“All told, Millennial women (those born between 1981 to 1997) accounted for about eight in ten (82%) of U.S. births in 2015.”

“The rising age at first birth is hardly limited to the Millennial generation. It has been a trend since at least 1970. Many factors may contribute, including a shift away from marriage, increasing educational attainment and the movement of women into the labor force.”

Do Millennials Want to Be Parents?

“While Millennials may be delaying parenthood, it’s not for a lack of interest in eventually becoming moms and dads. Members of this generation rated being a good parent as a top priority in a 2010 Pew Research Center survey.   Some 52% said it was one of the most important goals in their lives, well ahead of having a successful marriage, which 30% said was one of their most important lifetime goals.”

So, What Does This Mean for the Housing Market?

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Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and make a decision to purchase one of them.

Myth #2: The houses the buyers are touring are still for sale.

Myth #3: The buyers haven’t made a purchase decision yet.

Myth #4: If you list your home for sale, it will ALWAYS sell at the Open House.

Myth #5: Homeowners make a decision about selling their home after a 5-minute conversation.

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1. Capacity: Your current and future ability to make your payments
2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

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• To take care of aging parents (19%)
• Cost savings (18%, up from 15% last year)
• Children over the age of 18 moving back home (14%, up from 11% last year)

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“Closing costs, also called settlement fees, will need to be paid when you obtain a mortgage.  These are fees charged by people representing your purchase, including your lender, real estate agent, and other third parties involved in the transaction. Closing costs are typically between 2 and 5% of your purchase price.”

• Government recording costs
• Appraisal fees
• Credit report fees
• Lender origination fees
• Title services (insurance, search fees)
• Tax service fees
• Survey fees
• Attorney fees
• Underwriting fees

Is there any way to avoid paying closing costs?

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“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

1. Capacity: Your current and future ability to make your payments
2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

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Don’t Become Trapped

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

It’s Cheaper to Buy Than Rent

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”  “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

"It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.  It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

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Myth #1: “I Need a 20% Down Payment”

Myth #2: “I need a 780 FICO Score or Higher to Buy”

Bottom Line

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and make a decision to purchase one of them.

Myth #2: The houses the buyers are touring are still for sale.

Myth #3: The buyers haven’t made a purchase decision yet.

Myth #4: If you list your home for sale, it will ALWAYS sell at the Open House.

Myth #5: Homeowners make a decision about selling their home after a 5-minute conversation.

Bottom Line

 “First-time buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down.”

What has actually happened?

“Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their near-record 30-year mortgage rate lows.”

“Given we expect Brexit will have a minimal impact on the U.S. economy, we see no reason to change our forecast for mortgage rates to reach 3.85% by the end of this year, and 5.0% by the middle of 2018.”

 “First-time buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down.”

What has actually happened?

“Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their near-record 30-year mortgage rate lows.”

“Given we expect Brexit will have a minimal impact on the U.S. economy, we see no reason to change our forecast for mortgage rates to reach 3.85% by the end of this year, and 5.0% by the middle of 2018.”

• Interest Rates are still below historic numbers.
• 88% of property managers raised their rent in the last 12 months!
• Credit score requirements to be approved for a mortgage continue to fall.

• Interest Rates are still below historic numbers.
• 88% of property managers raised their rent in the last 12 months!
• Credit score requirements to be approved for a mortgage continue to fall.

“The high median credit score is due to many millennials believing they won’t qualify with the score they have - and are therefore waiting to apply for a mortgage until they have the score they think they need.” (emphasis added)

“The observed decline in originations could be a result of potential applicants being either too cautious or discouraged from applying, more so than tight underwriting as the culprit in lower mortgage activity.”

So what does this all mean?

“Many potential home buyers are 'disqualifying' themselves. You don't need a 750 FICO Score and a 20% down payment to buy.”

Bottom Line

Here are the top takeaways from the week of presentations:

“At any given time in our history, demographics would explain 60-80% of what’s happening [in the market], and we are in a period of time where Millennials make up a largest demographic group according to the Census, at 84 million.”

“84% of current renters have the desire to own. While 36% believe they cannot afford a home and 60% of renters believe it would be ‘difficult’ to qualify for a mortgage.

“Many potential home buyers are 'disqualifying' themselves. You don't need a 750 FICO Score and a 20% down payment to buy.”

Bottom Line

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

1. Capacity:Your current and future ability to make your payments
2. Capital or cash reserves:The money, savings and investments you have that can be sold quickly for cash
3. Collateral:The home, or type of home, that you would like to purchase
4. Credit:Your history of paying bills and other debts on time

Bottom Line

“In your opinion, what is the primary driver of recent home value growth in the U.S.?”

