Study Finds the Self-Employed Feel Lingering Affects of Housing Crisis
A new study on the Urban Institute indicates that the self-employed didn’t recovered in the housing crisis to the same extent that salaried employees have. Study authors Karan Kaul, Laurie Goodman, and Jun Zhu used American Community Survey data to discover how self-employed households have fared weighed against salaried households regarding income, mortgage use, and homeownership rates.
Their analysis which the self-employed were hit harder while in the recession and get been slower to recover.
Even after adjusting for income, the homeownership rate for your self-employed fell more than that for salaried households, indicating that credit availability has been a factor.
In 2016 only 67 percent of self-employed homebuyers obtained mortgages to invest in a home, when compared with 74 percent for salaried homebuyers. They hypothesized that this is probably going because the self-employed may see a higher price volatility and wish more documentation in order to show income. As compared with pre-2007, self-employed mortgage use declined 13 percentage points compared with 6 percentage points for salaried households.
However, the self-employed will probably own homes.
From 2001 to 2007, the homeownership rate for self-employed and salaried households averaged 79.2 percent and 65.8 percent, respectively, a 13.4 percentage-point gap. In 2016, both groups had homeownership rates of 72.9 % and 62.7 percent, respectively, a 10.2 percentage-point gap. The homeownership rate fell for self-employed and salaried households in the downturn, but self-employed households witnessed a more substantial drop despite the presence of an improved median income.
All this leads the study in the end which the mortgage sector is not adequately meeting the requirements self-employed households.
“The reality [is] that at any income level, both mortgage use and also the homeownership rate for self-employed households have declined greater than they already have for salaried households,” write the study authors. “This means that factors beyond income, for example tougher mortgage availability or requirements [of the individual Financial Protection Bureau’s qualified mortgage rule] are probably at play.”