MReport November 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 44 of 67

TH E M R EP O RT | 43 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 ORIGINATION Millennials Over- Extending When it Comes to Homebuying Zillow reports that 53 percent of younger potential homebuyers are forced to make multiple offers in order to secure their first home. A ccording to the Zil- low Group Report, millennials were the generation with the largest contribution to the housing market, injecting an estimated $514 billion into the industry, despite conditions adverse conditions with inventory and affordability issues. In all, 53 percent of younger potential homebuyers are forced to make multiple offers in order to secure their first home, and only 39 percent are able to afford the stan - dard 20 percent down payment. "Today, the results of the Zillow Group Report on Consumer Housing Trends 2017 show how the nation's highly competitive housing market is changing the way a new generation approaches buying a home," the report stated. Sixty-two percent of first-time millennial homebuyers look for a rental space while shopping for a home, which indicates, according to the report, that they accept the current market conditions and understand that homeownership in today's environment requires a secondary plan. In the competitive home market, millennial homebuyers who want to secure a home are much more likely to go over budget than other generations, at 37 percent compared to 29 percent, even though 29 percent of millennial homebuyers received financial help from friends or family for a down payment. "In many cities across the U.S., the housing market is extremely competitive, especially for first- time buyers who are looking to purchase a starter home," said Zillow Chief Economist Dr. Svenja Gudell. "Young buyers often start their careers in fast-growing cities in which the market is particu - larly tough—and they're trying to save for a down payment while making record-high rent payments … Whether it's searching for a rental as a Plan B, looking outside their preferred neighborhood, or cobbling together a down pay - ment from multiple sources, these buyers are willing to try every trick in the book in order to find a place to call home." The Truth Behind Down Payments A recent NerdWallet survey seeks to discover how well Americans understand down payments. H omeownership might be the most important goal for millennials, accord- ing to a recent report by NerdWallet—however, there is some misunderstanding as to how difficult of an obstacle securing a down payment truly is. NerdWallet commissioned an online survey of more than 2,000 U.S. adults conducted by Harris Poll to discover how well Americans understand down pay - ments, as well as the response to the idea that securing the down payment for a home is one of the biggest obstacles first-time home - buyers feel they need to overcome. "The study shows that there's a good deal of disagreement about how much you need to save for a down payment," said Mortgage Expert, Tim Manni of NerdWallet, "although that may be under - standable, considering how many different loan options there are these days." The report noted that 44 percent of Americans believe you need a down payment of 20 percent or more to buy a home. While 44 percent of Americans who are not homeowners also responded that the lack of down payment savings is a "stumbling block." According to Manni, millenni - als have an accurate perspective on what amount is currently needed for a down payment—24 percent of millennials think you need to put just 6 percent to 10 percent down—a similar percent - age is also way off, as 23 percent of millennials think you need to put more than 20 percent down. "It's hard to say whether this means millennials are savvy or confused about down payments. There is definitely some misin - formation and confusion among millennials regarding how much money is actually required to purchase a home," he said. The poll also discovered that 48 percent of millennials responded that they plan to buy a home in the next five years. In addition, millennials are much more likely to do so than other generations as "33 percent of Gen-Xers and only 16 percent of baby boomers expressed the same intention." Percent of Americans who believe you need a down payment of 20 percent or more to buy a home. 44%

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport November 2017