Issues Facing Originators

Celebrating Housing’s High Points

Written by Jim Jumpe

June is National Home Ownership Month, and there’s a lot of good news this year for those of us in the housing finance industry.

On a day-to-day basis, we often see a mix of good and bad headlines about home sales, but when you step back, the bigger picture is largely positive. The Home Buying Institute recently said this summer is likely to bring a hot housing market thanks to low mortgage rates and continuing job growth.

In May, Freddie Mac’s latest forecast stated, “Expect total home sales to surpass 2018 levels and reach 5.98 million units in 2019.”

There are signs Millennials, who now account for the largest share of home sales (36%), are poised to boost home ownership rates. In April, CoreLogic Deputy Chief Economist Ralph McLaughlin said, “an estimated 46 million households under the age of 30 will push up demand for both owner- and renter-occupied homes over the next two decades” and “the demographic fundamentals should lead to a healthy housing demand through at least 2040.”

In a survey, 33% of Millennials said their dog was a major factor in their decision to buy a home, according to the 2017 Harris Poll on behalf of SunTrust Mortgage. When it comes to reasons for buying a home, dogs outrank marriage (25%) and even kids (19%).

The U.S. home ownership rate stands at 64.2% as of the first quarter of 2019. According to Zillow.com, that’s in line with the historic average of 65.2% dating back to the ‘60s.

But, the housing market isn’t without challenges, especially for first-time buyers. It is enormously difficult for young families to save enough for a down payment on a house while also paying off college loans and other debts. Affordability is declining in many areas and many first-time buyers have been completely priced out of high-cost markets like San Francisco, Seattle, New York City and Washington, D.C.

Even with those challenges, it’s clear young people want to buy homes. Apartment List recently issued survey results showing 89% of Millennial renters plan to “one day” own a home.

What’s motivating home purchases? The biggest driver is Millennials’ love for their dogs. In a survey, 33% of Millennials said their dog was a major factor in their decision to buy a home, according to the 2017 Harris Poll on behalf of SunTrust Mortgage. When it comes to reasons for buying a home, dogs outrank marriage (25%) and even kids (19%).

It’s well known that owning a home is a powerful wealth-building tool. Making a monthly mortgage payment is much like putting money into a piggy bank every month: For many families and individuals, the enforced savings over time often creates their biggest financial asset.

We don’t often think of the social benefits of home ownership, but those positives were highlighted in a 2017 report by researchers at the Center for Real Estate Studies:

  • Students living in owned homes graduate high school at higher rates — thereby having higher incomes over their lifetimes.
  • The children of parents who are homeowners are more likely to participate in organized activities (including sports) and spend less time watching TV.
  • Homeowners are more likely to be involved in volunteer organizations and local government.
  • People who own their own homes have better health outcomes and physical health.

The housing market’s strong run over the past seven years has helped millions of homeowners benefit from rising property values. According to Zillow.com, the U.S. median home price increased by 52.35% to $226,800, from May 2012 to May 2019. That median-priced home also increased 6.1% over the past year.

Higher prices also make it more difficult for homebuyers. At Arch MI, we’re proud to have introduced several innovative products with the flexibility to help lenders turn qualified borrowers into homeowners:

  • Our AMGC Community Program is an MI solution for portfolio lenders, available through Arch Mortgage Guaranty Company. Eligible law enforcement, firefighters, nurses and other essential workers who have only modest down payments can get their loans approved when they are insured with this program.
  • With our RateStar BuydownSM tool, lenders receive Arch MI’s most competitive rates from RateStarSM and the ability to buy down the borrower’s MI premium using all available lender and seller credits — creating a payment option the competition can’t match. RateStar Buydown makes it easy to experiment with different combinations of upfront and monthly payments to customize the perfect solution for cost-conscious borrowers.
  • Our Roadmap to Home Ownership provides everything lenders need to host a first-time homebuyer seminar on their own or in partnership with local real estate agents.

Celebrate National Home Ownership Month with some home ownership facts:

As always, our Insights blog is designed as a forum for sharing ideas. Please send us a message about how you’re celebrating National Home Ownership Month and encouraging your customers to move from renting to owning a home.

About the author

Jim Jumpe

Senior Vice President and Chief Marketing Officer
As Chief Marketing Officer, Jim Jumpe oversees a long-term strategy to steward the Arch MI brand, help drive sales through effective customer communication, events, advertising and marketing collateral, and develop and execute innovative marketing strategies.