New Study Proposes Overriding Local Land Use Regulations With Statewide Reforms, Among Others, To Rebuild The American Dream
ROSEN CONSULTING GROUP RELEASES LAST OF THREE REPORTS, HIGHLIGHTS 25 POLICY RESPONSES TO HOMEOWNERSHIP CRISIS
BERKELEY, Calif., Nov. 3, 2017 /PRNewswire/ -- The U.S. national homeownership rate dropped from a peak of 69% in 2004 to 63.9% in the third quarter of 2017, remaining near 50-year lows. With millions of households unable to reach the American Dream of owning a home, the many advantages of homeownership are lost for millions of individuals, communities and the national economy.
Despite significant hurdles such as affordability, mortgage availability and housing supply constraints, there is still much that can be done at the federal, state and local level. Indeed, the crisis in homeownership warrants a vibrant national campaign to promote greater access to homeownership, according to a new report "Rebuilding the American Dream: Strategies to Sustainably Increase Homeownership" released today by Rosen Consulting Group and the Fisher Center for Real Estate & Urban Economics, Haas School of Business, University of California, Berkeley.
"Homeownership in the United States today is in a crisis. It is our goal to create a roadmap that encourages the public and private sectors to come together to implement solutions," said Ken Rosen, Chairman of Rosen Consulting Group and UC Berkeley's Fisher Center for Real Estate & Urban Economics. "These are innovative and common-sense reforms that can be implemented locally or nationally, and will promote homeownership across the country. Many of these policies, such as overriding local land-use regulations with statewide reforms or helping households afford a home through shared equity or student debt mortgages, are bold ideas that could help millions of families secure the American Dream."
RCG proposes more than 25 new ideas to bolster homeownership, with the most significant highlighted below;
Overriding Local Regulatory Hurdles with Statewide Reforms
- Across the United States, local zoning requirements greatly inflate the costs of building new homes and empower local opposition to new housing. A statewide approach could provide a pathway to offset these biases, by enacting legislation that effectively overrides overly restrictive local zoning, in order to encourage more housing supply.
Promoting Modular Construction to Increase New Home Supply
- New construction methods can help control costs in the building process. Modular construction, building housing units in box-like modules in an off-site factory, could significantly reduce construction costs, by up to 20%, while substantially increasing supply.
Helping Homebuyers Save with a Down Payment Savings Program
- A down payment savings program would help households save their income, through the creation of a tax-deferred account, much like a 401k or Individual Retirement Account, for use toward the purchase of a home without a tax penalty. Such a model could be implemented at the state or federal level, making it easier for first-time homebuyers to afford a home.
Expanding Mortgage Affordability with Shared Equity Products
- Shared equity is a homeownership model that allows a household to purchase a home by dividing the equity stake among multiple parties. There are a variety of approaches; including nonprofit models, private companies that partner with homebuyers to provide funds for the down payment, and co-buying arrangements among family members or non-related housemates. Many of these models could be expanded and replicated, effectively lowering housing costs by dividing the ownership share in a safe and sustainable manner.
Tackling the Burden of Student Debt with a Student Debt Mortgage
- Student debt burdens restrict millions of households from affording to buy a new home. A student debt mortgage would provide an avenue for homebuyers to lower their monthly payments, by consolidating outstanding student debt into their mortgage, when purchasing a home. The borrower would have one payment, lower than the two individual payments, promoting greater affordability and supporting first-time homebuyers.
Combatting Post-Foreclosure Stress Disorder with a Targeted Assistance Program
- The economic, social and emotional effects of the foreclosure crisis fundamentally altered many individuals' perceptions of financial risks and generated long-lasting psychological changes in financial decision-making, which we call post-foreclosure stress disorder. A nationwide targeted counseling program for homeowners who previously experienced foreclosure could go a long way toward allowing millions of households to consider buying a home once again in a safe and sound way.
Other Policy Interventions
RCG believes that tackling the hurdles to new development, the availability and affordability of mortgages and the burdens of student debt, will require a willingness to rethink the status quo and embrace new ideas that are both innovative and pragmatic. Through the reform of existing regulations, expansion of current programs and creative thinking about new products and programs, policymakers, advocacy groups, Realtors®, lenders, homebuilders and many other players in the housing industry could do much to further support homeownership in a safe, sustainable and affordable way.
To read the full report, please click here.
About the Study
Rebuilding the American Dream: Strategies to Sustainably Increase Homeownership was prepared by Rosen Consulting Group for the National Association of REALTORS® and jointly released by Rosen Consulting Group and the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business. This report, the third and last in RCG's series on homeownership, highlights potential policy responses that could help combat the numerous hurdles limiting homeownership. In particular, we focus on opportunities to mitigate the challenges of supply constraints, affordability, student debt, post-foreclosure stress disorder and mortgage availability. While we include a wide range of proposals, the goal is to combine innovative approaches with pragmatic strategy, in order to focus on revitalizing homeownership in America in a safe and responsible manner.
About Rosen Consulting Group
Rosen Consulting Group (RCG) is a leading independent real estate economics consulting firm. Founded in 1990 and with offices in Berkeley and New York, RCG provides strategic consulting and unbiased investment guidance through all market cycles. RCG is a trusted advisor to leading banks, insurance companies, institutional investors, and public and private real estate operators. For more information go to www.rosenconsulting.com.
About the Fisher Center for Real Estate & Urban Economics
The Fisher Center for Real Estate & Urban Economics (FCREUE) mission is to educate students and real estate professionals, and to support and conduct research on real estate, urban economics, and the California State economy. FCREUE strives to be the leading center for research on the California economy and excels nationally as a center for urban economic and public policy research. It also regularly provides a practical forum for academics, government officials, and business leaders. For more information, go to http://groups.haas.berkeley.edu/realestate/.
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