By JIM WOODARD
The more obvious culprits in limiting home sales in today’s market are the sluggish economy, continuing tight job market and tough requirements to qualify for a mortgage.
But there’s another not-so-obvious reason. Fewer babies are being born, thus families are more inclined to postpone a purchase of a family home.
Kids on hold
Young couples in their 20s who have put child-rearing on hold because of the poor economy are still reluctant to become parents.
This is “an unexpected consequence that has dropped the nation’s birthrate to its lowest point in 25 years.
“As the economy tanked, the average number of births per woman fell 12 percent from a peak of 2.12 in 2007. Demographic Intelligence projects the rate to hit 1.87 this year and 1.86 next year — the lowest since 1987.
“… The effect of this economic slump on birthrates has been more rapid and long-lasting than any downturn since the Great Depression,” reported USA Today. “Many young adults are unemployed, carrying big student loan debt and often forced to move back in with their parents — factors that may make them think twice about starting a family.”
* * *
Q: Is the demand for residential rentals increasing?
A: Yes. In fact, rental vacancy rates have fallen to 8.6 percent, the lowest since the second quarter of 2002, according to Freddie Mac.
Nationally, the for-rent market now appears to be in relatively good balance, with the rental stock close to overall rental demand, resulting in “normal” vacancy levels.
The continuing shrinkage in excess vacant stock is important because it means that in most markets the REO homes on the for-sale market are not competing with an oversized vacant housing inventory, Freddie Mac noted.
* * *
Q: What protections do homeowners have against more mistakes by mortgage servicers?
A: The Consumer Financial Protection Bureau, CFPB, recently proposed rules designed to protect homeowners from surprises or mistakes made by their mortgage servicers.
“CFPB announced that it was considering several proposals to implement requirements laid out in the Dodd-Frank Act, the bill that created the bureau,” noted a CFPB report. “The bureau reached out to consumer groups, small servicers, industry stakeholders, and government agencies for input.
“The first set of proposed rules is designed to bring more transparency to the mortgage market so consumers can avoid costly surprises.
“CFPB proposes: Clear monthly mortgage statements, including a breakdown of payments, due dates, and fees; warnings before interest rate adjustments with information about alternatives and counseling resources if the new rate is unaffordable; early information and options to avoid foreclosure; and options for avoiding ‘force-placed’ insurance, in which servicers purchase insurance to protect the lender’s interest in the property.”
* * *
Q: What are risks in signing for a reverse mortgage?
A: Many people are not aware of negative factors related to reverse mortgages. Here’s a quote from Shirley Krohn, a member of the California Senior Legislature advocacy group as carried in the Ventura County Star:
“Reverse mortgages are being hawked aggressively on TV, giving promises of a better life. People are being seduced into taking this product when other options might be better.”
Here’s another quote from Megan Thibos, the primary author of a special report on reverse mortgages: “It is an inherently confusing product to begin with. The product is a negative amortization home loan, which unlike a normal mortgage, the balance on the home loan actually rises over time rather than declining. That’s just one of many confusing aspects of the reverse mortgage.”
* * *
Q: Do most homeowners take extra cash when refinancing their mortgage?
A: No, about 81 percent of homeowners who refinanced their first-lien home mortgage either maintain the same loan amount or lower their principal balance, according to a report by Freddie Mac.
Of these refinancing borrowers, 59 percent maintain about the same loan amount (the highest share ever recorded), while 23 percent reduce their principal balance by paying-in additional money at the closing table.
* * *
Q: Is the housing market really improving?
A: The housing market is improving despite economic uncertainty, concluded the August report by CoreLogic.
“While housing data remained gloomy for years, we believe the housing segment is seeing sparks of hope with REO sales dropping, inventory levels declining and the nation’s foreclosure inventory slowing. The result of these conditions is a balancing of supply and demand, and the beginning of price stability — even price growth,” the report stated.
(To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.)