Mortgage Professionals Should be Optimistic About the Future

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Th e M Rep o RT | 51 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ANALYTICS the latest Few renters expect to Purchase a Home anytime soon Survey finds Americans of 'prime homebuying' age believe they can't afford the down payment. m ost of today's renters will still be renting three years from now, despite the vast majority viewing homeownership as something to take pride in, according to an online poll. In results published last month, Freddie Mac said its survey of more than 2,000 American adults revealed 61 percent of renters don't plan to purchase a house at any point in the next three years. When asked why they expect to keep renting for the near future, half of respondents said they can't afford to make a down payment for a mortgage, while 38 percent said they can't afford a monthly mortgage payment. Those percentages were high- est among respondents age 25 to 44, the bracket considered to be the prime homebuying years for most Americans. On the other hand, that same age group was also the likeliest to buy in the coming years: 47 per- cent of renters age 25 to 34 and 58 percent of renters age 35 to 44 ex- pect to purchase a house within three years compared to just 27 percent of 45 to 64 year-olds. "It's no secret that for the last several years, consumers have felt more strapped financially, particularly renters," said David Brickman, EVP of Freddie Mac's multifamily business line. "Many renters are not buying homes because of a perceived lack of ability to afford the down payment or mortgage and poor credit history." The majority of renters—45 percent—said they're living pay- check to paycheck at this point, with little or no money to spare for buying things they want. Only 31 percent of homeowners said the same thing. Meanwhile, 17 percent of rent- ers are sometimes not even able to pay for basic necessities like food or housing until their next payday compared to 7 percent of homeowners. Lifestyle choices also played a role in some respondents' desire to rent over buying. According to the survey, 39 percent of U.S. adults don't want the responsi- bilities that come with owning a home, particularly those who are entering or are already in their retirement age. According to renters, the top three favorable factors about rent- ing are freedom from home main- tenance responsibilities (with 78 percent agreeing), greater flexibil- ity in where they live (68 percent), and protection against home price volatility (66 percent). On the other hand, the top- cited benefits of homeownership had less to do with convenience and more to do with sentiment: 91 percent of renters said owning a home is something to be proud of, while 90 percent said they would like to be able to pass a home on to their children. previous high was 73 percent, set in Q 4 2013, and the lowest was 65 percent set in Q 3 2011. Also, 93 percent of young renters said they hope to buy a home someday, according to Trulia. The company reported that while optimism is high toward the housing market, barriers re- main to homeownership. While the biggest obstacle is still saving for a down payment, affordabil- ity has become a bigger concern in the last year—32 percent of respondents said increasing home prices were the biggest barrier to owning a home, compared to just 22 percent a year earlier. Poor credit and qualifying for a mortgage were also cited by respondents as impediments to homeownership. Measures of economic con- fidence were similarly mixed in November, retreating in one popular gauge and climbing in another. The Conference Board's index of consumer confidence declined to 88.7 in the group's November reading. The drop followed a bump of more than five points in October to a post-recession high of 94.5 (revised to 94.1 in the latest report). The Thomson Reuters/ University of Michigan consumer sentiment index, meanwhile, saw its fourth straight monthly gain, with November's final reading climbing to 88.8. According to the Conference Board, consumers in the group's latest survey were less optimistic about the labor market outlook, which was reflected in a decline in the share of respondents ex- pecting more jobs in the next six months and an increase of more than 2 percentage points in the share expecting fewer jobs. Americans were also slightly more pessimistic about income growth, with fewer expect- ing higher wages in the coming months. Those responses compare to comments offered in the UMich survey, which indicated more Americans are comfortable with their current financial situation and confident about the employ- ment outlook.

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