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The US job market is steadily improving and mortgage rates are still within historic low levels. So shouldn’t Americans be buying more homes? Despite the seemingly favorable conditions, the national homeownership rate remains near the historic low level recorded July 2016 — the lowest level of homeownership in the US since 1965.

The National Association of Realtors (NAR) recently released a white paper which delved into the hurdles of homeownership, and what could be done to stimulate homebuying activity.

Here are the four key reasons the homeownership rate remains so low in the US, according to the NAR commissioned research:

1. Psychology

Many Americans remain shell shocked from the Great Recession, particularly those who ended up in foreclosure, lost their jobs, or both. There is a “perceived risk” about homeownership, and those who experienced hardships or witnessed loved ones experience hardship during the financial crisis may have their view of homeownership negatively impacted.

“While most Americans still have positive feelings about homeownership, targeted programs and workshops about financial literacy and mortgage debt could help return-buyers and those who may have negative biases about owning,” says NAR.

2. Credit availability

The over-abundance of credit was a key factor in the financial crisis a decade ago with many borrowers getting financing that shouldn’t have been. Today, credit standards have not returned to normal since the Great Recession, even qualified and well-qualified borrowers aren’t getting approved at the rate they were in 2003. To fix this, NAR suggests that lending requirements need to be safely restored to “accessible standards” allowing households with good credit to borrow.

“Obtaining a mortgage has been tough for those with good credit, savings for a down payment are instead going towards steeper rents and student loans, and first-time buyers are finding that listings in their price range are severely inadequate,” says NAR Chief Economist Lawrence Yun.

3. Student loans

Saddled with high levels of student loan debt, young Millennials have been on the sidelines in the housing market because they simply can’t afford to get in. And, coupled with the rapid rate of national rising rent, Millennials can’t save for a downpayment. This is effectively keeping a large percentage of would-be homeowners out of the market entirely in many hot markets. Under current conditions, NAR estimates that Millennials are putting off homeownership by as much as five years.

“And unfortunately, potential homebuyers will either have to keep renting, expand their home search further away, or consider moving to another part of the country with more favorable affordability and supply conditions,” Yun tells BuzzBuzzNews.

4. Lack of affordable single-family housing

There simply aren’t enough homes being built to meet the demand. Lack of inventory has led to furious competition among homebuyers in many markets, driving prices up. Single-family home construction levels have fallen dramatically since the financial crisis, and as many American cities experience increased migration spurred by healthy job growth, construction levels are not keeping up.

“The market for first-time buyers looking for starter homes will remain challenging over the next year. New home construction simply isn’t keeping up with the strengthening demand seen as Millennials finally settle down to marry and have kids,” Adam DeSanctis, NAR’s Economic Issues Media Manager, tells BuzzBuzzNews.

Investors who close all cash transactions are also not uncommon, and often outbid traditional homebuyers, Yun says.

Ken Rosen, Chair of Berkeley Hass Real Estate Group, adds that over the last eight years there has been a cumulative deficit of nearly 3.7 million new homes due to an insufficient level of homebuilding.

Click here to read the entire report.

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