Zillow’s Matthew Speakman on 2021’s home-building market

In this interview, Speakman discusses the latest housing starts report and how it effects the home-buillding market.

Mortgage rates remain steady, rise to 2.81%

With 14 consecutive weeks below 3%, Khater says rates provided "tangible support" to economy.

The future of title and escrow tech

Heading into 2021, there are many changes in store for the title industry. Join this multi-panel event to get ahead of the curve.

Stacking the deck

Does choosing the right technology stack give your brokerage a competitive edge?

Mortgage

Why aren’t more renters becoming homeowners?

New York Fed report suggests the answers are obvious

The main factors preventing renters from becoming owners are weak balance sheets, low income, and lack of access to credit.

Some cite inherent advantages of being a renter, but notably few say that they do not want to own because they are concerned that house prices might fall. 

Still, there’s no one-size fits all.

Recent activity in the U.S. housing market has been widely perceived as disappointing. For instance, sales of both new and existing homes were about 5 percent lower over the first half of 2014 than over the first half of 2013. From a longer-term perspective, a striking statistic is that the homeownership rate in the United States has fallen from 69% in 2005 to 65% in the first quarter of 2014. This decrease in homeownership is particularly pronounced for younger households, implying that many of them are remaining renters for longer than in the past. In this post, we use survey evidence to shed some light on what is driving this sluggish transition from renting to homeownership. 

Understanding the rate at which renters enter homeownership is important for several reasons. One, first-time homebuyers (mostly former renters) generally account for a substantial portion of home sales. (The share going to first-time buyers has historically amounted to 30 to 50% of all home sales.) Two, in the time series, renter-to-owner transition flows tend to lead the business cycle and house price growth

What could be inhibiting the flow of renters into homeownership? Is it that renters today simply do not want to own because of changed attitudes toward housing, as sometimes hypothesized in the popular press? Or are they prevented from entering homeownership by fundamental factors, such as low incomes and weak personal finances, coupled with difficult access to mortgage credit? To help answer these questions, we use data from a special module on housing-related issues in the New York Fed’s Survey of Consumer Expectations, fielded in February 2014 to 867 homeowners and 344 renters. For more information on the survey, see our earlier post

3d rendering of a row of luxury townhouses along a street

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