MReport May 2022

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22 | M R EP O RT COVER STORY in affordability in the near-term. Even if demand moderates due to an affordability squeeze, it will take time for supply to catch up with demand, keeping house price growth positive." Middleman adds, "In my opinion, it will take the will of the government, either through owner-occupied tax credits or down payment assistance (with- out burdensome rules) to over- come the market forces currently in play. I would not be surprised to find a lower percentage of homeownership in the future unless something dramatic occurs to change the paradigm." But will the dust ever settle, and will the market ever return to a state of normalcy? That remains to be seen, but as Redfin shows, the typical homebuyer's monthly mortgage payment shot up 39% in March, the largest year-over-year gain recorded. One option that can assist with affording a home is down payment assistance programs. As noted by Chrane, who serves as Founder and CEO of Down Payment Resource, in the first quarter of 2022, there were 2,238 active homebuyer assistance programs—a figure that includes down payment and closing cost programs, Mortgage Credit Certificates, and affordable first mortgages—with at least one program available in each of 3,143 U.S. counties, and 10 or more programs available in more than 2,000 U.S. counties. "For many people, down pay- ment assistance provides the best pathway to homeownership," Puthur notes. "If somebody has the ability to repay, they should have the ability to benefit from the wealth building benefits of homeownership, and the abil- ity to invest in things like better neighborhoods, better education, and better life outcomes." However, rising costs can put a damper even on the buyer who is leveraging down payment as- sistance to purchase their home. "While we certainly believe down payment assistance is an important tool for many first-time borrowers, it is not a cure-all for every possible homeownership obstacle," Ferguson said. "Down payment assistance does solve one of the largest hurdles for borrow- ers, which is the down payment. Many would-be borrowers have good income and credit, but due to ever-increasing rental rates, they have not been able to save enough for a down payment on a home. For these types of credit worthy borrowers, down payment as- sistance can be of great help, especially for minority buyers, who often do not have familial wealth to assist them in buying their first home." Chrane agrees that even with down payment assistance, there are bumps in the road. "Purchasing a home with homebuyer assistance isn't with- out its challenges," Chrane said. "As housing professionals, we have enormous influence over the ability of fund-strapped borrow- ers to achieve homeownership, and we must challenge ourselves to be better informed about the affordability programs available to borrowers in our markets. To make competitive offers with homebuyer assistance, consumers need both lenders and Realtors to be informed and on board. The best results are achieved by Realtor-loan officer teams who are experienced, able to facilitate a smooth transaction, and effectively able to educate and allay the con- cerns of listing agents and sellers." The 'Wait and See' Approach " W hat makes today's afford- ability issues even more difficult is that there are no short- term fixes to make the inflation- ary pressures we are feeling go away," Buege said. "And housing affordability may be one of the more challenging struggles. We should remain hopeful because the forces of the market that have created the current housing envi- ronment will eventually run out of steam, so look for the hous- ing market to settle in to a new normal by next year." For many, going back to the drawing board is the best option to wait out the affordability storm. "Buying a home is the largest financial decision you will ever make, and it's not to be taken lightly," Kushi said. "Sitting on the sidelines may allow a potential buyer to continue to pay down their debt, build up their credit, and save for the down payment and closing costs. And in the meantime, they may find that more inventory is hitting the market that aligns with their preferences. Sometimes it pays to wait." With no clear end in sight, the saga continues and left in its wake is a generation eager to fulfill their homeownership goals yet forced to hit the pause button for the time being. "I believe affordability is going to be a long-term issue," Zitting added. "Most first-time buyers are in their '30s, and the population of this demographic is growing rapidly. The supply of afford- able homes will continue to have trouble keeping up." ERIC C. PECK is Five Star's Managing Digital Editor. He has 20-plus years' experience covering the mortgage industry; he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in communication arts/media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for "Even if demand moderates due to an affordability squeeze, it will take time for supply to catch up with demand, keeping house price growth positive." —Odeta Kushi, Deputy Chief Economist, First American

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