In this edition, we chat with Paul Bishop, Vice President of Research at the National Association of Realtors (NAR).
Paul Bishop, Ph. D., is Vice President of Research at the National Association of Realtors' (NAR). He leads the department's survey and market research activities, including real estate business analysis and policy issues. Prior to joining NAR in 2001, Dr. Bishop was a Senior Financial Economist in the Division of Insurance at the FDIC.
AOl Real Estate: 2010 was a tumultuous year for homeowners. How would you advise consumers to think about the financial status of their homes in the current economy?
Bishop: For homeowners who have accumulated equity in their home or own their home outright, the financial benefits of homeownership are evident. According to data from the Federal Reserve's Survey of Consumer Finances, homeowners have a much higher net worth than renters, with home equity one of the largest components of overall wealth.
For homeowners in areas of the country that have experienced a significant decline in prices in the past few years, the financial benefits of homeownership are less apparent. Many homeowners in these areas of the country, who purchased a home several years ago, still have an equity cushion, although not as large as at the top of the market. Recent home buyers in these areas may find themselves underwater or nearly so. For homeowners in this situation, homeownership is not contributing to their overall wealth, although for some, time will heal these wounds as prices stabilize and their equity position moves from negative to positive.
AOL Real Estate: What is the one change you'd like 2011 to bring to residential real estate?
Bishop: Although there are many changes that would make 2011 better than 2010 for the residential real estate market, the single most significant change would be a better functioning mortgage lending environment. Mortgage lending has become too restrictive, so that today well-qualified home buyers who are staying within a reasonable budget are finding it difficult to borrow for a home.
Although the financial market, and the mortgage market in particular, are functioning better than a couple years ago, greater access to home financing for qualified borrowers would help strengthen the housing market, reduce the overhang of properties on the market, help stabilize prices and provide the boost to confidence that consumers need to help the economic recovery.
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.