August 11, 2016

Home prices shutting out buyers; reg burden not helping

Overall home prices are now only 2 percent below their July 2006 peak, marking a housing recovery that has left behind many middle-class potential buyers, according to The Wall Street Journal.

The WSJ noted that between 200,000 and 300,000 fewer households are purchasing homes than would under normal economic conditions, and it said home prices are increasing in part due to a lack of supply, as new home construction remains at recession levels. The WSJ also noted that mortgage availability is a big cause of falling homeownership levels.

"High home price inflation driven by supply shortages is a fact of life in many areas," said NAFCU Chief Economist and Director of Research Curt Long. "In particular, there is a dearth of inventory aimed at middle-income families.

"Credit availability is tight, thanks largely to the tidal wave of mortgage regulations which have hampered the efforts of credit unions and other local lenders to provide mortgage loans to the communities they serve," Long continued.

NAFCU staff is reviewing CFPB's recently issued final rule amending parts of its 2013 mortgage rules, which implement provisions of the Real Estate Settlement Procedures Act and Truth in Lending Act. NAFCU has argued that the mortgage rules do not give enough consideration to small entities, which did not cause the financial crisis. NAFCU will publish a Final Regulation for members shortly.