Millennials Balk at Buying I read a great article in “Real Estate and Lending Insider” about the significant shift in our market concerning first-time home-buyers (link to the article is below). Market conditions have improved greatly for home-buyers since 1984, yet first-time home-buyers are now more hesitant than ever to buy. Check this out (2014 percentages based on data through May): First-time buyers affordability index: 1984 – 64.9 2014 – 116 Interest rates: 1984 – 13.9% 2014 – 4.1% Mortgage payments as a share of income: 1984 – 28.2% 2014 – 14.2% Unemployment among 24-25 year olds: 1984 – 7.9% 2014 – 6.9% 1st home-buyers as a share of the market: 1984 – 37% 2014 – 27% All the statistics indicate the market is more favorable for first-time home-buyers today than it was 30 years ago. Yet, the percentage of first-time buyers is down 10% from that point and even further when you consider that historically, the market has been closer to a 40% concentration rate of first-time buyers. Why are first-time home-buyers now so hesitant to buy? Couple of thoughts: Student loan debt is bogging first-time buyers down (see my weekly update on 7/28/14 - https://facebook/MikeSmallingMortgageAdvisor ) They viewed the financial meltdown in 2006-09 from the front row – became the first group in a long time to realize that housing prices don’t always go up. They like renting and the lifestyle that goes with it. They are not ready to commit to the responsibility of home ownership. Qualifying guidelines are more stringent for obtaining a loan than they’ve been in a long time. So what do we do? We have to start providing more education to this generation on the benefits of homeownership and how to prepare for it – and it probably starts in high school, before they become jaded by debt (particularly student loans). But therein lies the problem: those that need to hear the message are so young that they won’t be potential homeowners for at least a half a decade or more. So there isn’t any money to be made educating that group – at least not now. Let’s do it anyway. It will cure a lot of ills and give us a pipeline of customers down the road. martinhladyniuk/2014/07/11/hes-the-top-u-s-mortgage-salesman-his-daughter-isnt-buying-it/
Posted on: Mon, 11 Aug 2014 22:30:01 +0000
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