Representatives for the nation's largest group of real estate professionals went to Capitol Hill this week to urge lawmakers to rethink their current course of policy and its impact on entry-level homebuyers.
In a testimony before the Senate Banking Committee's subcommittee on housing, Mabel Guzman, 2014 chair of the National Association of Realtors' (NAR) Conventional Finance and Lending Committee, highlighted some of the biggest challenges constraining homeownership.
"The housing market hasn't been this unwelcoming to first-time homebuyers since 1987," Guzman said. "Tight credit, high fees and low inventory have combined to make it prohibitively expensive for millions of responsible, creditworthy prospective buyers.
"If this is the direction that the housing market is taking, we're headed down the wrong path," she continued.
In a recent measure, NAR reported that first-time homebuyers accounted for only about one-third of total home purchases in the last year, the lowest share in 27 years. Other gauges have disputed that number, estimating the actual share of entry-level buyers is closer to half.
Nevertheless, the group says credit access is too tight for minorities, young buyers, and low- and moderate-income earners, making it prohibitively difficult for them to join in on the housing recovery.
On top of that, NAR says the Federal Housing Administration's (FHA) push to increase mortgage insurance premiums in an effort to shore up its insurance fund has inadvertently impacted Americans with shorter credit histories and lower down payments, blocking them from homeownership.
Last year alone, NAR estimates nearly 400,000 creditworthy borrowers were priced out because of FHA insurance premiums.
"Even traditionally affordable properties like condominiums are out of reach for many home buyers because of purchasing restrictions imposed by FHA ... By lowering its fees, FHA could provide greater access to homeownership for historically underserved groups," the association said in a statement.
As a final point, Guzman urged lawmakers to pass a new version of the Mortgage Forgiveness Tax Relief Act, an expired piece of legislation designed to protect short sellers from being taxed on the forgiven portion of their mortgage debt.
"This bipartisan legislation will extend an expired provision that has helped millions of distressed American families by allowing tax relief for homeowners when lenders forgive some portion of the mortgage debt they owe," said Guzman. "If this provision is not extended, hundreds of thousands of American families who did the right thing by short selling their home will have to pay income tax on 'phantom income.'"