A recent study from Rosen Consulting Group (RCG), “Hurdles to Homeownership: Understanding the Barriers,” contends that despite steadily improving job markets and historically low mortgage rates, significant barriers to homeownership continue to hinder market growth.
Conducted in concert with the Fisher Center for Real Estate & Urban Economics at UC Berkeley’s Haas School of Business, the study estimates that more than 900,000 additional homes would have been purchased last year alone if mortgage availability had returned to a more normalized level in 2016.
“Ten years after the Great Recession, major barriers remain for households trying to buy a home. Limited mortgage availability and excessive bank regulation restricts nearly a million households from purchasing homes each year,” says Ken Rosen, chairman of RCG and UC Berkeley’s Fisher Center for Real Estate & Urban Economics.
“Many households now suffer from post-foreclosure stress disorder, an altered perception of the financial risks associated with homeownership,” he adds. “Moving forward, addressing these challenges will be critical to helping millions of households attain the American Dream.”
According to the study, “major barriers” to homeownership include the following:
- Mortgage availability: The lack of available credit played a significant part in depressing the national homeownership rate, keeping many households out of the homeownership market.
- “Post-foreclosure stress disorder”: The Great Recession fundamentally altered many individuals’ perceptions of financial risks and generated long-lasting psychological changes in financial decision-making, particularly housing tenure choice.
- Student debt: With spiking student loan debt levels, households are forced to delay the purchase of a home. The average student loan payment in 2015 was $300 per month, representing 20% of the $1,460 mortgage payment of the median existing-home price.
- Single-family housing affordability: The study forecasts that affordability will fall by an average of nearly nine percentage points across 75 major markets between 2016 and 2019, with approximately 5 million fewer households able to afford a local median-priced home by 2019.
- Single-family housing supply shortages: The availability of capital for home builders, the rising cost of construction, and the combined effect of local land-use and zoning regulations across the country are all constricting new single-family housing supply nationwide.
To read the full report, click here.