Do homeownership and rent subsidies protect individuals from experiencing material hardships? Do the relationships differ by race and ethnicity? Using the Survey of Income and Program Participation, we find that the likelihood of experiencing any material hardship is 5.6 percentage points lower for homeowners than renters without rent subsidies, a reduction of about 25 percent. Owning a home over ten years provides a larger protection than owning a home less than four years. Homeownership’s role in shielding people from material hardship is at least as important for non-Hispanic blacks and Hispanics as for non-Hispanic whites.
U.S. housing has posted some hopeful gains since the market hit bottom two years ago. Housing starts have nearly doubled since their nadir during the Great Recession, and house prices have gained back almost half of what they lost after the bubble burst.
The January edition of At A Glance, the Housing Finance Policy Center's monthly chartbook, provides timely metrics on the state of the housing market and the role of public policy in housing finance. This month’s issue contains a special quarterly feature on Fannie’s and Freddie’s loan composition and performance.
In November 2013, Invitation Homes LP, the Blackstone subsidiary that is the largest of the REO-to-rental operations, completed the first securitized financing of REO-to-rental properties (Invitation Homes 2013-SFR1). The private placement was very well received by the market, producing more favorable terms than many had anticipated. In this short article, we walk through why the deal was done, how it was structured, and what the financing means for the market.
The GSE Reform Debate has thus far succeeded in building a broad (though not universal) consensus that Freddie and Fannie should be replaced by a system in which private capital bears the first loss, with a catastrophic government guarantee behind it taking the residual risk. Investors would continue to have access to mortgage backed securities with a full faith and credit guarantee, but, in contrast to the current situation, the bulk of the credit support would come from private capital. The Corker-Warner proposal, S. 1217, for example, has this structure.
On December 31, 2013, the Federal Housing Administration (FHA) reduced the loan limits for its single-family insurance program in 652 counties, while increasing them in 89 counties. The changes result from the expiration of provisions of the Economic Stimulus Act of 2008 (ESA).
This report presents three tax reforms designed to promote homeownership through a channel other than the deductibility of mortgage interest. These reforms include a first-time homebuyer tax credit, a refundable tax credit for property taxes paid, and an annual flat amount tax credit for homeowners—all paid for by limiting current tax expenditures for housing. Although far from perfect, these reforms would provide a more efficient and equitable allocation of housing subsidies. Our simulations show that relative to existing incentives, each policy would raise home prices and make the tax code more progressive.
The December edition of At A Glance, the Housing Finance Policy Center's monthly chartbook, provides timely metrics on the state of the housing market and the role of public policy in housing finance. Topics also include the GSEs under conservatorship, modification activity, and agency issuance and Fed purchases. New this month are an overview of house price trends nationally and by MSA, and rates of delinquency and negative equity over time.
This paper examines the practices of investors who purchased 1-3 family residential real estate in Cuyahoga County, Ohio from financial institutions that acquired property following mortgage foreclosure. Policy and program recommendations to discourage illegal and irresponsible behavior, encourage beneficial behavior, and provide a cost-effective alternative to demolition of abandoned property are explored. The analysis utilized a number of research tools, including: post-foreclosure transaction data; identifying business connections between investors; interviews with investors, realtors, community development practitioners and financial institutions; and an assessment of vacant homes in 6 neighborhoods used to develop a template for determining the feasibility of housing renovation in different markets.
Fannie Mae and Freddie Mac both recently completed deals in which they transferred some of the risk from their guarantor book of business to private investors. As we contemplate a new housing finance system in which private entities take the first loss, backed up by a catastrophic government guarantee, the obvious question arises: how are these deals applicable to the new housing finance structure? While lessons can be learned from Fannie Mae and Freddie Mac deals, there are additional considerations in an environment without government-sponsored enterprises.