The interest rate on 30-year mortgages turned downward again last week dropping two basis points to 3.43 percent effectively removing the increase of the previous week. Rates have remained near historic lows for a period of eight consecutive weeks yet many would-be home buyers are unable to fulfill their dream of owning their own home because they simply can’t afford it.
The National Association of Realtors Chief Economist, Lawrence Yun, often quoted here said the home ownership rate may now be at a 50-year low, but that doesn’t mean the dream of home ownership is dying. In the second quarter of 2016, the home ownership rate dropped to 63.1 percent, but Yun notes it is clear home ownership still matters to Americans and to the economy.
According to Yun, the drop in the home ownership rate does not mean Americans aren’t interested in buying a house. Indeed, plenty of recent surveys show overwhelmingly that Americans have a strong desire for home ownership.
Several reports last week reinforce the challenges facing first-time home buyers. From the Economist’s Outlook blog at the National Association of Realtors; “Positivity about owning a home is still high. In the latest NAR Housing Opportunity and Market Experience survey, released earlier this month, 87 percent of people surveyed want to own a home in the future and 88 percent believe homeownership is a good financial decision. However, becoming a homeowner is still presently out of reach for some. Affordability continues to be a speed bump on the road to homeownership, and this is particularly acute in certain areas of the country.
Forty-eight percent of non-homeowner respondents reported the main reason they currently don’t own a home is because they can’t afford to buy one. This is close to respondents in the Northeast, where 47 percent feel they can’t afford to buy a home. It is slightly less in the Midwest at 44 percent and in the South at 45 percent, but the number jumps to 59 percent in the West.”
Here in North Idaho as reported by the Coeur d’Alene Association of Realtors’ Multiple Listing Service the median average home price is $208,986 compared to $247,700 as a U.S. average for an existing home. That nearly $40,000 difference would seem like an enabling factor yet the household income last reported as a U.S. median was $53,517 compared to a Kootenai County median of $48,776. Even with the lower median price then, the challenges to ownership would seem comparable.
According to the survey, there are other factors in play that delay the ownership dream: “Interestingly, while an improvement in their financial situation is one of the top answers both nationally and regionally, it is lifestyle considerations such as getting married, finding a new job or retiring that would entice most into becoming a homeowner (38 percent). This holds true across the regions: 40 percent in the Midwest and South report this is the case, while slightly lower numbers were reported in the Northeast at 36 percent and in the West at 34 percent.”
The dream of home ownership lives on but low rates have become a non-event with today’s first-time buyers. Perhaps that is why home ownership is not as urgent as it was to earlier generations.
Trust an expert….call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate Broker and the spokesman for the Coeur d’Alene Association of Realtors. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of Realtors, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664