Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Back to the Future of Mortgage Lending

This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Real Estate

This is why Millennials have yet to flood housing market

Largest generation isn’t fueling home buying market

Millennials are the largest living generation, however, according to Freddie Mac’s March Insight report, they are falling short of dominating the housing market.

Freddie Mac’s latest report examines the young adult generation, Millennials, or those born from about 1980 to 1994. With the youngest Millennial turning 24 this year, many are beginning to wonder what’s keeping the largest generation since the Baby Boomers from entering the housing market, and what will happen when they do.

As of 2016, there were about 45 million young adults aged 25 to 34 in the U.S., which is four million more than those aged 35 to 44, according to the U.S. Census Bureau. Freddie Mac explained that a population of this size should be fueling the housing market. There’s just one minor problem.

The headship rate.

The headship rate, or percentage of those heading a household, among young adults age 25 to 36 was down 3.6 percentage points in 2016 compared to 2000. If Millennials formed households at the same rate seen in 2000, this could have resulted in 1.6 million additional households in 2016.

But while household formations, or the lack thereof, could seem to be holding Millennials back from entering the home buying market, Freddie Mac suggested it could actually be the other way around. The GSE’s research indicates the two biggest factors explaining the decrease in household formation rates are housing costs and labor market outcomes.

From 2000 to 2016, real median home prices increased by 29%, but young adult per capita real incomes increased only 1%.

However, the household formation rate could soon drastically increase, bringing a new wave of demand to the housing market. Freddie Mac explained that even if later than previous generations, Millennials should soon begin to enter the housing market at a higher rate. It forecasts that Millennials and the following generation, Generation Z, could add somewhere between 19 and 21 million additional new households by 2025.

“We expect that as life progresses and today's young adults age, they will add around 20 million households to the U.S. economy, driving housing demand over the next decade,” said Len Kiefer, Freddie Mac deputy chief economist. “But, housing costs are a major factor holding back young adult household formations.”

“Our research results indicate that 28% of the decline in young adult household formation is due to housing costs, Kiefer said. “If housing costs continue to rise, we could see about 600,000 fewer households over the next decade.”

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