by CNBC, Property Records
Mark Zandi, Moody’s Analytics chief economist, stated that millennials are facing a lot more headwinds in owning a home.
The severe shortage in affordable houses makes it difficult to afford homes. Specially in the lower middle-income sectors of the society.
With rents and house prices going up, saving for a down payment is more difficult.
Also, the disparity in between ownership of homes are widening.
New generations have situations to consider.
1.5 Trillion in Student debt challenges are in the way in considering buying a new home.
Qualified mortgage rules are also a consideration. Tighter mortgage standards are a hurdle for newer borrowers. Debt-to-income ratios have more weight with the current underwriting rules in both lenders and banks.
Bank unlikely to extend mortgage if your credit history is far shorter than their underwriting standards. This affects most of the Hispanics and the Black communities that are in the lower income brackets.
Credit history are a major hurdle for this groups.
If you don’t have an extensive credit history banks won’t lend.
The Income Gap
Despite the strong number in the unemployment
Zandi stated that the system needs help in terms of considering different sources of income. This could be a determining factor in dealing with debt-to-income factors.
For example, Hispanics pay rent, have other sources of income that are not counted towards their ability to pay their mortgages.
In the African-American community, Joe Watkins, former Bush White House aide. Stated that even with decrease in labor unemployment, the disparity with income between whites and black are still an issue.
Is one of the issues for homeownership in decline with this demographic.
In the last three quarters, there is a steady decline in home ownership among the community. The price of first-time home buyer properties is more expensive. The decrease in building of new homes didn’t help as well.
Mark Zandi expressed that credit scoring should be changed to include incomes and consider on time rent payment to be one of the biggest considerations in a credit scoring.
Also, the regulation that congress should consider is extending the “Qualified Mortgage rule.”
Congress should extend rule
This rule is expiring in 2020. Which he sees as a bigger hurdle in the future if congress does not extend the current status.
This rule makes Fannie Mae, Freddie Mac and FHA to consider borrowers with high debt-to-income ratio.
See more of this article: https://www.cnbc.com/video/2019/07/26/heres-why-homeownership-is-on-the-decline.html
