2012 Governor’s Conference on Housing Homeownership Trends & Outlook

2012 Governor’s Conference on Housing Homeownership Trends & Outlook. Federal Home Loan Bank of Pittsburgh. Who are we? Government Sponsored Enterprise (GSE) Cooperative Ownership Wholesale Banking

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2012 Governor’s Conference on HousingHomeownership Trends & Outlook Federal Home Loan Bank of Pittsburgh Who are we?
  • Government Sponsored Enterprise (GSE)
  • Cooperative Ownership
  • Wholesale Banking Purpose: provide stable, on-demand, low-cost funding to member financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending
  • GSE Reform Who’s to blame?
  • CRA/GSE Housing Goals
  • Predatory Lending Practices
  • Toxic Private-Label Mortgage Backed Securities Where do we go from here?
  • Federal government’s role in the secondary market
  • Reduced federal support, but maintain federal presence
  • GSE Reform Impact on the outlook for homeownership:
  • One more element of uncertainty in the market
  • Ripple effects – “…if I can’t finance it, I can’t sell it and if I can’t sell it, I don’t want to build it…”
  • Other Market Factors Homeownership are still very much alive:
  • Recent TD Bank homebuyer poll
  • The majority (84 percent) of today’s younger renting generation (ages 18-34) responded that they intend to buy a home
  • More than half of those polled (of all ages) indicated homeownership is a vital component to defining the American Dream
  • Other Market Factors First-time buyers could help stabilize the market, but their numbers are shrinking:
  • A record 50 percent of all buyers in 2010 but just 32 percent for 2011 according to the NAR Contributing factors:
  • Banks are demanding more: higher credit scores, more documentation, and more up-front cash
  • Consumer fears:
  • Buying a home I can’t afford
  • Buying a home that could become worth less than I paid for it
  • Foreclosure and its consequences
  • Issues to Consider The drop in first-timers could lead to pressure for more incentives to get people buying. Should housing lead the recovery or wait for the economy to start producing more jobs which will result in more financially confidant buyers? Are lenders overcorrecting to compensate for loose lending during the bubble. According to the NAR default rates for loans originated since the crash are only 1 percent, compared with a historical average of 2 to 3 percent. Is lending being limited to only the “cream of the crop”? Looking Forward The FHLBank Pittsburgh continues to see a market for affordable homeownership options The Affordable Housing Program offers a good source of gap financing for market ready projects Down payment closing cost options are also available Potential for reintroduction of the First Front Door down payment/closing cost program in 2013
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