Last month, The New York Times reported encouraging recent trends relating to millennials and homeownership.
Millennials, or young adults born anywhere between the early 1980s and the late 1990s, have for nearly the past decade been plagued by recession woes and mounting student debts. The New York Times even cited a recent report from the Federal Reserve Bank of New York that found 30-year-olds just as likely to live in their childhood bedrooms as they were to own their own homes in 2013. This doesn’t exactly paint a positive picture for young adults who are now looking to buy their own homes, but the truth is that trends are starting to point to a shift in favor of millennial homeownership. The Times attributes a few different factors to this bright future in homeownership for millennials.
More Accessible Mortgages
First, with the recently announced 3% down mortgages backed by Fannie Mae, down payments on homes are now more accessible to young homebuyers than ever. As discussed in our blog post about the new program, the new loan program backing down payments as low as 3% of home value means that more and more young adults can qualify for home mortgage loans.
Second, millennial employment seems to be back on the rise. The Times reports that in 2010 unemployment rates for young adults were as high as 14%, up from about 8% in 2007. However, according to Alan MacEachin, a corporate economist with the Navy Federal Credit Union, the millennial unemployment rate had dropped back down to 9.3% as of January of this year. And with the Census Bureau reporting that about a quarter of millennials now have at least a bachelor’s degree, employment prospects for millennials are looking better now than they have since recession struck in 2008.
More Moving Out
Third, millennials seem to be moving out of their childhood homes in increased numbers as of late. The New York Times cited a study carried out by the University of California Lusk Center for Real Estate, which found that new household formation levels are now back to the levels they were at prior to the recession. In fact, Harvard University’s Joint Center for Housing Studies predicted in 2014 that millennials will create 24 million new households between 2015 and 2025. So while millennials may have been commonly associated with their reluctance to move out of their parents’ homes in recent years, the years ahead may very well create a new reputation for millennials involving homeownership.