What is National Homeownership Month?
June is National Homeownership Month, a time to celebrate the benefits that homeownership brings to families, neighborhoods, and communities across America.
But this year, it looks significantly different than we all could have imagined.
For many Americans, homeownership is at risk – homeowners who have lost their jobs due to COVID-19 may find themselves needing to go onto a forbearance plan, while renters who had hoped to enter the housing market are suddenly shut out by tightened (yet temporary) credit restrictions and stay-at-home orders.
Still, Americans generally agree that owning a home is one of the best vehicles for building wealth. In 2019, home prices continued to rise, resulting in a national 4% YoY growth in home prices from Dec 2018 to Dec 2019. While the novel coronavirus has presented many issues for the American economy, we’ve continued to witness record-breaking volumes of refinances, and lately we’ve seen purchase volume begin to pick up.
National Homeownership Month has gone through many iterations to get to where it is today, starting as a week-long celebration in the 1920s created by local real estate associations to a month-long celebration initiative created by HUD. Today, the mortgage industry continues the message of helping people realize the dream of responsible homeownership.
Homeownership in the U.S.
There continues to be a noticeable shift from renting to homeownership, especially among younger buyers. Although we believe this trend began in 2015, it started showing up in the official homeownership data.
According to Zillow, the average home value was $246,000 at the end of 2019, an increase of about 3.6%. Rising home prices leans into the idea that homeownership is still a top way for people to increase their wealth through home equity.
Navigating the Current Environment
In the past, we’ve discussed some hefty challenges facing first-time homebuyers such as low housing inventory, home prices outpacing wage increases, and large amounts of student debt when you consider the Millennial generation.
On top of these existing challenges, our country is now navigating through a pandemic that has forced people to stay at home, thereby discouraging prospective homebuyers from looking and prospective home sellers from listing. Servicers are also working double-time to help distressed borrowers into forbearance and workout plans so they can stay in their homes.
What Can We Do?
There are plenty of mortgage products that can help first-time homebuyers get into a home and start building equity in a long-term investment vehicle. These options include VA loans, HFA loans, FHA loans, and conventional loans with private mortgage insurance. While different loans make sense for different borrowers, conventional loans with private mortgage insurance have become more popular with first-time homebuyers, helping more first-time homebuyers in the past year than any other loan products.
While we in the mortgage industry can’t influence larger market trends like inventory, we can play our part by educating first-time homebuyers on their financing options. That means encouraging good savings habits, expanding knowledge of different types of loans, and showing the long-term payoff of owning a house.
The more knowledge we can share with homebuyers, the more we can help get into homes and stay in their homes in times of hardship. We can also ensure they’re responsible homeowners, making them a safer investment for you. As mortgage professionals, that’s the best way we can honor National Homeownership Month.