Worcester Business Journal

wbjournal.com | May 24, 2021 | Worcester Business Journal 13 "Overnight, you saw property values skyrocket," Aylouche said. "It's not good for the customer that MassHousing is looking to help." at downward trend was de- cades in the making, and demo- graphics show homeownership rates may lag for years to come, ac- cording to the Urban Institute. Each subsequent generation – from Baby Boomers to Generation X, and from older Millennials to younger ones – has a homeownership rate lower than that of the generation before them at the same age. e reason fewer are buying homes is simple, according to the Harvard housing center: median sale prices of single-family homes rise faster than median household incomes. In 2019, the latest year available, that circumstance took place for the eighth straight year. It was the fourth straight year the median sales price quadrupled the median household income, a tipping point at which homes gen- erally become unaffordable. A 2019 survey by federally sponsored lender Freddie Mac confirmed the worries about home affordability. Half of renters called a lack of money for a down payment and closing costs to be a major ob- stacle to home buying. About half also said they made spending or housing changes to afford monthly housing payments, including 62% of renters and 47% of homeowners. e burden of costly student loans and child care costs were cited by Mil- lennials, who now make up the country's biggest generation and an age group now in prime homebuying years. That movement could worsen inequality. That's because homebuy- ing is considered a key way to build household wealth. A 2018 report by the Urban Institute found owning a home generally gives a better return on investment than stocks or bonds. at was the case even when homes were sold at a low point in the market. "e fact that homeownership is prevalent in almost all countries, not just in the United States, and especially prevalent for people near retirement age," the Urban Institute said, "suggests that most households still view homeowner- ship as a critical part of a life-cycle plan for savings and retirement." Massachusetts home prices rose 14% in the past year through March to hit a median of $460,000, according to Peabody real estate data firm e Warren Group. With demand for housing outstrip- pling supply, homebuying is becoming increasingly unaffordable in Central Massachusetts, particularly for first-tim- ers, Dohan said. "Right now," Dohan said, "the number one, the number two and the number three issues are inventory." Local Business News Reliable news to your inbox every weekday. SIGN UP HERE >> Worcester Business Journal WBJ wbjournal.com/enewsletters A loan, t gether. We tailor our lines and loans to meet t'e needs o• your business. W mortgage at a home needing some work. "at can be a huge barrier," Murphy said. "Someone can't buy a fixer-upper, which might be the only thing they can afford, because it won't pass FHA inspection." A downward homeowning trend Local cities' challenges in helping more people buy homes comes as homeown- ership rates have been on a slight but steady decline nationally. In 2005, before the last housing peak, roughly 69% of households nationally owned their home, according to the Cen- sus. at rate bottomed out at about 63% in 2016 before rebounding a bit since. Still, all of the recent uptick has taken place among high-earning households, according to a 2020 report by the Har- vard Joint Center for Housing Studies in Cambridge. More higher-earning house- holds bought homes but lower-earning counterparts were less likely to buy. A 2018 report by the Urban Institute, a Washington, D.C., economic and social policy think tank, highlighted what it called an alarming drop in homeown- ership rates among those with no more than a high school education. Prices have only increased at sharper rates since the coronavirus pandemic hit. Worcester homeowners, by race The percent of white owner-occupied units Worcester renters, by race The percent of white renter-occupied units Source: Home Mortgage Disclosure Act

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