Photo: Robert Clark
The US housing market is currently a seller’s market, with low national inventory inflating prices and spurring fierce competition among homebuyers.
Yet despite the aggressive nature of the market, more Millennials took the plunge and became homeowners in April, according to a report released earlier this week by the mortgage processing tech company Ellie Mae.
Millennials have been on the sidelines in the housing market in recent years, saddled with student loan debt and often living in areas where rent growth is accelerating at a faster pace than income, making it nearly impossible to save for a hefty downpayment on a home.
Millennials aren’t just putting off homeownership later than previous generations, but other life milestones like marriage and having kids as well. Their absence from the housing market has often been cited by real estate experts as one possible cause of the country’s historically low homeownership rate.
More Millennials homebuyers took out purchase loans than any other type of loan in April. The market share of percentage of purchase loans among Millennials rose 1 percent from the previous month to 89 percent in April. The fact that the market share of purchase loans increased means that more Millennials are choosing to become homeowners.
Meanwhile, closed refinance loans among the generational group declined to 10 percent in April, down from 11 percent the previous month, says Ellie Mae — which processes nearly one quarter of all US mortgage applications.
Not surprisingly, more Millennials are moving to where housing is more affordable like the Midwest and Southeast. Millennials accounted for majority of closed loans in April in metros like Bardstown, KY (73 percent), Dalton, GA (65 percent) and Appleton, WI (63 percent).
Affordability didn’t stop Millennials to moving to some of the hottest markets either. The percentage of closed loans by Millennials has steadily increased over the last three years in New York City, Chicago, IL, Los Angeles, CA and San Francisco, CA.
The New York metro area has seen an increase in Millennial activity over the last several years. The percentage of Millennial homebuyers in 2017 is 24 percent, while just two years ago Millennials only made up 19 percent of all New York area homebuyers.
Chicago and Dallas recorded even greater increases in Millennial homebuying activity. In Chicago, Millennials made up 31 percent of all homebuyers in 2017, up from 22 percent in 2015. And in Dallas, the percentage of Millennial homebuyers jumped from 21 percent to 31 percent over the same period.
“This new generation of homebuyers is making its presence felt across the country,” says Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae.
Click here to read the entire report.