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YoY Prices Up and Delinquencies Down, Yet Affordability Remains Problematic

Phil Hall
Sep 28, 2015

New data reports finds a housing market where home prices and loan delinquencies are quite different from a year ago, but the persistent question of affordability options is being challenged in a new study that calls for more so-called “inclusionary housing” in new real estate developments.

Home prices registered a 5.3 percent year-over-year increase during July, according to the latest Home Price Index (HPI) report issued by the Data & Analytics division of Black Knight Financial Services Inc. One a month-over-month basis, July’s home prices were up a slight 0.4 percent. The national level HPI in July was approximately, $248,000, which is 5.5 percent below the June 2006 peak of $268,000.

Only two states experienced downward price movement in July: Missouri fell 0.1 percent and Virginia was down 0.2 percent. New York had the greatest month-over-month appreciation, with a 1.4 percent increase, and seven metro areas within the state occupied the top 10 best performing markets for the month. Twelve of the nation’s 40 largest metro areas reached new peaks, most notably San Jose ($865,000), San Francisco ($717,000), Boston ($406,000) and Denver ($324,000).

The increase in home prices is mirrored in a separate Black Knight Financial Services data report that determined the total U.S. loan delinquency rate—defined as covering loans 30 or more days past due, but not in foreclosure—was 4.83 percent in August, which reflects a month-over-month increase of 2.47 percent but a year-over-year decrease of 18.22 percent. The total U.S. foreclosure pre-sale inventory rate last month was 1.37 percent, down 2.17 percent on a month-over-month measurement and down 23.74 percent on a year-over-year basis. The total U.S. foreclosure starts in August was 80,500, up 6.76 percent from July but down 1.35 percent from August 2014.

Despite these new statistics, affordability in housing remains a continual problem. A new report published by the Lincoln Institute of Land Policy is stressing the value of “inclusionary housing”—a policy by which developers provide for the construction of affordable housing—as a potential answer to this problem. The new report, titled “Inclusionary Housing: Creating and Maintaining Equitable Communities,” addresses the economic and sociopolitical issues that are preventing affordable housing solutions from taking root.

“In hot-market cities, skyrocketing housing prices push middle class and low income residents far away from well-paying jobs, reliable transportation, good schools and safe neighborhoods,” said Lincoln Institute President George W. “Mac” McCarthy. “Inclusionary housing alone will not solve our housing crisis, but it is one of the few bulwarks we have against the effects of gentrification—and, only if we preserve the units that we work so hard to create.”

The report’s author—Rick Jacobus, principal of Street Level Advisors—added that inclusionary housing is not a theory, but a solution that has already produced neighborhood stabilizing results that benefit all stakeholders.

“More than 500 communities have used inclusionary housing policies to help maintain the vibrancy and diversity of neighborhoods in transition, and we’ve learned much along the way,” Jacobus said. “Research shows that if programs are thoughtfully designed and implemented, they can be a valuable tool at a time when affordable housing is desperately needed.”

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