What is driving the housing market?
Question of the week: What is driving housing market?
Answer: The Millennial Generation. In 2019 millennials (defined as born 1981 to 1996) surpassed baby boomers as the largest living adult generation. Today millennials are between 28 and 43 years old.
Nationwide, first-time homebuyers are overwhelmingly in their late twenties and early thirties; due to higher home prices in Southern California the first-time homebuyer age gets pushed a bit higher.
Looking at data from August, approximately 55% of government backed and conventional purchase mortgages funded were to first-time buyers, according to Intercontinental Exchange, who specializes in data services. That is the highest percentage of the market for first-time buyers going back to 2014.
What continues to drive the market on the supply is predominantly death and divorce. Heirs and beneficiaries are putting the family home on the market after the death of parents. Divorcing couples are selling homes to split their equity and go their separate ways. Also adding to local markets are empty nesters selling to down-size, and families moving out of the area or state.
What remains a drag on housing supply are move-up buyers, reticent to sell their homes with mortgage rates in the low 3’s, or lower, for a mortgage with a rate near, or over 6%, almost doubling their housing cost.
With the buyers holding back from entering the market due to higher rates, millennials who have been on the sideline of the market have been able to accumulate more funds for their home purchase; many keeping pace with rising prices and higher down payment needs.
Stereotypes of millennials include their preference to travel and spend on experiences rather than “things,” and propensity to save better than other generations. As they enter the prime first-time buyer age, many are able to leverage their savings into down payments.
Generations enjoy poking fun and stereotyping other generations. For homeowning boomers who have been poking fun, or feeling exasperated by, millennials in their workplaces, neighborhoods, or families, be thankful for their tendencies that may drive you a bit crazy as they are able to purchase your home when you decide to put it on the market.
Oh, and get ready for more of them to be your neighbors as they the most likely generation to purchase the home next door!
Schedule an appointment to discuss your options if you are considering purchasing a new home or property or refinancing an existing one and want to know the mortgage options available to you.
Have a question? Ask me!
Last week surprised to the upside, this week we are again surprised with higher than expected data. The Consumer Price Index was released this week and it showed prices increased 2.4% from last September, expectations were a 2.3% increase after August prices showed a 2.5% change. Core prices (fuel and food taken from data) increased 3.3% in September after a 3.2% increase in August. While prices are significantly higher than the were in January 2021, the rate of inflation is at the same level.
Digging into the data, food prices had their biggest one month increase since January. Energy costs dropped 4.1% for the month—portending lower heating costs this winter. For retirees, the Social Security Administration has announced a 2.5% increase in payments for 2025, tracking the inflation rate, the increase is the lowest in four years.
Rates for Friday October 11, 2024: Sticky inflation numbers, combined with last week’s strong jobs data, comments from members of the Federal Reserve Board of Governors regarding moderation in lowering rates, has pushed mortgage rates higher again this week. Rates are at their highest since August.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.125% Up 0.25%
30-year high-balance conforming 6.375% Up 0.25%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
The WR&MU is coming to you from Brooklyn, we are here visiting our youngest after visiting our oldest in Boston. Before heading home we are detouring through Montreal and Quebec City for some exploring and enjoying the beautiful fall foliage in the Northeast region
Another plea in the “personal” section of the WR&MU to assist in recovery efforts for not only Helene but also Milton which added to Florida’s challenges.
Integral to these efforts, as always, is the American Red Cross. I implore you to make any size donation by clicking here. Thanks to everyone who clicked and donated last week, and to those who will do so this week.
