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
As we enter the new year, uncertainty looms around interest rates and the housing market.
The stage was set in 2018 when the Federal Reserve raised its benchmark interest rate four times over the course of the year, leaving current homeowners and potential borrowers wondering:
When will interest rates and the housing market prices go back down?
Even though a slowdown is projected in the future, it doesn’t seem like interest rate hikes are going to alter course anytime soon. Currently, it is around 4.7 percent but many industry analysts expect the average rate to hit 5 percent in 2019. Danielle Hale, Realtor.com’s chief economist, claims the average 30-year mortgage will reach 5.3 percent for at least the better part of the year and even reach 5.5 percent by the end of 2019.
Mortgage rates increased almost a full percentage point over the course of last year, leading experts to believe this year should be a little more consistent in regards to the fluctuating interest rates.
What does this mean for home equity borrowers?
Borrowers with outstanding balances should be prepared to spend more the longer they wait to refinance or take cash-out. Obviously, if you have a fixed-rate mortgage this will not affect you much, but if you have an adjustable-rate mortgage then you should prepare for your interest rate to go up.
For more information on how you can prevent your interest rate from going up on your current adjustable-rate mortgage, click here to refinance or call us at 855-982-3321 to have one of our experienced mortgage bankers assist you with refinancing to a fixed-rate mortgage loan.
What can we expect from the housing market this year?
Housing prices have skyrocketed in recent years, adding to the frustrations of many Americans looking to purchase a home. Although home prices increased about 5 percent in 2018, Freddy Mac predicts that home prices will still increase, just at a slower pace. We can possibly expect an increase of about 4.3 percent in 2019 and then 2.9 percent in 2020.
What does this all mean?
Real estate will always fluctuate based on the surrounding area. Housing prices may go up or down depending on availability and demand. Having said that, the market increase should slow down in 2019. If you are in the market to by a home, before you go searching for the perfect property, meet with a mortgage lender to get pre-approved so that you may be in a position to submit an offer with confidence knowing you can afford it. USAloans is fully prepared to help fulfill your dream of home ownership, click here to discover what you can afford online or call us at 855-982-3321 to have one of our experienced mortgage bankers assist you through the process.