Download Buying a home

2012 Governor’s Conference on Housing
Homeownership Trends & Outlook
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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
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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
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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…”
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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
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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
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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”?
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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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