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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 14 June 2025 C O V E R S T O R Y cline of single-family homes over several decades and, in particular, the marked underbuilding of entry-level homes, where the most demand exists. Reasons for the lack of new develop- ment to meet the demand for affordable units include steeply increasing raw ma- terial costs, lack of available construc- tion labor, land use regulations, zoning restrictions limiting the ability to meet demand, lack of developers, and lack of land to develop, according to the FHLB of Chicago report. It noted, "These fac- tors drive up development costs, and the economics of new home construction, and specifically affordable, entry-level homes, often simply do not pencil out." Additionally, investors bought up much of the available housing stock during the economic downturn in 2008-2010, turning much of it into rental housing and thus removing it from the market. Nationwide, affordable housing inventory is down in 94 of the 100 largest metro markets, the FHLB of Chicago report added. There is an estimated shortage of at least 3.8 million units na- tionwide. Home prices are up 47% since 2020 and 115% since 2010. "Beyond inventory constraints, the sustained rising home prices and inter- est rates being higher for a period are both hurdles to homeownership," said Tai Christensen, Arrive Home's Chief Communications Officer and Chair of the American Mortgage Diversity Council. "Many qualified borrowers also struggle to save for a down payment, particularly in high-cost markets." See agrees. "Housing prices have outpaced income growth. High mort- gage rates—while still historically rea- sonable—mean the total cost of housing is now higher than ever. For many would-be buyers, saving 5% to 20% for a down payment and covering closing costs is a significant challenge." See adds that credit score and debt- to-income (DTI) requirements can also be a barrier, especially as rising loan bal- ances have contributed to lower scores and higher debt ratios. The first challenges are the down payment and mortgage costs, but other homeownership costs, including insur- ance, property taxes, and repairs/upkeep have also risen significantly, presenting further stumbling blocks on the path- way to homeownership. "Homeowners need to factor in the cost of repairs," O'Shields said. "When you buy a home, you're in charge of maintenance. There's no landlord to call to fix the plumbing." These challenges have pushed up the average age of the first-time home- buyer to 38, compared to 29 just 15 years ago, according to the National Associa- tion of Realtors (NAR). "Homeownership is more challenging today than it was five years ago, and even more challenging if you go any further back," said Jeremy Davis, President of Mortgage at Southern Bancorp. "It just underscores the necessity that that our industry needs to work across the board on inventive solutions for how we help homeownership. This is a public-private problem that needs partnerships, policies, and plans to make it better." "Multi-pronged solutions are needed to facilitate access to affordable homeownership—strategies that both increase owner-occupied housing inven- tory and bridge the widening home- ownership affordability gap for low and moderate-income households," noted the FHLB of Chicago report. "For home- ownership to be a viable option for low- and moderate-income households in the district, current affordability and supply gaps must be bridged." Plans to Promote Homeownership T he partnerships, policies, and plans working to address these issues include programs from financial institutions, mortgage lenders, housing advocates, and others. "The big trend right now is spe- cialized programs that address specific homeownership issues," Davis said. "The biggest challenges tend to be cash to close or down payment and affordability." Lenders and other groups are offer- ing down payment assistance programs, grants, forgivable loans, repayable Beyond inventory constraints, the sustained rising home prices and interest rates being higher for a period are both hurdles to homeownership. Many qualified borrowers also struggle to save for a down payment, particularly in high-cost markets." —Tai Christensen, Chief Communications Officer and Chair of the American Mortgage Diversity Council, Arrive Home