How the U.S. became a nation of renters.

hyo Great Rental Societp When the housing bubble burst, several million Americans went from being owners to renters. > 5 MILLION NEW RENTERS entered the rental market between 2005 and 2012 rent ВUY A HOME 43 MILLION RENTER households in U.S. (2013) РERCENTAG Е OF RE N T ERS IN E A C H CITY 54% SEATTLE 52% 45% 67% MINNEAPOLIS GRAND RAPIDS BOSTON 50% 56% DETROIT 53% 60% SPRINGEFIELD 68% POUGHKEEPSIE 64% 43% CHICAGO 53% 47% 55% 48% NEW YORK SAN FRANCISCO 66% 59% PROVIDENCE INDIANAPOLIS PHILADELPHIA 61% 63% DENVER COLUMBUS 56% 63% SAN JOSE OAKLAND ST. LOUIS WASHINGTON DC 42% CINCINNATI LOS ANGELES SANTA FE 47% 53% 47% 50% NASHVILLE МЕMPHIS 46% PHEONIX 43% 56% SAN DIEGO CHARLOTTE ATLANTA 42% FORT WORTH 55% 40% 55% EL PASO DALLAS JACKSONVILLE AUSTIN LOCAL HOUSING PRICES AND HOME AFFORDABILITY ARE KEY FACTORS AFFECTING THE PERCENTAGE OF RENTERS IN AN AREA 56% 45% HOUSTON 68% SAN ANTONIO MIAMI Нow ΑΜΕ RICΑ НaS TUR NE D IN TO А ΝΑΤΙΟΝ O F RE N T ERS REGULATORY STATE ECONΟΜICS STATISTIC S The New Deal starts. It's a group of new laws created to fix problems in the Great Depression economy, including methods to increase home ownership. 1933 The National Housing Act makes more affordable housing and home mortgages 1934 Fannie Mae is founded by the government. →It purchases and securitizes mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers. 1938 CPI - consumer price index New home av. cost CPI 1960 $16,500 29.6 Fannie Mae converted to a stand-alone government sponsored enterprise. Fannie Mae operates to facilitate liquidity in the primary mortgage market. 1968 Freddie Mac (Federal Home Loan Mortgage Corporation) is chartered by an act of Congress to buy mortgages on the secondary mar- ket, pool them, and sell them as mort- gage-backed securities to investors on the open market. New home av. cost CPI 38.8 1970 $26,600 Community Reinvestment Act passed to encourage banks to offer credit to minor- ity groups on lower incomes or owning small businesses New home av. cost CPI 60.6 1977 $54,200 Savings and Loan Crisis caused by rising interest rates and over development in the commercial real estate sector, and exacerbated by deregulation of savings and loan lending standards. New home av. cost 1985 $100,800 CPI 107.6 The Tax Reform Act eliminated the tax deduction for interest paid on credit cards, encouraging the use of home equity through re- financing, second mortgages and home equity lines of credit (HELOC) by consumers. 1986 Closing hundreds of insolvent thrifts 1989 US recession, new construction prices fall New home av. cost CPI 136.2 1991 $147,200 Fannie Mae, Freddie Mac were required to devote a percentage of their lending to support affordable housing increasing their pooling and selling of such loans as securities. 1992 1993) 17% - Mortgage denial rate New Community Reinvestment Act regulations break down home-loan data by neighborhood, income, and race. 1995 The first publicly available securitization of CRA (Community Reinvestment Act) loans, issuing $384.6 million of such securities. CPI 160.5 New home av. cost 1997 $176,200 - This encouraged people to buy more expensive first homes, as well as invest in second homes and investment properties. The Taxpayer Relief Act Inflation-adjusted home price 1998) appreciation exceeds 10% per year in most West Coast metropolitan areas Action to provide $2.4 trillion in Mortgages for affordable housing for 28.1 million families was announced by President Clinton's Housing Urban Development (HUD) Secretary Fannie Mae eases the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans. 1999) 28% - Mortgage denial rate Financial Services Modernization Act deregulates banking. Insurance and securities into a financial services industry allow financial institu- tions to grow very large. 