WASHINGTON (7/28/10)--The American Dream of homeownership got a good dose of reality during the recession and housing crisis, with many consumers forced to change their locations--not necessarily for the better, according to new Census data from the 2009 American Housing Survey. The findings, if prolonged through what some say may be a double dip recession, could change spending and savings habits and affect the types of loans consumers seek. Evictions have soared, many people are in a worse home or neighborhood, and households shared their homes with more people than in 2007, said the study, which sampled 60,000 housing units, 45,000 of them occupied (USA Today
July 27). The findings:
* The number of households that moved in the past year because they were evicted rose 127% to 191,000. * Roughly 3.1 million households--18% of those who moved in the past year--said their new home is worse. That's an increase of 10% from 2007. About 2.3 million or 13% of households said they are in a worse neighborhood, a 12% increase. * In 2009, only 10% of those surveyed moved to upgrade their home; 5% moved to reduce costs of rent or maintenance. That compares to 12% that moved did so for a better home in 2007, and 4% moved to cut costs. * More households contained five or more people than in 2007. This group rose to 11.3 million or 10% of occupied houses in 2009. Homes shared by two families rose to 2.6 million. The number of homes that are co-owned or co-rented also went up--26% to 3.4 million. * Six million households, or 10%, saw more people move in. Analysts attributed the increases to immigration and kids who boomeranged back home because of high unemployment and the economy. * House sizes were smaller, with the number homes having 4,000 or more square feet dropping 14% during 2009.
How do credit unions adapt their products and services to these trends? A number of credit unions have foreclosure prevention programs and offer low-rate mortgages for eligible members. The Filene Research Institute picked up on the trend in 2009, with a report, "Reimagining the Dream: The Future of Home Ownership," by Denise R. Gabel, Filene chief innovation officer, who challenged readers to identify potential treatments by developing ideas that can reshape the residential lending marketplace while benefiting both borrowers and lenders. The report challenged credit unions to make home loans more flexible, blend the best of renting and owning in rent-to-own models, find ways to lower or remove the down payment, and preserve the borrower's relationship with the credit union when the loan is sold to another lender. Credit unions, said Gabel, should look to members' needs first when they create new products, not the bottom line. According to the Credit Union National Association's Monthly Credit Union Estimates for May, credit unions saw fixed-rate mortgages leading their loan growth with a 0.9% increase over the previous month. Adjustable-rate mortgages grew 0.2% as did home equity loans. Of the $583.4 billion in loans credit unions made in May, fixed-rate, first mortgage rates accounted for 26.6%, while adjustable rate first mortgages accounted for 12.1%, second mortgages, 8.2% and home equity lines of credit, 5.6%.