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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 40 March 2024 F E A T U R E S T O R Y Still, while the housing market remains volatile, experts say there are some signs pointing to positive trends in the future. Isern anticipates factors such as increased government and policymak- er efforts may help address stubborn affordability headwinds. This includes tax rebates for first-time homebuyers, subsidies for low-income individuals and families, or incentives for developers to provide more affordable housing. Also, more purchasers will be drawn in and market conditions will improve, as rural and suburban revitalization is expected to continue if people can work remotely. The future of housing is projected to include various housing options, such as co-living and multigen- erational housing. Credit Insecurity, Lack of Credit Knowledge Affecting Homeownership Rates H aving a mortgage can be seriously hampered by credit insecurity or lack of education. To address these problems, extensive efforts must be made to raise financial literacy, expand the availability of credit at reasonable rates, and offer assistance and tools to people to help them overcome obstacles to becoming homeowners. "Lack of financial knowledge, not just credit knowledge, is a huge factor," Leinan said. "Consumers, particularly first-time buyers, don't really understand the mortgage process, what products are available, and how they can improve their chances of buying a home and qualifying for a mortgage." Leinan, who expressed the impor- tance and necessity of teaching financial literacy in schools and in society, said much more has to be done by the indus- try and the real estate sector to educate today's consumers. Just 7.8% of Black non-homeowning families were considered income-ready for a mortgage in 2022, whereas 12.5% of white families were financially prepared to purchase a home, representing a 4.7 percentage point difference, according to a recent Zillow report which examined the racial mortgage readiness gap. Per that same report, in 2022, nearly one in 10 Black families that did not own were income mortgage-ready—meaning they could afford the monthly cost of a new mortgage for the typical home in their metro area. However, that same Zillow report also noted that this so-called "racial mortgage readiness gap" is shrinking. While rising mortgage rates have caused the share of mortgage-ready Black families to decrease to 7.8% from 26.7% in 2012, the difference between the share of white families and Black families that can comfortably afford to take on a mortgage decreased from the peak 7.9 percentage points in 2012 to 4.7 percent- age points in 2022. "Despite the significant decline in mortgage affordabil- ity in the past two years, millions of families who do not own their home have the means to afford the largest share of a homeowner's cost—the mortgage," said Orphe Divounguy, Zillow Senior Economist, in the Zillow report. "While some families may choose to rent, many are simply constrained. It's crucial to recognize the existence of additional barriers beyond monthly cost, including access to funds for a down payment and closing costs—as well as other barriers." Improving Homeownership in Today's Economy "There's a large segment of the population that are renters," said Scott Gesell, CEO and General Counsel of Gateway First Bank. "That being said, it's disproportionate for certain groups out there, and there's a number of issues that come into play." Due to inflation and other cost increases, everything has increased by 17–20% in the last two years. Paychecks, in Gesell's opinion, haven't kept up with that. "Despite the significant decline in mortgage affordability in the past two years, millions of families who do not own their home have the means to afford the largest share of a homeowner's cost—the mortgage." —Orphe Divounguy, Senior Economist, Zillow Divounguy Gesell