When Buying A Home Is Too Costly And The Rent Is Too High
A new report from the Harvard Joint Center for Housing Studies finds that affordability problems for renters have skyrocketed over the past decade, and in the aftermath of the economic recession, more people have been driven out of the housing market and into rental housing. As monthly rent swallows ever larger portions of Americans’ paychecks, homeownership grows out of reach. Overall, the number of American renters paying unaffordable amounts for housing reached an all-time high last year.
Making sense of the story:
- More than half of renters – 21.1 million households – were cost burdened in 2012, paying more than 30 percent of income for housing. This is the greatest number of housing-cost-burdened renters on record.
- According to the study, between 2000 and last year, the nation’s median rent, adjusted for inflation, increased 6 percent, while the median income for renters fell 13 percent.
- Twenty-eight percent of renters paid more than 50 percent of their income on housing in 2011.
- From 2001 to 2011, nearly one in five households headed by someone in their 30s switched from owning a home to renting at some point; nearly one in seven households headed by a person in their 40s did the same.
- In order to pay their monthly housing costs, low-income households with severe housing cost burdens cut back most heavily on their spending for food, transportation, health care, and retirement savings.
- According to the study, about 13 percent of extremely low-income renters reside in homes with structural deficiencies.
In other news …
Banking Under Dodd-Frank Takes Shape With Volcker-Rule Approval
Regulators have now finalized and approved the Volcker Rule, which is intended to stop banks from engaging in certain types of risky behavior. The rule stems from the Dodd-Frank financial reform act that passed in 2010, and it bars banks from speculating with their own money.
Trulia: Repeat homebuyers to dominate 2014 market
In his latest housing predictions for 2014, Jed Kolko, chief economist with Trulia, posited that the housing market will see the dominance of the repeat homebuyer. This is a shift from the dominance of investors in 2013.
Housing Market Overstocked With Older Homes
AOL Real Estate
A recent survey from research firm RealtyTrac indicates that 71 percent of U.S. single-family homes were built before 1990. New-home construction is well below normal long-term levels.
U.S. Senate confirms Mel Watt as next FHFA directorSource: HousingWire
Correcting three myths about the housing market
Reuters states persistent myths about the market are obscuring the data and driving policy in the wrong direction. Specifically, the publication suggests the following are myths: 1) The foreclosure crisis is over; 2) We have to let homeowners fail; and 3) There’s nothing more the government can do.
Nobel laureate: Everyone should have a financial adviser
Robert Shiller, the Nobel Prize-winning economist, argued in a recent speech that financial advice should be readily available to all Americans, not just the wealthy. He pointed to a lack of good financial advice as one of the reasons for the financial crisis, and he compared the need for financial advice with the need for health care.
Chinese investors snatch up U.S. houses
Source: CNN Money
Chinese buyers purchased $8.2 billion worth of U.S. property in 2012, and New York and Los Angeles are two cities that attracted the most interest from buyers. But Philadelphia and Detroit came in at No. 3 and No. 4, and the top 10 list is rounded out by Houston, Chicago, Las Vegas, Atlanta, San Diego and Memphis. Most of these transactions are paid in cash.
Fannie, Freddie to Raise Loan Fees
Source: Wall Street Journal
Home-loan borrowing costs for U.S. homeowners could be affected by an increase in fees that Fannie Mae and Freddie Mac charge lenders. There will be a 0.1 percentage point increase in the so-called “guarantee” fees that lenders are charged. However, in the majority of states, this increase will be offset by the removal of crisis-era fees.
Talking Points …
—> According to the latest report from Morningstar Credit Ratings, distressed inventory is on the decline, but the number of months it takes to clear distressed inventory from the market is on the rise.
—> The time to clear this inventory has increased by five months from the second quarter of this year and 11 months from September 2012, according to Morningstar’s analysis. According to its forecasts, it will take 49 months to work through the private-label RMBS sector’s distressed inventory.
—> Judicial states hold about 61 months of distressed inventory, while non-judicial states hold about 32 months’ worth. Short sales made up 49 percent of distressed sales in the third quarter of this year, up from 45 percent a year ago.
Thanks for reading!
David S. Wilfert
RE/MAX R.E.O. – The Wilfert Group
12341 Newport Avenue, Suite A-100, North Tustin, CA 92705
Real Estate Broker – BRE# 01861699
Notary Public – Commission# 1987439
Direct: (714) 963-8000 or Email: David@WilfertGroup.com