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Freddie Mac has acknowledged what it has defined as “the pessimistic tone of the projections of leading experts of future homeownership rates” and has responded with a thumbs-down.
In the October edition of its monthly Insight report, Freddie Mac noted that both Harvard University’s Joint Center on Housing Studies and the Urban Institute are forecasting the possibility of homeownership rates below 60 percent. But Freddie Mac’s expert point out that these forecasts overlook three key considerations: the still-undetermined future of federal housing finance policy (especially in regard to the fate of the government-sponsored enterprises), the long-overdue wide push of Millennials into the homeownership world, and—in what is viewed by Freddie Mac as the ultimate wild card—the potential for increased homeownership rates among nonwhites.
“We believe their projections may be overly pessimistic,” said Freddie Mac Chief Economist Sean Becketti about the Joint Center on Housing Studies and the Urban Institute’s respective forecasts. “The income and education gaps that are responsible for some of the differences may be narrowed or eliminated as the U.S. becomes a 'majority minority' country. And as these types of potential home buyers comprise a larger and larger share of the population, it will become increasingly expensive to overlook them. Profit-oriented financial institutions will be motivated to find better ways to serve them.”