A Troubled 'Ownership Society' - The Diigo Meta page

• 23 Oct 07
  

  Jim McClintock

  economy real estate sub-prime

  • Experts differed on the cause of the increase in homeownership, from 64.2% of households in early 1995 to 69.1% in early 2005
  • bulk of the increase was caused by innovations in the mortgage market, in particular the explosion of "piggyback" or "combo" loans that made it possible for people to make small or zero down payments.
  • lenders aren't making many of those loans anymore because default rates on the smaller, second loans have been extremely high. That means that one of the main props of the housing market has been kicked away. If the homeownership rate drifts back to where it was in 1995, the outlook for housing construction and home prices could turn out even worse than the pessimistic projections.
  • authors conclude that the availability of new kinds of mortgages, mainly ones with low down payments, accounted for 56% to 70% of the decade-long increase in the U.S. homeownership rate

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