Rising Rent Costs Blocking Homeownership Dreams for Many

Posted on December 04, 2017 in Uncategorized | Add Your Voice

Rising Rent Costs Blocking Homeownership Dreams for Many
It’s no secret that rent prices are taking a big bite out of many Americans’ incomes, especially for those not in a position to purchase a home. Even worse, it’s a real obstacle toward being able to save toward a down payment that could make buying a home a feasible possibility. A new report from Zillow highlights just how bad it’s become—renters are spending nearly $2,000 a year more in 2017 than they would have been prior to the housing bubble.

According to Zillow’s analysis, the median U.S. rental costs 29.1 percent of the median monthly income. Compare that to the numbers before the housing bubble: between 1985 and 2000, typical renters were spending just 25.8 percent of their income on rent. That translates to an increased expenditure of $1,957 per year in 2017, as opposed to if that percentage had remained the same.

That’s even more striking when compared to how the typical homeowner is faring in 2017. According to Zillow, mortgage payments make up an average 15.4 percent of income for homeowners in Q3 2017, as compared to 21 percent historically, so the average homeowner is actually saving money. Contrasted with a typical renter’s annual cost of $2,000, the typical homeowner is saving around $3,300.

“Clearly the pressure put on rents during and after the foreclosure crisis resulted in the inability of renters to save for downpayment, as evidenced by the stagnant homeownership rate and slow pace of household formation,” says Collingwood Vice President Stephanie Schader. “The House and Senate tax reform bills both propose roughly doubling the standard deduction and a bigger child tax credit, this may help offset the rental cost burden and stimulate savings for downpayment.”

Zillow Chief Economist Dr. Svenja Gudell explains that rent taking a bigger bite of monthly income “can mean less cash to put toward paying off student debt, building an emergency fund, or saving for retirement. For those hoping to buy a home, it could be a significant part of their down payment.” For example, Zillow’s report explains that the $5,298 annual difference in Dallas, Texas, would be enough to save a 20 percent down payment for a typical home there in eight years. According to an April 2017 Zillow survey, more than two-thirds of renters cite saving for a down payment as the biggest obstacle to buying a home.

read more: M Report

NAHB CEO: GOP is Interested in Our Demands on the Tax Bill
National Association of Home Builders CEO Jerry Howard told CNBC on Friday he’s much more optimistic about the Republican’s tax overhaul after a meeting with key lawmakers.

Howard said last month his members were “irate” about a proposed plan in the House bill to slice the mortgage interest deduction in half, to a maximum of $500,000. He said it could lead to a housing recession.

The NAHB has asked that the bill maintain a cap on mortgage interest deduction at $1 million but expand the deduction to include home equity loans for capital improvements to residences among other demands. The Senate bill would not change the mortgage interest deduction. If the Senate passes its version, conferees would have to reconcile their two.

“We’ve had some very interesting and positive discussions with the speaker and Chairman Brady, and we know that they are very aware of the potential impacts on housing,” said Howard, referring to meetings Thursday with House Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady. “And they’re interested in our ideas on how to correct some of those.”

“I’m not saying we’re in support of the bill yet, but we’re in a much better place than we have been,” Howard told “Squawk Box.” “They’re very interested in our ideas.”

read more: CNBC

Lawmakers Pressed to Save Flood Insurance Program
Numerous business sectors are urging lawmakers to act quickly to extend the National Flood Insurance Program before a crucial deadline next week.

The House passed a flood insurance reauthorization and reform bill Nov. 14 by a 237-189 vote. But the Senate Banking Committee has not acted on a flood insurance bill yet. Without an extension, the program will expire on Dec. 8.

“Unless Congress acts now to extend authority before December 8, just eight legislative days away, the NFIP will no longer be able to issue or renew flood insurance policies across the U.S,” Elizabeth Mendenhall, president of the National Association of Realtors.

read more: National Mortgage News

Fannie: Millennials Embracing Home Ownership in Droves
New research from the University of Southern California and Fannie Mae confirms that millennials are finally embracing home ownership.

The study, conducted by Patrick Simmons, director, strategic planning for the Economic & Strategic Research Group at Fannie Mae and Dowell Myers, professor of policy, planning, and demography at the Sol Price School of Public Policy at the University of Southern California, notes that traditional age-group analysis of the data suggests that millennial home-ownership demand continues to slumber. However, by examining the data from a cohort perspective, which disentangles current from past home-buying behaviors, the authors reveal a sharp awakening of millennial home ownership.

Cohort analysis shows that the pace of young-adult home purchases accelerated substantially during the economic recovery and quickened further through 2016.

read more: BUILDER Online

Pending Home Sales Bounce Back, Reversing Months of Declines
Pending home sales rebounded strongly in October, after three straight months of declines.

The National Association of Relators’ (NAR) Pending Home Sales Index rose 3.5% to 109.3 in October, up from the downwardly-revised 105.6 in September. Though the reading is its highest since June and a bright spot in the economy, it was still lower (0.6%) than the same period last year.

All major regions in the nation, excluding the West, saw an increase in contract signings in October. The rise in pending sales in the month was driven mainly by strength in the southern region of the U.S., which bounced back considerably following the devastating hurricane-related disruptions, according to NAR chief economist Lawrence Yun.

“Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” he said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”

read more: Fox Business

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