Are you aware that FHA declared June as National Homeownership Month? They even have a theme: “Dare to Own the Dream.” Sounds a little ominous…
Julian Castro, HUD Secretary, says it’s a good time to reflect on all that the Obama Administration has done to ensure that homeownership is well within the reach of the average American family. Really?
Like Dodd-Frank and all its rules and regulations that have stymied mortgage lending, to say nothing of increasing the costs of getting a loan!
Secretary Castro goes on to say that, “home is the place where you put down roots, become part of a community and raise our children.” This opportunity should be open to all who are ready and qualified to buy a home. Spoken like a true potential candidate for VP. Question is, what is considered ready and qualified?
The homeownership rate is at its lowest levels since 2004, when it peaked at almost 70%. It’s been downhill from there, highlighted by the crash of 2008. Maybe, all those programs to increase homeownership, and the mandates placed on the agencies, had something to do with this decline.
Could it be that just maybe those who weren’t quite ready and qualified for homeownership were pushed into it by all these mandates and special lending programs designed to increase homeownership? Another great example of what our government has done to help.
Although job and wage growth is stagnant, home prices still remain relatively high. This puts the dream of owning a home further out of reach for many consumers. Ironically, the home values are partly the result of the programs previously introduced to increase homeownership. These made it easier for more to qualify for loans increasing the demand while the home supply remained level, and may have declined due to so many existing homeowners refinancing rather than selling their home.
Now, in the midst of a Presidential Election, the current Administration wants to tout homeownership and all it’s done to help. Announced by an individual with visions of becoming the next Vice President, we’ll fix the problem by simply declaring a homeownership month with a fancy slogan. All will be right again. Excuse me for being a little cynical, but I doubt it.
What we need is a better economy. One which creates either new jobs at decent wage levels (not part time employment), or one that provides for consistent and realistic wage growth for those employed. That is what will afford many Americans that opportunity to pursue their dream of homeownership. Many of which may have already given up on that dream.
Neither FHA, the Agencies, nor the mortgage lending community can increase the homeownership through new programs alone unless done by easing the current standards for loan approvals. We saw where that got us last time. We have plenty of programs, with lenders willing to lend, for those who are now ready and qualified to buy a home.
The challenge is how we get more Americans ready and qualified.