Deeper Debt Isn’t Stopping Millennial Buyers

Millennials are taking out the greatest share of all new mortgages and buying homes across price ranges. But a new study also shows they’re going more into debt at an alarming rate.

Realtor.com®’s research team analyzed records for more than 3.2 million mortgages originated from January 2013 to October 2017 and divided it by age groups.

Compared to other generations, millennials are narrowing the gap in the price of homes they’re purchasing. In September, millennials obtained mortgages on homes with a median purchase price of $237,000. Generation Xers (born between 1965 and 1981) purchased homes with mortgages on a median price of $280,000, and baby boomers (born between 1946 and 1964) purchased at $258,000.

Millennials are making down payments nearly as high as Generation Xers. The average down payment for a millennial originated mortgage is 9.1 percent. Gen X buyers have been making down payments of 11 percent, since early 2013.

Source: “Millennials Are Taking Over Real Estate—But They’re Going Deeper Into Debt Too,” realtor.com® (Dec. 5, 2017)

When Will Millennials Break Into Ownership?

The housing market has made some strides since 2013, but household growth has yet to fully recover from the effects of the recession, according to a new housing report released Thursday by Harvard University’s Joint Center for Housing Studies.

“Young Americans, saddled with higher-than-ever student-loan debt and falling incomes, continue to live with their parents,” the report notes.

Still, researchers are hopeful for a turnaround as the Millennial generation breaks out on their own. The number of households in their 30s is expected to increase by 2.7 million over the coming decade, which should boost demand for new housing, the report predicts.

“Ultimately, the large Millennial generation will make their presence felt in the owner-occupied market, just as they already have in the rental market, where demand is strong, rents are rising, construction is robust, and property values increased by double digits for the fourth consecutive year in 2013,” says Daniel McCue, research manager at the Joint Center.

But Millennials likely will not be able to increase their presence in the housing market until incomes grow. Also, the report notes that another important aspect is how potential GSE reform will affect the cost and availability of mortgage credit for the next generation of home buyers.

Source: Harvard University’s Joint Center for Housing Studies

When Will Millennials Break Into Home Ownership?

The housing market has made some strides since 2013, but household growth has yet to fully recover from the effects of the recession, according to a new housing report released by Harvard University’s Joint Center for Housing Studies.

“Young Americans, saddled with higher-than-ever student-loan debt and falling incomes, continue to live with their parents,” the report notes.

  • Still, researchers are hopeful for a turnaround as the Millennial generation breaks out on their own. The number of households in their 30s is expected to increase by 2.7 million over the coming decade, which should boost demand for new housing, the report predicts.

“Ultimately, the large Millennial generation will make their presence felt in the owner-occupied market, just as they already have in the rental market, where demand is strong, rents are rising, construction is robust, and property values increased by double digits for the fourth consecutive year in 2013,” says Daniel McCue, research manager at the Joint Center.

But Millennials likely will not be able to increase their presence in the housing market until incomes grow. Also, the report notes that another important aspect is how potential GSE reform will affect the cost and availability of mortgage credit for the next generation of home buyers.

Source: Harvard University’s Joint Center for Housing Studies

Lending Stalling the Housing Recovery?

Tight mortgage lending standards are still plaguing the housing recovery, says Stuart Miller, CEO of homebuilder Lennar.

Housing starts are averaging about a million per year right now, still well off from the 1.5 million that is considered more normal for the economy. In 2009, housing starts fell below 500,000 but have been gradually increasing since.

Lennar, one of the nation’s largest builders, is predicting a gradual recovery that will likely stretch over the next three to five years.

“The mortgage market is not enabling demand to form at normalized levels,” Miller tells CNBC. He notes that there has been insufficient growth in the number of households as the Millennial generation doubles up and lives at home with their parents.

“We’ve been under-producing what’s needed for a growing population and for what should be normalized household formation,” Miller says.

Source: “Housing is still 30% below normal: Lennar CEO,” CNBC (June 4, 2014)

Millennials Poised to Put Their Mark on Housing

Sixty-five percent of the millennial generation, ranging in age roughly from 18 to 34, say that their intention to purchase a house has significantly increased in the past year, according to a survey from PulteGroup.

“As the economy continues to stabilize, more young adults will wean off of mom and dad and start to live on their own, spurring added economic growth,” HousingWire reports.

Nearly 20 percent of men ages 25 to 34 reportedly live with their parents, while 9.7 percent of women that age still live at home.

As this generation gains greater financial security, more millennials will begin to embark on their own.

A recent article from Barron’s notes that Generation Y could surprise the nation in upcoming years with their spending power and economic growth. The generation is 7 percent larger than the baby boom generation.

“Millennials have witnessed the housing boom and bust, but still believe home ownership is a good investment,” says Fred Ehle, vice president for PulteGroup.

Source: “Millennials Rightly Positioned to Boost Economy,” HousingWire (April 29, 2013)