Small down payments and low interest rates could change millennials’ minds about homeownership
Millennials are said to only think of themselves, but they’re not thinking of buying their own homes.
“The most impactful contributor to consumer wealth since the great financial crisis has been growth in home equity,” Brad Friedlander, managing partner at Angel Oak Capital Advisors told USA Today. “Similarly, there has been a growing wealth gap between homeowners and renters, largely due to home equity.”
U.S. owners “held more than $12.7 trillion in home equity at the end of the second quarter of 2016,” according to the Federal Reserve – the highest since 2006 ended, prior to the housing bubble burst.
This means that housing values have increased. Renters, meanwhile, are paying more than ever. Rent has gone up steadily since 2010. A typical renter now pays 20% more than prices were in September of that year.
Median household incomes remain below 2007 levels – not the best time for millennials – but there is still hope.
National Association of Realtors chief economist Lawrence Yun said “some people could qualify for a mortgage who don’t even try.”
He said there are FHA mortgage products that only need 3.5% down, a mere $8,750 payment for a $250,000 mortgage, and historically low interest rates, USA Today reported.
“Maybe they need to lower their expectations of what that first home should be or settle for a smaller home in a different neighborhood,” Yun said. “But if they do, these young homebuyers can build equity over time.”
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“The most impactful contributor to consumer wealth since the great financial crisis has been growth in home equity,” Brad Friedlander, managing partner at Angel Oak Capital Advisors told USA Today. “Similarly, there has been a growing wealth gap between homeowners and renters, largely due to home equity.”
U.S. owners “held more than $12.7 trillion in home equity at the end of the second quarter of 2016,” according to the Federal Reserve – the highest since 2006 ended, prior to the housing bubble burst.
This means that housing values have increased. Renters, meanwhile, are paying more than ever. Rent has gone up steadily since 2010. A typical renter now pays 20% more than prices were in September of that year.
Median household incomes remain below 2007 levels – not the best time for millennials – but there is still hope.
National Association of Realtors chief economist Lawrence Yun said “some people could qualify for a mortgage who don’t even try.”
He said there are FHA mortgage products that only need 3.5% down, a mere $8,750 payment for a $250,000 mortgage, and historically low interest rates, USA Today reported.
“Maybe they need to lower their expectations of what that first home should be or settle for a smaller home in a different neighborhood,” Yun said. “But if they do, these young homebuyers can build equity over time.”
Related stories:
Morning Briefing: Young homebuyers facing weaker mortgage acceptance
Nearly 40% of young Americans living with relatives
