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Affordability Challenges to Homeownership

As home sales have cooled, it seems that “affordability” has become a concern and focus for many institutions, consultants and real estate companies.

On June 9th, Lawrence Yun, Chief Economist for the National Association of Realtors, joined Rosen Consulting Group and Berkeley Hass Real Estate to provide information regarding the new white page report from RGC titled Hurdles to Homeownership: Understanding the Barriers.

Adam DeSanctis, of NAR blog, highlights the conclusion to the barriers as:

  • Post-foreclosure stress disorder
    • There has been long-lasting psychological changes in financial decision-making for some of the 9 million homeowners who experienced foreclosure and the 8.7 million people who lost their jobs during the Great Recession.
  • Mortgage availability 
    • Credit standards have not normalized following the recession.
  • Growing burden of student loan debt 
    • Student loan debt makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in expensive markets.
  • Single-family housing affordability 
    • Many markets are experiencing decaying affordability conditions because of soaring home prices and rents and a lack of single-family housing inventory.
  • Single-family housing supply shortages 
    • An insufficient level of homebuilding has created a cumulative deficit of nearly 3.7 million new homes over the last eight years.

Yun gave a presentation June 16th titled Affordability Challenges to Homeownership. The presentation provided informative information about equity, job growth, and overall supply and demand.

Following are some the highlights from Yun’s presentation according to DeSanctis:

  • Home equity has doubled since 2009.
  • Job creation is far outpacing housing starts.
  • Home sales are at a decade high and would be higher if there were more supply.
  • There’s a mismatch between what’s for sale and what households can afford.
  • Affordability challenges will remain because of low housing supply.
  • Home prices up 5.0 percent.


Thinking through the above information should lead one to summarize that lack of supply and financing are holding the market back. On the positive side, more people are working, credit issues are being slowly turned around and people would buy if the terms and prices were affordable.

As a note investor you should recognize this as an opportunity to fill a void in the market place.

Large supplies of homes are sitting vacant. These homes are not on the market for sale but rather are in idle position while the non-performing loan works it way through the system. Once the non-performing loan is acquired and the note holder repossesses the property, putting it on the sales market with seller financing will lead to a quick sale.

Note investors have access to the inventory (supply) and the ability to fill the void (demand) in the market by offering attractive terms to potential buyers.


Kevin Shortle

Dir, of Training and Research



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