TheMReport

52 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Inventory Continues Freefall New data links the market's inventory shortages with how long homes stay on the market. T he current inventory shortage is strongly cor- related with how long homes are staying on the market, according to the recent Trulia Inventory and Price Watch. Home inventory in the U.S. dropped 8.9 percent nationally year-over-year between April and June, marking the ninth consecu - tive month of decline, accord- ing to Trulia. Compared to five years ago, today's inventory is 20 percent lower, with current starter and trade-up homes decreas- ing 15.6 percent and 13.1 percent, respectively. Premium homes have seen less of a decrease, falling 3.9 percent over the last year. "Markets that have witnessed larger decreases in inventory have experienced larger declines in the share of homes still sit - ting on the market after two months," Trulia Chief Economist Ralph McLaughlin said. "With these declines, falling inventory has also pushed affordability of homes across all segments to new post-recession lows." Trulia reported that the falling inventory has also affected affordability of homes across all three home types stud - ied. Typically, starter-home buyers would need 39.1 percent of their monthly income to buy a starter home, which is a 3.1-point increase from last year. Trade-up homebuy - ers need 26 percent, and premium homebuyers need 14.3 percent. On average, Trulia found the more a market's housing inventory has fallen over the last five years, the faster homes come off the mar - ket. Fifty-seven percent of homes in 2012 were still on the market after two months. However today that number has dropped 10 per - cent to 47 percent of homes still on the market after two months. The largest decreases in inventory, like San Jose, California, and Oakland, California, have also seen signifi- cantly fewer homes for sale after two months. Buyers who have to act fast can be found in the West, excluding Columbus, Ohio, while the slowest-moving markets are generally found in the South and Northeast. "As inventory continues shrink, the few homes that are available are flying off the mar - ket within a couple of months," McLaughlin said. "In the tightest markets in California, only one in four homes are still on the market after two months. Clearly, this spring is not bring - ing the inventory relief buyers so desperately need. In today's frenzied market, buyers must be prepared to (1) move fast, (2) be flexible with sellers' timelines, and (3) make multiple offers." Low-Income Consumers Disadvantaged When Establishing Credit History Many low-income Americans establish credit via negative actions, like debt collection or public records. C onsumers in lower- income parts of the country are more likely to establish credit history through negative means, like debt collection or public records, accord - ing to a recent study from the Con- sumer Financial Protection Bureau. The study found that consumers in higher-income areas more com- monly establish credit with a credit card or through co-borrowing. According to CFPB Director Richard Cordray, the study shows that those in lower-income areas are at a financial disadvantage very early on. "It is no secret that lower-in - come consumers face challenges in the financial marketplace," Cordray said. "Today's study shows that even at the beginning of their financial lives, they are faced with higher hurdles to gain access to credit, which hinders them from turning their version of the American dream into reality." The study found that nearly 80 percent of Americans establish credit history before the age of 25, most commonly with credit cards. Consumers in higher-income parts of the country were 30 percent more likely to use credit cards to these means than those in lower- income areas. While 44 percent of high-income area consumers established credit through a card, just 34 percent of those in lower- income regions did. Low-income area consumers are also 240 percent more likely to establish credit history through negative records. About 27 percent of these consumers establish their histories through what the CFPB calls "non-loans," including debts in collection or public records. Only 7.9 percent of consumers in high-income areas establish credit via non-loans. High-income area consumers are 100 percent more likely to rely on a co-borrower to establish credit history. Only about 15 percent of low-income area consumers estab - lish credit through these means. Additionally, the CFPB found that the percentage of consumers who establish credit history via student loans has doubled over the last decade. More than 26 percent of consumers now use student loans when establishing their credit history. The CFPB estimates that 11 percent of all U.S. adults—about 26 million—are "credit invisible," meaning they have no credit his - tory with Experian, TransUnion, or Equifax. Without a history, these consumers are at a disad- vantage when it comes to lending. "Without a sufficient credit history, consumers face barri- ers to accessing credit or higher costs," the CFPB reported. "This issue disproportionately impacts consumers who are African American or Hispanic, and people who live in low-income neighbor - hoods. It can also impact some recent immigrants, young people just getting started, and people who are recently widowed or divorced." "It is no secret that lower-income consumers face challenges in the financial marketplace." —Frank Martell, President and CEO, CoreLogic

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