Young Americans are hitting more and more homeownership roadblocks: crippling student debt, escalating home prices, surging mortgage rates and a scarcity of listings. So why have they gone on a buying binge?
First-time buyers accounted for 46% of new mortgages (excluding refinancings) that Freddie Mac backed in the first quarter, their biggest quarterly share in data going back to 2012, according to the company. Meanwhile, the National Association of Realtors puts the median age of first-timers in the U.S. at 32.
In other words, it appears that young people, helped by easier credit and an improving job market, are acting fast as rents rise and a surge in property values and borrowing costs threatens to price them out of homeownership.
The sheer size of the generation means a lot of mortgages, Freddie Mac Chief Economist Sam Khater said. “This is a millennial-driven rise,” he stated. “You’ve got a strong economy that’s helping, along with the appetite of the financial market to invest in mortgages.”
So while it’s a tricky time to be a young homebuyer, it might be a good one compared with next year.