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U.S. homeownership reaches record high;
policymakers still not satisfied
By • Bankrate.com
 More
than two-thirds of Americans now own their own homes, according
to recently released figures. That's the most in history.
But if you think lenders, mortgage companies
and government officials are going to take a break now that they've
met homeownership targets set in the mid-1990s, think again.
At a recent Mortgage Bankers Association of
America conference, Department of Housing and Urban Development
Secretary Andrew Cuomo said he wants even more people to buy.
For borrowers, that means that the low down
payment loans, easier qualifying standards and other breaks that
started becoming widely available a few years ago should only get
more plentiful and generous as lenders try to meet the government's
ambitious goals.
"Sure, we're at an all-time high," Cuomo said
Oct. 30 at the MBAA conference in San Francisco. "But we're going
to go higher."
"We are only limited by our own vision," he
added. "We will go higher if we believe we can."
The path to proprietorship
The great democratization of housing that boosted the homeowner
rate to 67.7 percent in the third quarter of this year from 64.2
percent at the end of 1994 results from a number of factors that
came together at the right time.
The economy pulled out of its slump at the beginning
of the last decade and hasn't looked back. HUD and the Clinton administration
made the promotion of homeownership a priority, setting an ownership
rate target of 67.5 percent and launching initiatives designed to
get it there. Nonprofit agencies increasingly got involved, offering
home-buying seminars, counseling and down payment assistance programs.
Meanwhile, the so-called government sponsored
enterprises, or GSEs, progressively loosened their restrictions
on which loans they would buy. That allowed lenders who sold their
mortgages to Fannie Mae and Freddie Mac to ease down payment, debt
ratio and other underwriting standards.
At the same time, lenders got more creative
with the types of loans they offered in an effort to target niche
borrowers who needed more than 30-year fixed-rate mortgages.
"No. 1 is the long period of affordable mortgage
rates certainly made it possible for folks to move into homeownership,"
says Glenn Crellin, director of the Washington Center for Real Estate
Research at Washington State University in Pullman. "That was coupled
with a fairly aggressive policy on the part of HUD and Fannie Mae
and Freddie Mac to come up with some innovative financing approaches
that would let some lower-income households into the market."
More consumers moved into a position to buy
over the course of the decade, too.
"Part of it relates to demographics as our population
has aged," says Nick Retsinas, director of the Harvard Joint Center
for Housing Studies in Cambridge, Mass. "Older people are more likely
to be homeowners than younger people."
In addition, the financial success of past
buyers encouraged many Americans to take the plunge themselves.
"Homes, like many other assets, have seen prices
rise significantly," Crellin says. "And just as we saw significant
increases in homeownership in the 1970s, we've seen the same thing
happen now because of the rapid increases convincing people this
was a good vehicle for accumulating wealth."
And the beat goes on
The boom times haven't shown much sign of letting up, and officials
say they want to push the homeownership rate even higher, perhaps
above 70 percent.
Cuomo said lenders can help do so by focusing
on traditionally underserved borrowers, including immigrants, urban
residents and Native Americans.
Only 48.2 percent of minorities owned a home
in this year's third quarter, for instance. While that's up from
43.7 percent in the fourth quarter of 1994, it's almost 20 percentage
points below the national average. In central cities, the ownership
rate is only 51.9 percent, up from 48.2 percent.
Experts aren't sure whether Cuomo is asking
for too much. Retsinas calls any goal of, say, 75 percent "very,
very ambititous," though within reach, while Crellin says it will
be "extremely tough" to boost the homeownership rate much higher
than it is now. But lenders say that if there's money to be made
in mortgages, they'll be there to make it.
"My sense is that over time, if the economy
remains strong and income growth is good and the agencies continue
to try to make financing more accessible, lenders will obviously
compete and do as many loans as they can," says Scott Happ, president
and chief executive officer of Mortgagebot.com in Cedarburg, Wis.
"It seems reasonable."
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