BY Courtney Huckabay
"In a recovering market, homeownership rates are down sharply for blacks and young adults. Most renters say they would like to own in the future, but financial constraints are an obstacle."
"A Pew Research Center analysis of Census Bureau and mortgage loan data indicates that the decline in ownership since 2004 has been more pronounced among households headed by young adults, blacks and those in the lower income tier. A substantial portion of the ongoing falloff in homeownership reflects fewer renter households transitioning to homeownership, rather than homeowners being forced out of the market through foreclosure or other financial difficulty."
This decline falls in line with AudienceSCAN's latest survey findings. Only 6.5% of Americans intend to purchase new homes in the next 12 months.
"And while a new Pew Research Center survey shows that a solid majority (72%) of renters say they would like to buy a home in the future, several noteworthy trends in residential housing markets have made becoming a homeowner a more challenging proposition for today’s renters than was the case during the housing run-up."
"Lending standards are much more stringent today than they were as home values were climbing in the early 2000s."
According to the most current AudienceSCAN research, 52.2% of House Shoppers are renting currently.
"For some potential home buyers, these tightening credit standards may be a deterrent to entering the market. While loan approval rates are up compared with 2004 levels, loan applications are down significantly, and the falloff has been most dramatic among black and Hispanic applicants. In addition, the types of loans many of these borrowers relied on prior to the crash have largely dried up. For example, in 2004, 32% of loans to black borrowers were higher priced or “subprime;” in 2015 only 7% were. To be sure, there is an upside to the changed lending environment. Mortgage defaults have declined and fewer homeowners are struggling to manage their home loans."
Lenders and realtors can reach House Shoppers and help them find the right mortgages through television (over-the-air, online, mobile or tablet) advertising. AudienceSCAN found 41.3% of House Shoppers took action after watching commercials in the past month.
"Beyond the tightening credit market, rebounding home values have made it more difficult for some renters to get into the market. From the vantage point of renters, price appreciation puts homeownership further out of reach in two ways: It increases the amount they need to borrow, increasing the prospective monthly mortgage payment; and it increases the amount of the down payment needed to obtain a mortgage. The typical renter does not have large financial assets to tap in order to come up with a down payment."
Financial planners, banks and credit unions can encourage saving for down payments through radio advertising. According to the latest AudienceSCAN survey, 27.2% of House Shoppers took action after hearing spots in the past month.
"The Pew Research Center survey finds that roughly a third of today’s renters say they rent as a matter of choice, and about seven-in-ten would like to buy a home at some point in the future. The most prominent reasons that renters provide for renting rather than owning include financial obstacles, specifically the inability to afford a down payment on a house; not being able to afford to buy the home or buy in the neighborhood they seek; and the desire to pay down debts before taking on a mortgage. Financial obstacles to homeownership loom larger among nonwhite adults."
AudienceSCAN data is available as part of a subscription to AdMall for Agencies, or with the SalesFuel API. Media companies can access AudienceSCAN data through the AudienceSCAN Reports in AdMall.