2000) 27% - Mortgage denial rate US Federal Reserve lowers Federal funds rate eleven times, from 6.5% to 1.75% 2001 21% - Mortgage denial rate President G.W. Bush sets goal of increasing minority home owners by at least 5.5 million by 2010 through tax credits, subsidies and a Fannie Mae commitment of $440 billion Annual home-value growth at highest rate since 1980 2002 Federal reserve's key interest rate is 1%, the lowest in 45 years. The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loạn standards 2003) 14% - Mortgage denial rate American Dream Down- payment Act. The goal was to provide a maximum downpayment assis- tance grant. In addition, the Bush Administration committed to reforming the homebuying process. Homeownership rate peaked with an all time high of 69.2% 2004 US housing market correction («bubble bursting») Booming housing market halts abruptly. 2005) > 0.8 million foreclosures Continued market slowdown. Prices are flat, home sales fall. 2006 > 1.25 million foreclosures President Bush announces a The decrease in existing-home sales is the steepest since 1989. limited bailout of homeowners unable 2007 > 2.2 million foreclosures to pay the rising costs of their debts «super-SIV» (Structured investment vehicle) mortgage crisis bail-out plan. It was officially abandoned by a consortium of bank. The subprime mortgage industry collapses, foreclosure activity increases and rising interest rates threaten to depress prices further. Subprime lending means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks such as unemployment, divorce, medical emergencies, etc 406 people were arrested for mortgage fraud in an FBI sting across the U.S., including buyers, sellers and others across the wide- ranging mortgage industry. Home sales continue to fall. Fears of a U.S. recession. 2008) > 3.1 million foreclosures A foreclosures crisis occurs due to many foreclosures being carried out even without the necessary paper-work being in place, instead relying on «robo-signing» of the legal documents. Many demand that all foreclosures be halted nation-wide until the systemic issues of extrajudicial practices have come under control. 2010 > 3.8 million foreclosures The U.S. Financial Crisis Inquiry Commission: the crisis (2007–2010) was avoidable and was caused by: 2011 > 1.8 million foreclosures 3. DRAMATIC BREAK- DOWNS IN CORPO- RATE GOVERNANCE including too many financial firms acting recklessly and taking on too much risk; 5. SYSTEMIC BREACHES IN ACCOUNTABIL- ITY AND ETHICS AT ALL LEVELS 1. WIDESPREAD FAIL- URES IN FINANCIAL REGULATION, including the Federal Reserve's failure to stem the tide of toxic mortgages; 2. KEY POLICY MAK- ERS ILL PREPARED 4. AN EXPLOSIVE MIX OF EXCESSIVE BOR- ROWING AND RISK BY HOUSEHOLDS AND WALL STREET that put the financial system on a collision course with crisis; FOR THE CRISIS, lacking a full understanding of the financial system they over- saw; References: PMGuardian Report «Rise of the Renter Nation: Solutions for the Housing Affordability Crisis.» June 2014 (www.homesforall.org) www.1960sflashback.com/1960/Economy.asp www.1970sflashback.com/1970/Economy.asp www.1980sflashback.com/1980/Economy.asp www.1990sflashback.com/1990/Economy.asp www.azcentral.com/story/money/business/2014/06/18/in-wake-of-the-housing-bust-more-americans-are-renting/10760775/ www.en.wikipedia.org/wiki/Subprime_crisis_impact_timeline www.en.wikipedia.org/wiki/Subprime_lending www.en.wikipedia.org/wiki/Timeline_of_the_United_States_housing_bubble www.ffiec.gov/hmcrpr/hm072604.htm .com Dot-com bubble Early 2000s recession US housing bubble (part of the world housing bubble)