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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 survey: rising rents to continue challenging Homeownership Respondents overwhelmingly agree rental affordability will not improve in the near-term, but just over half say the government need not intervene. F ast-rising rents have made it difficult for many Americans to save up a down payment for a home purchase—and experts say that problem is unlikely to go away any time soon. Late last year, real estate firm Zillow reported renters living in the United States paid a cumula- tive $441 billion in rents through- out 2014, a nearly 5 percent annual increase spurred by rising numbers of renters and climbing prices. Last month, the company said its Rent Index increased 3.3 percent year-over-year, accelerat- ing from 2013 even as home price growth slows down. Results from a more recent survey conducted by Zillow and Pulsenomics suggest rent prices will continue to be a problem for the aspiring homeowner for years to come. Out of more than 100 real estate experts surveyed, 51 percent said they expect rental affordabil- ity won't improve for at least an- other two years, Zillow reported in mid-February. Another 33 per- cent were a little more optimistic, calling for a deceleration in rental price increases sometime in the next one to two years. Only five percent said they expect affordability conditions to improve for renters within the next year. Despite the challenge rising rents presents throughout the country, more than half—52 per- cent of respondents—said the mar- ket should be allowed to correct the problem on its own, without government intervention. "Solving the rental affordability crisis in this country will require a lot of innovative thinking and hard work, and that has to start at the local level, not the federal level," said Zillow's chief econo- mist, Stan Humphries. "Housing markets in general and rental dy- namics in particular are uniquely local and demand local, market- driven policies. Uncle Sam can certainly do a lot, but I worry we've become too accustomed to automatically seeking federal assistance for housing issues big and small, instead of trusting markets to correct themselves and without waiting to see the impact of decisions made at a broader local level." On the topic of government involvement in housing mat- ters: The survey also asked respondents about last month's reduction in annual mortgage insurance premiums for loans backed by the Federal Housing Administration (FHA). The Obama administration projected that the cuts will help as many as 250,000 first-time homebuyers make their first purchase. The panelists were lukewarm on the change: While two-thirds of those with an opinion said they think the changes could be "somewhat effective in making homeownership more accessible and affordable," just less than half said the new initiatives are unwise and potentially risky to taxpayers. Finally, the survey polled panelists on their predictions for U.S. home values this year. As a whole, the group predicted values will rise 4.4 percent in 2015 to a median value of $187,040, with projections ranging from a low of 3.1 percent to a high of 5.5 percent. "During the past year, expec- tations for annual home value appreciation over the long run have remained flat, despite lower mortgage rates," said Terry Loebs, founder of Pulsenomics. "Regarding the near-term outlook, there is a clear consensus among the experts that the positive mo- mentum in U.S. home prices will continue to slow this year." On average, panelists said they expect median home values will pass their pre-recession peak ($196,400) by May 2017.

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