Recently, Ordinance 29-2020 was introduced for Euclid City Council's consideration. If passed, the ordinance would eliminate the escrow component of the City's Point of Sale policy.
ACAR's Vice President of Government Affairs, Jamie McMillen spoke in support of the ordinance during the Business Development, City Planning & Housing Committee meeting on June 3, 2020, noting, "We appreciate the efforts of Mayor Gail and this committee for considering updates to the City’s Point of Sale Inspection policy, in particular the escrow component..."
As an organization, ACAR supports systematic exterior only inspections of all homes in a jurisdiction – not just those for sale or rent. In general, cities without a point of sale inspection policy tend to have a more robust real estate market... The topic continues to be the number one item ACAR's Government Affairs department fields questions about.
McMillen went on to say, "When you think about young adults looking for their first home, Euclid fits the bill. 50% of home buyers purchased a home in a suburban area last year, and 87% bought a single family home. However, if you’re paying off student loan debt like so many of us are, having funds for a down payment, anticipated repairs, associated costs with getting your own private inspection, closing costs, and then having to come up with additional funds to be placed in escrow can be a real deterrent to some home buyers."
The National Association of REALTORS® has released a few studies looking at obstacles, such as student loan debt, to homeownership.
Highlights from the 2017 Student Loan Debt & Housing Report: When Debt Holds You Back:
- At the time of the study, 27% of recent home buyers reported having student loan debt, with a typical amount of $25,000.
- If we look at first time home buyers only, we see 40% with student loan debt.
- Regardless of whether the homebuyer was a first timer or not, student loan debt is cited as a challenge in achieving the American dream of homeownership.
- 83% of non-homeowners, many of whom may be renting, point to student loan debt as a reason they’ve delayed buying a home.
- That delay for non-homeowners has a median of 7 years.
- 3 years for those may be looking to purchase their next home.
Highlights from the 2020 Down Payment Expectations & Hurdles to Homeownership report, which sheds additional light on the topic.
- 26% of first time buyers cited saving for a down payment was the most difficult task in the homebuying process.
- Since 2015, student loan debt has been the most cited expense delaying savings, followed by credit card debt and car loan. Rising rents also contribute to this delay.
- Millenial non-homeowners were most likely to report student loan debt as a factor preventing down payment savings. Depending on whose scale you’re using, millennials are in the 26-40 year old age range.
Why does this matter? Millennials still make up the largest share of home buyers at 38 percent. Eighty-six percent of Younger Millennials and 52 percent of Older Millennials were first-time home buyers, more than other age groups.
It is also important to note that homeownership is still a priority for many. 78% of non-owners believe homeownership is a good financial decision. Additionally, 81% of non-owners want to own a home in the future.
ACAR believes eliminating the escrow requirement may open the doors to many first time or low-moderate income home buyers in Euclid.
McMillen closed her remarks reminding the committee that ACAR is their community partner for homeownership and property rights.
ACAR member Maureen Wlodarczyk also addressed the committee members sharing a client's difficulty finding a home in Euclid due to the escrow requirements.
The Committee approved a motion referring the ordinance to the full council body with a recommendation to approve.