Are Young Adults Missing Out on Big Housing Opportunities?
December 21, 2012
With low mortgage rates and fallen home values, some housing analysts are questioning why more first-time buyers—particularly the younger generation—aren’t flooding to the market. As a recent Reuters article questions: Could they be missing out on the “sweet spot” of the housing market by delaying their home purchases?
The desire to buy is certainly there. Ninety-three percent of renters in the millennial generation say they plan to buy a home in the future, according to a poll by Trulia. But the number of first-time home buyers remains constrained: One in three home buyers are first-timers, the article notes.
“Maybe that's because some millennials—generally those now in their 20s to early 30s—don't have the jobs that qualify them for mortgages, or because they are taking time to accumulate down payments, or because the ongoing wave of foreclosures has frightened them,” writes Linda Stern, a Reuters columnist.
Whatever the case, they may still have some time to cash in, particularly as long as financing a home purchase remains so low. The Fed announced it is keeping interest rates low until the unemployment rate drops below 6.5 percent, which the Fed doesn’t expect to happen until 2015.
Real estate professionals may be able to help the younger generation work toward their goal of home ownership in the meantime too.
For example, as the Reuters article points out, those looking to buy soon should take several steps to home ownership, such as working to improve and protect their credit score. “If your score is anything less than 740, find out how you can raise it — paying down a credit card balance, putting more time between you and your last late fee,” Stern writes. The article also notes CreditKarma.com, a free site that allows you to monitor your credit score until it’s more attractive to a lender.
Young adults who are aspiring for home ownership also should start tightening up their wallets and saving for a down payment and closing costs. Also, they should learn about mortgages available from the Federal Housing Administration, which offers loan products with low down payments that are popular among first-time home buyers.
Source: “Are First-time Homebuyers Missing the Sweet Spot?” Reuters (Dec. 19, 2012)
Updated: June 18, 2018