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From Home Furnishing Business

New Book Examines Housing Crisis

August 11, 2014  by in Economic News, Industry   

"Homeownership Built to Last: Affordability, Access, and Risk after the Housing Crisis" reexamines the goals of homeownership and explores the housing crisis' harsh lessons.

Though the national homeownership rate rose to its highest level ever in 2005, millions of Americans saw their hopes of building wealth through homeownership dashed in the foreclosure crisis that followed, at enormous financial, psychological and social costs. With tighter credit in the wake of the crisis, purchasing a home today can be very difficult, particularly for those with limited resources. Despite the challenges and risks, however, Americans overwhelmingly still aspire to homeownership, and many advocates continue to view it as an important wealth-building strategy for low-income and minority households.

The book features contributions from some of the country’s preeminent housing, real estate, and finance experts and scholars, and focuses on a variety of themes, including homeownership as a policy goal in the wake of the housing crisis, supporting the home buying process for low-income households, balancing affordability and access to homeownership while mitigating risks, the government’s evolving role in housing finance, and sustaining homeownership particularly for owners who encounter distress.

Some of the book’s key findings include:
* Those who managed to sustain homeownership through the worst housing market crash since the Great Depression experienced significant gains in household wealth, while most of those who did not keep their homes did not end up financially worse off than those who rented through this period. Importantly, low-income and minority households were no less likely to benefit from sustained homeownership.
* Americans continue to have strong aspirations to own a home for both financial and non-financial reasons, and strategies are needed to ensure people make good decisions about tenure and financing in the face of “optimism biases” that may influence financial decisions.
* It is possible to responsibly extend credit to a significant percentage of targeted borrowers without undue risk by allowing different risk factors to offset each other. However, tools such as an automated underwriting scorecard, while useful, are not a panacea, and other methods for preparing and supporting borrowers at higher risk of default are also needed.
* State housing finance agencies (HFAs) provide a prominent example of successful specialized lending to higher-risk homebuyers, utilizing a combination of counseling, careful underwriting, and diligent servicing. Still, there are a variety of questions about whether this approach can be scaled to a national level.