If you are a Millennial and are thinking that 2019 might be the year stop paying rent and buy a house, you’re not alone. According to the U.S. Census Bureau, the U.S. homeownership rate in Q3 2018 was 64.3%, up from 63.9% a year ago. This trend is led by the under-35 age bracket, with a 36.8% homeownership rate, the highest level since the end of 2013. First-time home buyers in this bracket are also seeing growth, with a homeownership rate up 1.2 percent since Q3 2017 to 36.8%.
And the latest Ellie Mae Millennial Tracker TM backs up those numbers with their recent findings. Eighty-nine percent of the loans issued to Millennials in September 2018 were for purchases, up 4% from this time last year.
So why is there growth in this segment? Here are four reasons:
Rising Rates – Freddie Mac reported in a forecast snapshot that rates will climb up above 5.1% in 2019, creating an urgency to get a loan sooner than later.
Rent Increases - According to Trulia, the median rent rose 3.1% last year, and has risen nationally 19.6% since the end of 2012. That can quickly sway the rent vs own decision into the purchase column.
Employment – The U.S. Bureau of Labor Statistics reported that the unemployment rate remained steady at 3.7% in October, creating the perfect environment for Millennials to be employed, especially when you consider that they make up about 35% of the labor force.
They Want to Own – Fifty-three percent of Millennials own homes and 88% of Millennials who do not own a home have one on their wish list, according to a Qualtrics survey.
And if you think Millennials prefer to live in only big urban cities, you would be wrong. According to a research study done by Porch, they found that cities like Omaha, Nebraska, Madison, Wisconsin and Greensboro, North Carolina, are attracting Millennials in great numbers and could eventually beat out cities like San Francisco and Chicago as places to live and work. They're finding city experiences just as appealing in some of the smaller markets as the large ones, without the high costs.
As this segment continues to advance in their careers, you can expect their home buying power to continue to grow and fuel the market.
For more information on how NASB can help you secure a mortgage loan, contact us at 855-465-0753 or click here.