How Well Do You Know Millennial Buyers? – Industry Outlook

By April 8, 2019Industry Outlook

Mortgage Rates Hold Steady after Recent Big Drop – Based on Freddie Mac reports, mortgage rates remain at multi-month lows and borrowers are rushing to take advantage. Mortgage applications surged 18.6 percent recently as borrowers locked in lower financing costs, the Mortgage Bankers Association reports. “Purchase mortgage application demand saw the second highest weekly increase over the last year, and thanks to a spike in refinancing activity, overall mortgage demand rose to the highest level since the fall of 2016,” says Sam Khater, Freddie Mac’s chief economist. “While the housing market has faced many headwinds the last few months, it sailed through the turbulence to calmer seas with demand strengthened by a strong labor market and low mortgage rates. The benefits of the decline in mortgage rates that we’ve seen this year will continue to unfold over the next few months due to the lag from changes in mortgage rates to market sentiment and ultimately home sales.”

Listing Prices Just Hit a New High, and They’re Still Heading Up – According to®’s Monthly Housing Trends Report, the U.S. median home list price surged in March to $300,000 for the first time ever, which marks a price increase of 7 percent year over year. “The typical U.S. home list price has set a new high right on the cusp of the spring homebuying season, and despite a slowing growth rate, home prices will likely continue to set new records later this year,” says Danielle Hale,®’s chief economist. “Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions. A buyer’s experience will vary notably depending on the market and price point they’re targeting.”

Loan Approval Chances Just Got Better for Self-Employed Clients – Based on recent announcements from Fannie Mae and Freddie Mac, who have rolled out automated underwriting technology for lenders that will take a lot of the guesswork and risk out of the approval process for mortgage applications of the self-employed. One of the reasons lenders have been reluctant to approve loans if you’re self-employed is because it’s expensive, time-consuming, and labor-intensive to gather and analyze the paperwork needed to verify your income and gauge your risk. It’s much easier and profitable to process applications of wage or salaried employees who get a W-2 issued by their employer. But this new technology, incorporated into the companies’ automated underwriting systems, enables lenders to analyze the paperwork quickly and accurately so they can come to a decision in a fraction of the time it used to take and with far less speculation involved.

How Well Do You Know Millennial Buyers? – According to the National Association of REALTORS®’ newly released 2019 Home Buyers and Sellers Generational Report, Millennials are the largest buying force in the housing industry. This generation of buyers, who are between the ages of 21 and 38, account for 37 percent of all home purchases. “The largest cohort in America is growing up and becoming more traditional in their buying habits,” the report notes. Older millennials (ages 29 to 38) make up the largest share of buyers who are married, at 69 percent, and are the most likely to have children under the age of 18 living at home, at 58 percent. Their top motivating factors for purchasing include the desire to own their own home, the desire for a larger home, relocation for a job, a change in familial status (marriage, birth of a child, or divorce), and the desire for a home in a better location. Older millennials have a median household income of $101,200, according to NAR’s report, and purchase homes with a median price of $274,000. That’s comparable to Gen Xers, who have a median income of $111,100 and purchase homes with a median price of $277,800, and younger baby boomers ($102,300 and $251,100, respectively). “Older millennials are now entering the prime earning stages of their careers, and the size and costs of homes they purchase reflect this,” says NAR Chief Economist Lawrence Yun. “Their choices are falling more in line with their Gen X and boomer counterparts.”

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