Tight Credit, High Housing Costs Imperil Homeownership for Millions

Tight Credit, High Housing Costs Imperil Homeownership for MillionsEven as the housing recovery gains momentum, millions of homeowners are still delinquent on their mortgages or owe more than their homes are worth as housing costs have set new records, according to a new study.
Add to the mix tight credit standards that are limiting the ability of potential homebuyers to take advantage of low interest rates — and those rates have started to climb from historic lows
Last year, an increase of 1.1 million renter households propelled a second consecutive year of double-digit percentage increases in multifamily construction.
But the flip side of a strong rental market has been a slide in homeownership rates, according to “The State of the Nation’s Housing” report released Wednesday by the Joint Center for Housing Studies of Harvard University.
“Even as historically low interest rates have helped make the monthly cost of owning a home more favorable than any time in the past 40 years, the national homeownership rate fell for the eighth straight year in 2012,” said Eric S. Belsky, Managing Director of the Joint Center for Housing Studies. “The drop was especially pronounced for 25–54 year olds, whose homeownership rates were at their lowest point since record-keeping began in 1976.”
Access to credit at reasonable rates is still a major issue for millions of consumers.
“At issue is whether, and at what cost, mortgage financing will be available to borrowers across a broad spectrum of incomes, wealth, and credit histories moving forward,” said Chris Herbert, Director of Research at the Joint Center for Housing Studies.
The number of Americans paying out half or more of their incomes on housing is at an all-time high, the study said.
At last count, 20.6 million households were shouldering such severe burdens, including nearly seven out of ten households with annual incomes of less than $15,000 — roughly equivalent to year-round employment at the minimum wage.
But, the housing study finds, even as the need has never been greater, federal budget sequestration will pare down the number of households receiving rental housing assistance.
“With governments at all levels under severe budgetary pressures, policymakers must make difficult choices about allotting
scarce public resources to the country’s many competing needs,” the report concludes. “But given the profoundly positive impact that decent and affordable housing can have on the lives of individuals, families, and entire communities, efforts to address urgent and longstanding housing challenges should be among the nation’s highest priorities.”
Read the full report.
Tight Credit, High Housing Costs Imperil Homeownership for Millions

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