DS News - U.S. Bank

38 A SNAG CALLED HOUSING AFFORDABILITY Nearly three out of four American households believe that the nation is suffering from a housing affordability crisis according to a nationwide survey conducted by the National Association of Home Builders (NAHB). e survey, which polled 2,200 adults between November 27 and November 30, 2018 to assess whether the lack of affordable housing was a problem in their neighborhood, city, and across the U.S., revealed that 68 percent of respondents believed that housing affordability was an issue in their state, while 54 percent cited it as a concern in their neighborhood. Urban communities, according to 68 percent of the respondents, suffered the most from the problem of housing affordability, while 64 percent said that it was an issue in middle-class neighborhoods and 54 percent citing it as a problem in rural areas. "ese poll results confirm what builders from across the nation have been warning about—that housing affordability is an increasingly serious problem in communities across America," said Randy Noel, Chairman of NAHB. "A mix of regulatory barriers, ill-considered public policy, and challenging market conditions is driving up costs and making it increasingly difficult for builders to produce homes that are affordable to low- and moderate-income families." On asking the respondents what strategies could be used to mitigate this issue, the survey said that 55 percent respondents said it would be effective for their city or country to lower development and construction fees that builders pay so that they could build more affordable units. Fifty-three percent of respondents felt that increasing government subsidies to builders to produce more affordable unit would also be an effective way of getting over this problem. NAHB said that the poll was consistent with its latest Housing Trends Report for the third quarter of 2018, that found 79 percent of buyers saying they could afford to purchase fewer than half of the homes available in their local markets. According to the association's analysis of data from the Census Bureau's 2017 American Community Survey, nearly a third of America's 119 million households are cost burdened and pay more than 30 percent of their income for housing. at number includes almost half of the nation's renter households and a quarter of the owner households. G-FEES AT THE GSEs e average single-family guarantee fee on 30-year fixed rate loans fell by 1 basis point to 59 basis points in 2017, according to a report on Fannie Mae's and Freddie Mac's single-family guarantee fees in 2017 by the Federal Housing Finance Agency (FHFA). e report analyzes the government- sponsored enterprises' (GSEs') average guarantee fee and gives a breakdown by product type, risk class, and volume of their business. It also analyzes the costs of providing the guarantee and gives a comparison to the guarantee fee data of the prior years. e upfront portion of the guarantee fee, which is based on credit risk attributes such as loan purpose, loan-to-value ratio (LTV), and credit score, fell 1 basis point to 15 basis points in 2017. e ongoing portion of the guarantee fee, which is based on the loan product type such as fixed-rate or ARM, and loan term, increased 1 basis point to 41 basis points, the report noted. Higher interest rates in 2017 led to a smaller share of both rate-term refinances and the 15-year loans acquired by the GSEs compared to the prior year. e report also indicated a slight increase in the share of loans with higher LTV and lower credit scores due to a larger share of purchase loans and a growing focus by Freddie and Fannie on pilot programs for first-time homebuyers and affordable housing. Looking at the profitability of the loan types, the report indicated modest changes in 2017. While expected profitability improved slightly for 30-year fixed rate loans, it declined for a 15-year fixed rate and ARM loans. Breaking down the numbers and comparing them to historical data, the report found that while guarantee fees had remained unchanged in 2016 and 17, they had increased between 2013 and 2014. Over the five year period that was covered under this report, the acquisition profile in 2017 reflected a slightly higher risk mix overall compared with 2016. According to Freddie Mac's Whitepaper titled "Single-family Rental: An Evolving Market," single-family rentals make up about half of the overall rental market—the single largest segment of the rental market by valuation and households served. KNOW THIS

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