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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 78 December 2024 J O U R N A L Midwest and East Coast have seen the largest increases in rents due to a lack of new building. Out of the 50 most populated metro areas we examined in October, Virginia Beach, Virginia, saw the largest rent increase, rising 11.7% annually to $1,647. Rents in Washington, D.C., rose 11.1%, while Cleveland (+9.8%), Chicago (+8.8%), and Baltimore (+8.5%) rounded out the five major metros where rents rose the most. Raleigh, North Carolina saw the biggest rent decline, down 8.8% year over year to $1,450. It was followed by Tampa (-8.5%), Jacksonville, Florida (-8.4%), Austin, Texas (-8.2%), and San Diego (-6.4%). Rents Dropped Across All Bed- room Counts for the Third Time in Four Months For the third time in four months, asking rentals decreased across all bed- room counts, despite a minor increase overall last month. Simpson's paradox is a statistical phenomenon that explains the slight difference between the three distinct bedroom counts—all of which decreased—and the total median rent (which showed a slight 0.2% gain). The median monthly rent for apartments with 0–1 bedroom decreased by 0.4%, to $1,475; for apartments with 2 bedrooms, it decreased by 0.1%, to $1,699; and for apartments with 3 or more bedrooms, it decreased by 1.5%, to $1,985. For the 18th Consecutive Month, Asking Rents per Square Foot Has Decreased For the 18th consecutive month, Oc- tober saw a 1.1% decrease in rental unit asking prices per square foot compared to a year earlier, underscoring the general improvement in affordability for renters. The general rise in supply brought on by the recent building boom is one factor contributing to the decline in price per square foot. According to the latest data available, the second quarter saw a 6.2% year-over-year decline in the rents of newly built apartments. Building owners are now fighting with one another to fill their apartments in places like Florida and Texas where new development has exploded, which has resulted in lower rentals and con- cessions being offered. THE SHRINKING DOLLAR'S IMPACT ON HOMEOWNERSHIP T he American Dream has long been synonymous with home- ownership. However, for many low- and moderate-income families, realizing this dream is becoming increasingly out of reach. This is due to several factors, including rising housing costs, stagnant wages, and a decline in the availability of small-dollar mortgag- es, defined as those for homes priced at $150,000 or below. Recently, The Pew Charitable Trusts funded two white papers that took a closer look into small-dollar mortgages, titled Access to Small-Dollar Homeownership in Three U.S. Cities: A Qualitative Analysis and The Socioeco- nomic Consequences of the Decline in Small Mortgages. Authored by Craig J. Richardson Economic Consulting LLC, Socioeco- nomic Consequences found that a key factor contributing to the decrease in affordable mortgages for low- and mod- erate-income families is the 2010 Dodd- Frank Act, which made small-dollar mortgages relatively more expensive to process than larger loans. This is due to a rise in fixed processing costs per loan and caps on banking fees for smaller loans. As a result, many banks have found it unprofitable to issue these smaller loans, leading to a decline in their availability. This decline in small-dollar mortgage lending has had a significant impact on homeownership in the Unit- ed States, particularly in low-income communities. In many cases, investors and all-cash buyers have stepped in to fill the void, purchasing these homes and either f lipping them for a profit or using them for rental income. This has made it even harder for low- and moderate-income families to become homeowners. The Socioeconomic Consequences re- port explores the decline in small-dol- lar mortgage lending and its impact on homeownership in three U.S. cities: Philadelphia, Pennsylvania; St. Louis, Missouri; and El Paso, Texas. The report draws on quantitative data from the American Community Survey, the Home Mortgage Disclosure Act, and CoreLogic, and qualitative data from interviews with homeowners and rent- ers in each city. City-by-City Homeownership Analysis Craig J. Richardson Economic Consulting found that as of 2022, there were still large numbers of owner-oc- cupied homes assessed at $150,000 or less in each of the three cities studied, particularly in distressed areas. Howev- er, the stock of low-cost homes declined from 2007 to 2022 due to home price appreciation. After the Great Recession, applica- tions for and originations of small-dollar mortgages dropped more dramatically than the stock of small-dollar homes valued at $150,000 or less. These trends were more severe in distressed areas of Philadelphia and St. Louis, but less severe in distressed areas of El Paso. Between 2007 and 2022, distressed areas saw consistently higher levels of all-cash purchases than aff luent areas, despite residents there having lower incomes and less wealth than the city as a whole. This finding suggests that investors are more active in these markets. Nominal housing prices rose in nearly all aff luent and distressed areas between 2007 and 2022. But while price growth in aff luent areas was consistent across cities, price growth in distressed areas varied widely, from -4% in St.