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38 NEW HOMES GROW LARGER – BUT WHO'S BUYING THEM? According to a report issued by the National Association of Home Builders (NAHB), the average size of a new home is increasing, and the population of buyers may be the main reason for the average home's expanding size. Data culled from the Census Bureau and presented at NAHB's International Builder's Show in Las Vegas showed some interesting trends in new home production. "e average home size has continued to rise for the past four years, from 2,362 square feet in 2009 to 2,679 square feet in 2013," said Rose Quint, NAHB AVP for survey research. Homes with four bedrooms have increased from 34 percent in 2009 to 48 percent last year. Sixty percent of new homes are two-story, and the percentage of homes with three-plus garages has climbed to 22 percent last year. What's spurring the increased size of new home production in the United States? More qualified buyers who have higher credit scores and more income are pushing homes out and up. "It requires a high credit score and a nice income to qualify for a mortgage," said Quint, who noted that the spread between the average Experian credit score of all U.S. consumers and the average home borrower's score has risen from 33 points in the early 2000s to 58 points in 2013. More qualified buyers typically bring a higher median income, and rising sales prices and lackluster new home production nudge buyers toward larger homes. e average sales price of new homes has risen from $248,000 in 2009 to $318,000 in 2013. e median income of new-home buyers has steadily climbed from $91,768 in 2005 to $107,607 in 2011, and the number of new-home sales has dramatically declined from 1.28 mil- lion to 306,000 during the same period. "ere are not as many people who have the income that can qualify for a new home," Quint said. CFPB DIRECTOR CALLS FOR INCREASED FINANCIAL LITERACY For Richard Cordray, the equation is simple: In the Land of the Free and the home of the free mar- ket, American citizens should be as informed about and capable of self-governance in their personal finances as they are in the democratic process, espe- cially when it comes to borrowing for a mortgage. In a speech in February before the federal Financial Literacy and Education Commission, Cordray, the director of the U.S. Consumer Financial Protection Bureau (CFPB), stressed the need for Amer- ican businesses to teach employees the importance of saving and making more sound financial decisions when it comes to major investments, such as buying a home. Cordray called upon business owners and managers to leverage such milestone moments in their employees' lives to teach specific skills they will need in order to make good decisions for their future. Cordray's speech is the latest effort in a growing trend to help American citizens better understand what it means to borrow money to buy a home. Cordray said the lack of good consumer education was a key factor in the wave of foreclosures since the Great Recession started squeezing American throats five years ago. He added that the CFPB fields daily calls from distressed homeowners watching their version of the American dream erode due to the poor decisions they've come to regret making. Cordray's challenge to American businesses builds on a January 27 report he made to the House Commit- tee on Financial Services. In that speech, Cordray compared what he called "troubling similarities" between the student loan crisis plaguing young people and "the broken mortgage market before the crisis." e troubling similarities include borrowers who took out loans with much worse rates than they could have qualified for and the disastrous con- sequences of not knowing what kinds of questions to ask in order to secure more favorable loans. Not all news from the CFPB camp is grim, however. Cordray said in January the bureau's efforts to educate Americans about the risks and conse- quences of their financial endeavors yielded much fruit in the past two years. As more citizens become aware of the bureau's education programs and consumer tools, he said, the more they have righted their troubled ships. Still, Cordray said, there is much uneasy water to traverse. He called upon U.S. employers to help employees understand and diversify their personal savings and to increase information about major financial decisions as well as increase access to information regarding employee retirement and benefits programs. Only when the finances of American work- ers are in order, he said, are homebuyers in a true position to understand what getting a mortgage is all about. The troubling similarities include borrowers who took out loans with much worse rates than they could have qualified for and the disastrous consequences of not knowing what kinds of questions to ask in order to secure more favorable loans. Annually, foreclosures are down in 31 of 42 markets from 2013 reports DataQuick. KNOW THIS

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