Young prospective home buyers in their 20s and 30s who were once reluctant to purchase are now driving the housing market recovery during the pandemic, The Wall Street Journal reports.
Even prior to the pandemic, millennial buyers were starting to increase in number, accounting for more than half of all new-home loans early last year. They have consistently stayed above that level in the first months of this year, too, realtor.com® data shows.
The large size of this generation has prompted predictions that they will make a lasting impact on the housing market. Millennials have now surpassed baby boomers as the largest living adult generation in the U.S., Pew Research Center data shows. The largest segment of millennial births occurred in 1990, so that cohort is turning 30 this year. “We anticipate as they turn 31 and 32, we’ll just see homebuying demand grow,” Odeta Kushi, deputy chief economist at First American Financial Corp., told the Journal.
First American predicts millennials could purchase at least 15 million homes over the next decade.
Existing-home sales surged nearly 25% in July, reaching their highest seasonally adjusted annual rate since December 2006, according to the National Association of REALTORS®. First-time buyers comprised 34% of sales in July, up from 32% a year earlier.
The pandemic and low interest rates—which are under 3%—may be offering incentive for more young adults to finally buy. “Millennials, they’re roaring into home buying age,” Rick Arvielo, chief executive of mortgage lender New American Funding, told the Journal. “What the industry’s been talking about for a decade is whether they’re going to follow their predecessor generations in terms of their desire to own homes. … They have the same desires.”
Americans have lost about $106 million to fraud related to COVID-19 so far this year, the Federal Trade Commission warned on Tuesday. That prompted the commission to issue an alert for consumers to be cautious about solicitations asking them to pay for access to certain financial assistance, such as stimulus checks, job opportunities, and mortgages.
The FTC warns that some scammers are duping homeowners to make them believe they need to pay up front for mortgage help. “It’s illegal for companies to charge you before they help you with your mortgage—but that doesn’t stop scammers from trying,” the FTC warns.
Homeowners who fall behind on mortgage payments should speak with their mortgage servicer to discuss their options. Those struggling to make their mortgage or rent, who may face a foreclosure or eviction, may want to consult with a legal services organization.
Stimulus checks have been another growing area of fraud, the FTC warns. Congress is debating issuing more stimulus checks, which could open the door to more fraud. Just like last time, if there is another stimulus payment, you won’t have to pay to get it, the FTC says. “Nobody will call to ask for your Social Security, bank account, or credit card number,” to access your payment, the FTC reports.
Also, real estate professionals should continue to remain vigilant against wire fraud scams in real estate transactions and warn their clients, particularly as more areas of a transaction are conducted remotely. Down payment scams and others that target different points of a real estate transaction can put your clients at risk. Access resources from the National Association of REALTORS® on how to keep you and your clients safe from wire fraud.
The reports looked at the factors driving home prices and purchase demand, the impact of the pandemic on listing and sales activity, and the differences between today’s market and the conditions prior to the Great Recession, among other things.
While the pandemic continues, home prices are accelerating and, in some markets, began to edge into previously uncharted territory this month. The national median listing price in July was $349,000—a record high, realtor.com® reports in its latest Monthly Housing Trends report.
Further, homes are selling just as fast as they were last year. Buyers are in a rush for fewer homes for sale. Nationally, the housing inventory has declined to nearly one-third of what it was last summer, realtor.com® reports.
National listing prices grew 8.5% in July year over year. Homes are selling six days faster than a year ago. Homes are selling the fastest compared to a year ago in markets like Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.; Boston-Cambridge-Newton, Mass.-N.H.; and Hartford-West Hartford-East Hartford, Conn., realtor.com® reports.
When the COVID-19 outbreak first struck the U.S. in March, home prices tumbled. But, since April, home prices have reversed course and accelerated each month. July’s listing price increase of 8.5% marks the largest jump in median listing prices in one month since November 2018, realtor.com® notes, equating to a $27,000 increase from a year ago.
The Northeast is now leading the nation’s housing recovery, realtor.com® reports. “After being particularly hard-hit in March and April, new coronavirus cases remain stable in the Northeast and we’re seeing buyers return to the market in force,” says Danielle Hale, realtor.com®’s chief economist. “If this same trend follows in the South and Midwest—where outbreaks continue to rise—we could see a flurry of activity well into the fall, especially as schools delay their openings.”
Indeed, Hale notes that “the U.S. housing market performance is closely mirroring COVID’s path, which is providing clues into what we can expect for various housing markets in the months to come.”
Housing inventories remain tight across the country. Inventories of new listings are down 34.8% compared to a year ago, according to realtor.com®. The metros that have seen the largest declines in inventory are Riverside-San Bernardino-Ontario, Calif. (down 50.4% annually); Baltimore-Columbia-Towson, Md. (down 48.7%); and Providence-Warwick, R.I.-Mass. (down 47.4%).