Milennials Expected To Buy More Homes In The Next 2 - 5 Years
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Milennials Expected To Buy More Homes In The Next 2   -   5 Years

Analysts predict that more millennials will enter the housing market and become first-time homeowners within the next five years than ever before. One of the biggest obstacles to homeownership for young Americans is due to financial hardships and inability to save money for the large down payment of 20% typically required for a conventional loan. Many young adults have only been in the job market for a few years and may have massive student loans to pay off. Research conducted by New York Fed shows that young adults with large student loans are less likely to take out a mortgage loan. Keep in mind that a high income to debt ratio is also viewed negatively by many lenders and may disqualify any individual from getting approved.

Due to the recent recession some may have had difficulty finding a job in their field of study and may have had to work in a lower paying field. Low wages also have an impact on the ability of many millennials to buy home; only 2% of all Americans received an increase in salary from 2007 two 2012.

Some experts predict that will all change within the next 2 to 5 years. A recovering economy, strong job market and higher levels of education obtained by millennials will translate into higher salaries and incomes. Others disagree and feel that homeownership will stay low for millennials indefinitely. Postponement of marriage and having children may possibly keep homeownership rates low.

One advantage for millennial's is that around a third have at least a four-year degree which is significantly higher than decades past. 62% of milennials have attended some college. With an improving labor market milennials will have access to jobs with high incomes and career growth potential. Milennias who are interested in buying a home may want to consider getting pre-approved since this allows buyers to find out how much they can borrow (You can read more about getting pre-approved at Pre Approval Guide.

New federal regulations will also make it easier to buy home. Fannie Mae and Freddie Mac have implemented programs which will allow individuals to purchase a home with as little as 3% down. The only drawback are additional private mortgage insurance costs which are required in case the borrower defaults. FHA home loans at loanDepot are another option; these loans are issued by the federal housing administration and also enable individuals to take out loan with just 3% down. FHA loans also tend to be more forgiving when it comes to lower credit scores.

Experts predict that when millenniums purchase a home they will most likely stick closer to big urban cities instead of moving out to the suburbs like their parents did. Only time will tell if milennials will start getting the house bug but it looks as if many already have.


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