expand the number of geographic locations which can be considered rural.