Off the wire:

Declining availability of financing methods that allow people to buy a home without first accumulating a down payment is one of the key reasons for the housing slump, concludes new research published by the Federal Reserve Bank of Atlanta.

The study points out that U.S. homeownership climbed from 64.2 percent of households in 1995 to 69.1 percent in early 2005. The increase reflected the growth of”piggyback” or “combo” loans. As loans like these become harder and harder to get, the homeownership rate has declined.

According to the Census Bureau, it was 68.2 percent in the second quarter of 2007, down from 69.2 percent in the fourth quarter of 2004 and 69.1 percent in the first quarter of 2005.

Of course, those who put no money down found themselves more likely to encounter difficulty selling their homes in the down market that followed, and many of those who bought with no money down did so with adjustable rate mortgage loans, which are now resetting to higher rates than they can afford.

So, is the drop in homeownership necessarily a bad thing?


Source: – Tight Lending Cuts Homeownership, Fed Study Says – By Peter Coy, Business Week Online, by way of

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