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Investors need to differentiate builders by the market segments they are serving. And home builders would be prudent to take a page out of DR Horton’s playbook and focus more on entry-level homes, where coincidentally the need for more supply is greatest.
A healthy economy and growing leverage will continue to support housing demand until it doesn’t. When the next recession happens, borrowers and taxpayers will be reminded why housing belongs on the list of financial weaknesses.
Our recommended changes to the capital requirements, with a focus on single-family whole loans and guarantees, would result in additional risk-based capital of more than 200 basis points relative to FHFA’s proposal and a minimum leverage ratio of 4 percent.
Mortgage risk jumped in July with all indexes setting new series’ highs for July. The composite Purchase National Mortgage Risk Index (NMRI) was up 0.5 ppt from July 2017, and the Refi NMRI also set a new series’ high primarily due to a higher Cash-Out Refi NMRI.
| US Department of Housing and Urban Development
- AEI Media
A decrease in home building and the lack of homes on the market, has increased home prices while stagnant wages have made affordable housing difficult for buyers. Experts discuss how Sen. Elizabeth Warren (D-Mass.) recently introduced legislation that would infuse $50 billion a year into affordable housing through nonprofits developers and local housing agencies.