In 2018, Millennials represented 45% of all new mortgages, compared to 36% for Generation X, and 17% from Baby Boomers.
It has long been predicted that Millennials would be destined to take over the housing market, it was just a matter of when. Based on recent research taken from Realtor.com it appears that the younger generation is starting to dominate the market. Millennials are beginning to purchase homes in mass quantities and it is very encouraging.
Millennials are also beginning to pass up older generations in the total dollar amount for mortgages. According to the statistics, home buyers between the ages of 23 and 38 now represent the largest dollar volume by age group.
On the flipside, however, this also means Millennials hold the largest share of new loans and debt by dollar volume compared to other generations. This will provide an ample amount of opportunity for lenders to refinance in the future.
“At the end of 2018, the median price of a mortgaged home purchased by Millennials was $238,000, $26,000 less than the median price of a home mortgaged by Baby Boomers and $51,000 less than Generation X.” – Realtor.com
Based on that data, it shows that Millennials are looking for affordability rather than prestige. In 2018, research showed Millennials moved primarily to affordable areas with strong job markets where they can have more purchase power.
As much as the older generations like to make fun of them, Millennials are being smart with their money. They understand that the cost of living is higher than what it was 40 years ago and they are making sacrifices in order to obtain affordability and the American dream.
One statistic that is not in the Millennials favor is their average down payment. Millenials averaged 8.8% down in 2018, compared to 11.9% for Generation X and 17.7% for Baby Boomers.
This is one of the main reasons why many Millennials are turning to the Federal Housing Administration to fund their mortgages. With an FHA loan, qualified borrowers are eligible for a down payment as low as 3.5%. The FHA also makes it easier to qualify for these loans because the lenders bear less risk due to the FHA paying the claim in the event that the borrower fails to uphold the mortgage agreement.
Overall, this is good news for Millennials, the economy and the future of our great nation. If you are a Millennial and are interested in seeing if you qualify for an FHA loan, “click here” or call
Reference: Alcynna Lloyd (2019) Millennials Have Officially Entered the Housing Market