Though foreclosure and delinquency rates continue to fall, the national homeownership rate fell more than 5 percentage points in 2015 from its peak in 2004, according to a report from Fannie Mae. This decline has been primarily attributed to affordability. Due to continued home price appreciation, homeowners are paying larger shares of their income on housing.
Even more so, the number of homeowners and renters classified as severely “cost-burdened” or those paying more than 50 percent of their income on housing is estimated to increase 11 percent by 2025. Fannie Mae states that the main driver for the increase in cost-burdened households came from the rental market. The share of cost-burdened renters surged to the highest level it has been compared to any other time in U.S. history.
Despite the increase in default rate percentage, David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, believes there is no a cause for alarm. Quote Looking at the economy and credit conditions, American consumers are in good shape. The S&P/Experian Consumer Credit Default Indices covering mortgages and auto loans are within a few basis points of the lowest levels seen in 12 years. End quote. Additionally, three of the five major cities saw their overall default rates increase during the month of June.