Millennials on the march in many US housing markets
- Millennials are making inroads in the housing market, accounting for 36.1% of mortgage requests from LendingTree in the last six months, up from 34.24% over the same period a year earlier, according to a new study from the online loan company.
- Pittsburgh topped the list of cities where this group — counted as individuals age 35 and under — accounted for nearly half (48.4%) of all mortgage requests, with an average mortgage of $201,921.20. Washington, DC, followed with a 46.8% share but at a value of $381,109.72. Des Moines ranked third at 46.4% and $173,439.39.
- Despite the higher loan values in major markets, the national average mortgage loan amount requested by millennials was $175,180 versus $191,157 for individuals older than 35. Ohio reported the lowest-cost millennial mortgages and California the highest.
Although millennials face many barriers to entry in the housing market — such as high prices, tighter lending standards, rising rents and student debt — forecasts suggest that younger buyers are set to account for a larger share of homebuyers as wage levels improve and more supply comes online.
Personal finance website SmartAsset reported in January that younger households are beginning to buy homes rather than rent, particularly in U.S. cities like Sioux Falls, SD, Peoria, IL, and Chattanooga, TN, where rental inventory is limited and housing costs are relatively low.
The National Association of Realtors noted that first-time, typically younger buyers accounted for 35% of home sales last year compared to 32% in 2015.
A move this week by the Federal Reserve to raise its benchmark interest rate by 25 basis points to a range of 0.75% to 1% could quell some of the enthusiasm over the growing presence of younger, first-time buyers in the market as mortgage rates rise and fuel a growing affordability gap.
However, some market participants believe that until long-term mortgage rates, which are still holding around historic lows, reach 5.5% there is unlikely to be any noticeable impact on housing demand.
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