MReport August 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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M REPORT | 51 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Homeownership Lagging Behind Potential Demand A report suggests millennials could give housing a boost. A ccording to First American's Home- ownership Progress Index (HPRI), the homeownership rate is still lag- ging behind potential demand. Experts attribute this subpar homeownership rate largely to the record low number of houses now available for sale on the market. First American's HPRI stud- ies and analyzes the influence of myriad things like how lifestyle and societal and economic trends affect homeownership demand and the housing market in gen- eral. Following an initial sudden drop upon the cusp of the pan- demic's emergence—during the second week of April—the num- ber of mortgage applications sub- mitted by hopeful homeowners shot up for nine weeks straight. The increase even surpassed the number of home loan applications from this same time last year. For this reason, experts believe that housing may be the key to the recovery of the American economy from its current pan- demic-related recession. Experts attribute this uptick in mortgage applications to a mixture of de- mographic and economic factors, particularly pointing to how the millennial generation may lead the march forward in the coming days. The reason why the experts are pointing to the millennial genera- tion as possible leaders forward are that the data reveals how millennial households are shown to be the ones propelling the increase in demand most. Other factors that experts attribute to higher demand include the ability to make solid bids thanks to wage growth and record-low mortgage rates. According to First American, the potential homeowner demand is only expected to increase, even amid the current economic struggle resulting from COVID-19. Millennials, thanks to their vast- ness in number, their diversity, their higher education levels (upon average), and more, are presumed to lead the way (to) home. In a prior report, Mark Fleming, Chief Economist, First American Financial, said he is banking on the belief that mil- lennials will rally and overcome these obstacles: "According to a 2019 survey, 88% of millennials be- lieve homeownership is important for personal success, and there are signs that millennials will continue to be a driving force in homeownership demand. It ap- pears millennial homeownership has been delayed, not denied." Work-From-Home Orders Causing Shift in Moving Trends A new report found a record number of movers are seeking more space, but one economist suggests some of pandemic-driven moves will be temporary. A ccording to Redfin, a record number of Americans (27.4%) are looking to relocate to areas where they can have more space, especially with room for office space given work-from- home orders. This represents an increase of more than 1% from Q! 2020 and more than 2% from Q2 2019. Redfin Economist Taylor Marr commented on what exactly is driving these changes in the cur- rent state of the housing market. "The factors driving a surge in overall homebuyer demand—low mortgage rates and changes in what people are looking for in a home—are lighting a fire in people who were already considering a move to a different area. Add in employers' increasingly flexible remote work policies and the fact residents of many big coastal cities can't fully enjoy their local amenities, and the people who have long wanted to live in a more affordable area or closer to family are incentivized to make the move soon," Marr said. "As we enter the second half of the year, I expect more people to move from one part of the country to another as the pandemic continues to influence people's priorities and lifestyles. But it's also important to note that some pandemic-driven moves are temporary, and the stories about families hiding out in remote cabins won't all result in home purchases or permanent relocation." Redfin did an analysis to pinpoint where most homebuyers were planning to relocate—or at least looking at—across 87 of the U.S.'s largest metro areas. According to its findings, Redfin revealed that Phoenix; Sacramento, and Las Vegas topped the list of most popular picks, followed closely by the areas of Austin and Atlanta. Also, Redfin noted that among those seeking to relocate, current residents of New York; San Francisco, and Los Angeles made up the lion's share of home seekers.

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