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December 6, 2004 12:25 PM

Can There Be Too Many Homeowners?


Excerpt: More than 69 percent of American households own their homes. Further expanding the rate of homeownership, which is a policy shared by the housing industry and politicians alike, is leading to an increased focus on subprime borrowers -- those with less-than-perfect credit. But with affordability for first-time home buyers already quite low, will the current initiatives aimed at creating even more homeowners backfire?


More than 69 percent of American households own their homes. Further expanding the rate of homeownership, which is a policy shared by the housing industry and politicians alike, is leading to an increased focus on subprime borrowers -- those with less-than-perfect credit.

But with affordability for first-time home buyers already quite low, will the current initiatives aimed at creating even more homeowners backfire?

An index of affordability for first-time home buyers shows a disconnection between the prices of starter homes and the income of first-time buyers. With the number 100 indicating that a median-income first-time buyer has exactly the income needed to buy a median-priced starter home, the current first-time home buyer index of 74.7 is cause for concern.

According to the National Association of Realtors, 40 percent of home buyers are first-time buyers. The era of ultra-low mortgage rates has introduced many households to the world of homeownership. With interest rates remaining so low for so long, what will it take to expand homeownership above the current 69-percent threshold?

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21st-Century Landlords (December 10, 2004)
Fresh out of grad school in 1998, Keith Colacioppo moved back home with his parents in the Bronx to save money. He lived frugally and opened a 401(k) retirement account at work. But Colacioppo wanted to do more to cut his taxes and kick his ...
Get Real About Real Estate (December 09, 2004)
THE HOUSING MARKET HAS shown Herculean strength in the past few years. New home sales increased 0.2% in October, to the third-highest level ever, according to a recent Commerce Department report. That same month saw new home construction rise 6.4%, to the highest level of ...
Selling Your Home (December 06, 2004)
Thinking of cashing in your gains in the real estate market? Or maybe you're selling because you're changing jobs, downsizing, leaving the fast lane. Selling a home can be an intimidating prospect, but with the right preparation and attention to detail you can maximize your ...
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Borrowers can get larger loans in 2005 without having to pay higher rates for jumbo mortgages. Mortgage funding titans Fannie Mae and Freddie Mac have raised their 2005 conforming limit to $359,650, up from the 2004 limit of $333,700. It represents a 7.7 percent increase ...

Read all 22 posts in the same category of Home and Mortgage:

A New Way to Hedge Your Home's Paper Profit - Dec 12, 2004
California, U.S. in a Housing 'Bubble,' UCLA Forecast Says - Dec 11, 2004
21st-Century Landlords - Dec 10, 2004
Get Real About Real Estate - Dec 09, 2004
Selling Your Home - Dec 06, 2004
Conforming Mortgage Loan Limits Rise For 2005 - Dec 04, 2004
12 Tips For Wise Use Of Equity - Dec 01, 2004
Housing Wealth Reverberates - Nov 30, 2004
More Mortgages To Be 'Conforming' - Nov 30, 2004
Realtors Engage In Turf Battle With Discounters - Nov 28, 2004
Expanding The American Dream Commitment - Nov 26, 2004
'Tis the Season to Fix Up Your House - Nov 26, 2004
Sell Your Home — Fast - Nov 26, 2004
Most Expensive Gated Communities In America 2004 - Nov 26, 2004
Exchanging Real Estate Tax Free - Nov 25, 2004
Home Equity For The Holidays? OK, With Caution. - Nov 25, 2004
Does It Pay To Save? - Nov 23, 2004
The High Earner/Poor Saver - Nov 20, 2004
Six-Figure Zip Codes - Nov 20, 2004
Buyer's Home Feature Preferences Reflect Lifestyles - Nov 16, 2004
Pattern of Strong Home-Price Gains Continues in Most Metro Areas - Nov 16, 2004