National Homeownership Month Local Lending

Reflecting on the Past and Looking to the Future with National Homeownership Month

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.

It’s also an opportune time for you to educate prospective borrowers on the value of homeownership. Owning a home continues to be one of the best vehicles for wealth in the U.S. In 2018, rising home prices and the slow expansion of mortgage debt have only improved homeowners’ equity. Over the course of last year, home prices increased 4.7%, continuing the trend of rising prices.

National Homeownership Month has gone through many iterations to get to where it is today:

1920’s: The concept for celebrating homeownership begins as a week-long celebration thanks to local real estate associations wanting to promote the idea of homeownership

1956: The National Association of REALTORS® picks up the concept and celebrates it officially

1976: The week is officially renamed Private Property Week

1986: Renamed again to American Home Week

1990s: The Clinton Administration makes a big push for homeownership through various initiatives

2002: President George W. Bush proclaims June as National Homeownership Month as the celebration is absorbed into an initiative created by the Department of Housing and Urban Development (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 the National Association of Realtors, the national median price for existing single-family homes was $254,800 in Q1 2019, up 3.9% from Q1 2018. Rising home prices leans into the idea that homeownership is still a top way for people to increase their wealth through home equity.

 

A Shift in Challenges for First-Time Homebuyers

Last year, we talked about the fact that first-time homebuyers were facing two key problems: low inventory and home prices outpacing wage increases. In short, there were many potential first-time homebuyers, but not enough inventories for sale, and not enough inventories affordable to these homebuyers.

In 2019, we’ve finally seen a break in the discrepancy between home prices and wages. Housing prices have cooled while wages have been given a chance to catch up. These factors, coupled with lower interest rates, appear to show good signs for the housing market.

Another market force to consider is the fact that older Millennials want to buy houses. Millennials are eager to achieve the milestone of homeownership and start building equity, but they’re up against thousands of dollars in student debt. Experts estimate that Millennials collectively hold $1.56 trillion in student loan debt. With all that debt, it’s easy to see what’s holding members of this generation back from buying a home.

The inventory problem from last year is improving, though. While there is a YoY increase in inventory from last year, many in the mortgage industry still feel that inventory is still tight, especially in hot markets.

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.

There are already some programs like this in place – HomeReady™ and Home Possible® require first-time homebuyer education programs in certain situations which promote safe savings practices. There are also plenty of comparison charts online that LOs can share with their potential borrowers to explain the differences in loans (like FHA vs a loan with PMI) and MI structures. Some borrowers may also be interested in value-add programs from different MI providers such as Genworth’s Home Suite Home.

The more knowledge we can share with homebuyers, the more we can help get into homes. 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.

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