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July 15, 2011

MBA: U.S. Homeownership Could Fall 2% More

July 15, 2011

MBA: U.S. Homeownership Could Fall 2% More

The popular press continues to point out that while a record share of Americans want to buy homes, both U.S. government and corporate policies (often working at cross-purposes) are making it more difficult. Of course, it is Wells or Chase or the servicer who bear the brunt of the liability if the loan “goes south,” not the newspaper, yet reporters are quick to point out that “Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify. That’s limiting a real estate rebound that also has been damped by a state attorneys general probe into foreclosure practices and an Obama administration loan-modification program that has fallen short of expectations.” Few want to return to no-documentation-required loans being mainstream, but most agree guidelines need to swing back somewhat.

If the results of Fannie Mae’s monthly national consumer survey accurately portray their attitudes, Americans appear to have increasingly realistic expectations of the housing market. Data from the June survey indicate that Americans are resigned to lower house prices and higher rents and have come to expect rock-bottom interest rates. Fannie’s National Housing Survey polls 1,000 home owners and renters each month to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, household finances, and overall consumer confidence then compares the results to answers to the same survey conducted monthly since June 2010.

Lastly, the MBA suggested that the U.S. homeownership rate could fall another one to two percentage points if credit conditions and the economy remain in the same crisis mode exhibited in 2009. Most in the business agree that not everyone deserves to own a home, and the current homeownership rate of 66.4% is in line with historic norms. The peak came in 2004 at 69.2% – so perhaps the press should spend more time wondering why it was so high in 2004, and not why it is falling now? But perhaps we are back to a more sustainable level.