However, things may be about to change…

1. As more homeowners realize their equity situation has dramatically improved over the last four years, they will be more likely to put their homes on the market.
2. With the residential real estate sector outperforming a sluggish economy, more home builders will be looking to add new construction inventory to a depleted supply of housing stock.
3. Many banks are just now foreclosing on loans that have been delinquent since the housing bust. These houses will also be coming to market.

“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory.” 

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Lawrence Yun, Chief Economist of NAR

“Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what's being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau."

Jonathan Smoke, Chief Economist of Realtor.com

"Low inventories and tight credit will limit the gains we will see in 2016. However, given the level of pent-up demand evident in web activity and stated buyer intentions for 2016, we should see this spring materialize as the busiest season of sales since 2006."

Rick Sharga, Ten-X's EVP

“Inventory is too low to support much higher sales. There's virtually no inventory available at the entry level, and single family housing starts and permits continue to languish at levels far below where they should be at this point of the recovery.”

David Crowe, Chief Economist of the National Assoc. of Home Builders

“Many sellers may not have an absolute decision as to whether to buy an existing home or a new home. So the low inventory of existing homes is locking them in place.”

Freddie Mac

“Challenges remain, with low housing supply and declining affordability being a key concern in many markets.”

Lawrence Yun, Chief Economist of NAR

“Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what's being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau."

Jonathan Smoke, Chief Economist of Realtor.com

"Low inventories and tight credit will limit the gains we will see in 2016. However, given the level of pent-up demand evident in web activity and stated buyer intentions for 2016, we should see this spring materialize as the busiest season of sales since 2006."

Rick Sharga, Ten-X's EVP

“Inventory is too low to support much higher sales. There's virtually no inventory available at the entry level, and single family housing starts and permits continue to languish at levels far below where they should be at this point of the recovery.”

David Crowe, Chief Economist of the National Assoc. of Home Builders

“Many sellers may not have an absolute decision as to whether to buy an existing home or a new home. So the low inventory of existing homes is locking them in place.”

Freddie Mac

“Challenges remain, with low housing supply and declining affordability being a key concern in many markets.”

Price Appreciation = Good News For Homeowners

“Home price growth continued to lift borrower equity positions and increase the number of borrowers with sufficient equity to participate in the mortgage market. In the last three years, borrowers with at least 20 percent equity have increased by 11 million, a substantial uptick that is driving rapid growth in home equity originations.” 

“Homeowner equity is the largest source of wealth for many Americans. The rise in home prices, expected to be at least 5% in 2016, will continue to build wealth and confidence across America. As this process continues, it will provide support for the housing market and the broader economy throughout [the] year.”

This is great news for homeowners! But, do they realize that their equity position has changed?

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

Some Highlights:

• Interest Rates are still below historic numbers.
• 88% of property managers raised their rent in the last 12 months!
• Credit score requirements to be approved for a mortgage continue to fall. The 723 average score is the lowest since Ellie Mae began reporting on scores in August 2011.
• The average first-time home buyer down payment was 6% in 2015 according to NAR.

Some Highlights:

• Interest Rates are still below historic numbers.
• 88% of property managers raised their rent in the last 12 months!
• Credit score requirements to be approved for a mortgage continue to fall. The 723 average score is the lowest since Ellie Mae began reporting on scores in August 2011.
• The average first-time home buyer down payment was 6% in 2015 according to NAR.

Some Highlights:

• 36% of Americans think they need a 20% down payment to buy a home. 44% of Millennials who purchased a home this year have put down less than 10%.
• 71% of loan applications were approved last month
• The average credit score of approved loans was 723 in September (the lowest recorded score since Ellie Mae began tracking in August 2011).

Some Highlights:

• 36% of Americans think they need a 20% down payment to buy a home. 44% of Millennials who purchased a home this year have put down less than 10%.
• 71% of loan applications were approved last month
• The average credit score of approved loans was 723 in September (the lowest recorded score since Ellie Mae began tracking in August 2011).

“For some people, the choice is very clear: Buying a home can be more costly, given the cost of the purchase itself, plus taxes and insurance, plus maintenance and repairs.”

“For some people, the choice is very clear: Buying a home can be more costly, given the cost of the purchase itself, plus taxes and insurance, plus maintenance and repairs.”

“For some people, the choice is very clear: Buying a home can be more costly, given the cost of the purchase itself, plus taxes and insurance, plus maintenance and repairs.”

Are you actually saving money by waiting?

"Our research found that unaffordable rents are making it hard for people to save for a down payment ... There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage."

“For some renters there may be a way out: Buy a house. Mortgages remain very affordable.”

Mortgage rates are expected to rise…

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