Millennials Shut Out of Housing Market Again
Pandemic relief and low mortgage rates pushed an increase in millennial homeownership, but the share of homes bought plunged from 34% to 26% by mid-2022.
WASHINGTON – A Washington Post analysis of U.S. Census Bureau data found millennial homeownership increased the most between 2019 and 2021, thanks to pandemic relief and historically low mortgage rates.
In 2022, however, millennials were pushed out of the housing market by a combination of rising prices, shrinking inventory and high mortgage rates.
A National Association of Realtors® (NAR) survey found that the median age of homebuyers hit a record 53 years, while the share of homes bought by first-time buyers plunged from 34% to 26% by mid-2022.
According to Freddie Mac, the average rate for a 30-year, fixed mortgage more than doubled year-to-year by November 2022, reaching a 7% high.
NAR’s Brandi Snowden thinks that already high home prices, low housing supply and rapidly appreciating mortgage rates “may have caused would-be buyers to delay homeownership.” On the seller side, high mortgage rates also put fewer homes on the market since homeowners are more likely to stay put when purchasing a newer residence because they’d have to switch from their current low-rate mortgage to one that charges more to refinance.
Although homeowners that relocate earn more from the increased value of their old home, rising prices undermine first-timers’ ability to vie for the decreasing number of listed properties.
The cooling housing market is unlikely to offer millennials much relief soon. Mortgage rates are expected to stay high for a while as the Federal Reserve raises borrowing costs to fight inflation.
Topics: Washington Post (11/30/22) Fowers, Alyssa
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