Can There Be Too Many Homeowners?

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?

READ FULL STORY ...

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Read all 37 posts in the same category of Home and Mortgage:

Why a Real Estate Agent May Skip the Extra Mile - Aug 14, 2006
Fed Chief Sees Home Price Bubble - Feb 21, 2005
Title Insurance Protects Lenders. So Why Shouldn't They Pay for It? - Feb 10, 2005
The Shiller Interview - Jan 25, 2005
HELOC Rates Move Closer To Home Equity Loans - Jan 23, 2005
Finding an Affordable Home Gets Harder - Jan 17, 2005
If you're paying off student loans, check out the tax deductions available to you. - Jan 17, 2005
What Is Your Home Worth? - Jan 04, 2005
U.S. Sales Of Existing Homes Hit Record - Dec 29, 2004
What Length Mortgage Should You Get? - Dec 27, 2004
Maneuvering Property-Swap Tax Details - Dec 27, 2004
No Money Down - Dec 24, 2004
New Home Sales Tumble - Dec 23, 2004
If The Bubble Bursts... - Dec 18, 2004
Housing Starts Tumble, But ... - Dec 18, 2004
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

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