Is the Millennial Generation Buying Homes?

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A quick glance at any search results regarding millennials and their home-buying decisions will undoubtedly show a hodge podge of articles with conflicting points of view. So the question remains, are millennials buying or not? Surprisingly, the answer is: yes. But they’re buying differently than the generations before them.

As the millennial generation begins to come of age, it is becomingly increasingly obvious that they are approaching property ownership differently. This is understandable as the recession of 2008 left many under employed, and the subprime mortgage crisis had dire consequences on the market as a whole. Millennials are entering the real estate much more slowly than generations before them, for both economic and social reasons. From an economic standpoint, they are carrying far more student loan debt than ever before. About 71% of bachelor’s degree recipients graduate with loans today, which is up from 64% just 10 years ago. Additionally, the millennial generation has been heavily focused on moving into urban areas (where, from their financial standpoint, homeownership is virtually impossible).  

But, the oldest members of the generation are turning 30 now, and the housing market is simultaneously beginning to find health. This means that millennials are actually looking to purchase homes.

Studies show that 35% of home buyers in 2015 were millennials, which was up 3% from 2014.  These buyers had a median age of 30 years old, and were purchasing primarily single family homes within suburban areas. Based on the millennial exodus to urban centers (where they were primarily renting space in apartments), it’s very likely that millennials would like purchase homes in those urban spaces if the economy allowed for it. According Lawrence Yun, a NAR Chief Economist,

“The need for more space at an affordable price is for the most part pushing their search further out.”

According to Fortune Magazine, a survey was done to determine where millennials (ages 20-30) were looking to purchase homes. It was found that individuals were actively seeking out places where average wages and home prices worked hand in hand to make for a healthy living situation. Not surprisingly, the areas where millennials were purchasing homes were far away from the coasts, where housing cost are steadily increasing.

Currently, the most popular place amongst millennials looking to purchase homes is Utah. Not only does Utah tout some of the most affordable home prices, Utah County also has the fastest employment growth of the 342 largest counties in the United States.

 National Mortgage News has pegged the following cities as the top 10 cities where millennials are buying homes:

  1. Ogden, Utah
  2. Minneapolis, Minnesota
  3. Raleigh, North Carolina
  4. Salt Lake City, Utah
  5. Charleston, South Carolina
  6. Denver, Colorado
  7. Washington, D.C.
  8. Seattle, Washington
  9. Austin, Texas
  10. Portland, Oregon

As, the millennial generation continues to age, it will be interesting to see how their buying habits develop over time.

Foreclosure Start Rates Lowest in 16 Years

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According to the Mortgage Bankers Association’s National Delinquency Survey, foreclosure starts have decreased across the board, in the first quarter of 2016.

The Mortgage Bankers Association (MBA) is one of the most reputable and highly recognized sources for data on the residential delinquency and foreclosure rates. For their National Delinquency Survey, 120 mortgage lenders are observed. They sample 41.6 million mortgage loans that are given out by institutions such as banks, credit unions, and mortgage companies. The MBA then proceeds to review and report on both the delinquency rates and foreclosure rates that they observe throughout the sampling.

One of the most significant rates to decrease was the percentage of loans where the action to foreclose was started. In the first quarter of 2016, the rate is 35%, which is down 10 points from 2015 and is the lowest level since the second quarter of 2000. (source)

This downturn in foreclosure can be attributed to two major shifts. One, the qualifications and guidelines for getting a mortgage loan have become much more stringent since the recession of 2008. The Dodd-Frank Wall Street Reform and Consumer Protection Act was put into place under Obama’s presidency; it was a huge reform that was designed to temper and prevent risky business practices by a variety of financial institutions. Under the Dodd-Frank Act, The Consumer Financial Protection Bureau was established to provide regulation over mortgage lenders and brokers.  One of the major side effects of that act was the implementation of protections of families from exploitive measures by lenders and mortgage companies.

The second shift took place on the consumer end. After feeling the effects of recession, consumers looking to buy a home have begun to seek education on the real estate market, before reaching out to apply for the loan.  More resources have become available on predatory lending, and consumers are now willing and able to arm themselves with that knowledge before moving forward.

As the decrease in foreclosure starts continues, the whole lending market will begin to shift focus. The focus for the past few years has perpetually been stuck on reducing risk. But with the reduction of foreclosures now being evident, lenders will be able to start focusing on expanding access to credit. Their goal can now be on continuing this positive momentum, and creating traction for a new housing boom.


For resources, please visit the following sources: MBA.org, Cornerstone Mortgage, Mortgage Orb