Headlines and housing experts have predicted a market slowdown for 2019, but renters’ behavior says something different. In the past six years, home inventory has hit an almost historic low, causing housing prices to rise.
Sellers have taken advantage of this growing demand to sell their houses quickly and at a profit.
But one big reason why housing inventory is tight, and has been for quite a while, is that a whole generation has started buying. Millennial homebuyers, from ages 19 to 35, are the buyers increasing competition and creating bidding wars in many parts of the U.S. These are the buyers who are ready to stop renting so they can finally put down roots in their communities.
How millennial renters are turning the housing market around
First American’s 2018 study, How ‘Renter’ Millennials Will Transform the Housing Market, had some important highlights:
- More millennials are entering their early-to-mid thirties.
- This is the time many millennials marry, have kids, and form households.
- Millennial renters will continue to be the driving force behind homeownership demand.
These insights make it easy to see why the 2019 housing market won’t be slowing down anytime soon. Young renters who aren’t happy living in landlords’ houses are getting ready to buy.
The Census Bureau’s 2018 Housing Vacancies and Homeownership Report also shows that homebuyers under 35 are beating out older buyers. Younger buyers may have underperformed older buyers just a few years ago, in the first quarter of 2016, but have held a steady lead starting at the end of 2016 to the present.
The rate of national homeownership hit its peak in 2004 before continuing to drop until the second quarter of 2016. Then it reversed and began to climb again, all because of the increased demand from homebuyers under 35.
Buying a house can be easy when you’re in charge of your mortgage every step of the way.
In 2018, over half of Fannie Mae and Freddie Mac’s purchase mortgages went to first-time buyers. Both Census Bureau and First American calculations indicate that aging millennials will buy at least 10 million new homes in the next 10 years. Millennial renters may turn into more than 20 million first-time homebuyers by the year 2060.
Have your mortgage your way
If you’re a renter who’s ready to buy, look for a local loan officer who’s well-versed in the first-time buyer market. Many renters concerned about their credit score or down payment are glad to hear they have options. You could be in a house sooner and easier than you think.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.