Tag Archives: millennial homebuyers

Millennials have different views on Home Ownership

Millennial’s have different views on Home Ownership

Here’s a look at what Millennial’s want in a new home and why:

Contrary to reports that the recession left Millennials disillusioned about owning a home, 75 percent believe homeownership is an important long-term goal and 73 percent see real estate as a good investment. About a quarter already own a home and 60 percent plan to purchase in the future. According to estimates, Millennials aged 25-plus account for 15 percent of new home shoppers. Lending constraints, student debt and down payments are still hurdles, but as the economy and jobs continue to improve, substantially larger numbers of these buyers will shop for homes. Over the next five years, Millennials are expected to account for about two-thirds of new households.

Millennials have long been touted as the generation that prefers city over suburbs, but multiple recent studies show that city living only appeals to a small portion, from 5 to 16 percent (depending on the study), while 55 to 66 percent say they prefer the suburbs. On the other hand, younger Millennials who are renting definitely favor urban settings.

Three-quarters want a single-family home. When asked about home size, 2,475 square feet is what a majority would like to have. Two-story homes (52 percent) and open concept floor plans (78 percent) were also preferences in recent NAHB’s research. For bedrooms, 81 percent said they wanted either three or four and two or two and a half baths would be fine.

“Home design is one of the top motivating factors,” says Mollie Carmichael, a principal in John Burns Consulting. Design emerged as the No. 1 trend for Millennials. Also topping the list was a focus on function over size.

The most desired feature? It’s a laundry room, with 55 percent of Millennials saying they just wouldn’t buy a new home without one. Surprisingly, exterior lighting came in second, with 88 percent saying it was essential or desirable. Storage is also important, with linen closets, a walk-in pantry and garage storage making the top 10 most desired features.

About half of those under 35 report that their current use for outdoor space is limited to grilling, yet a majority want their space to feel like a relaxing retreat for entertaining. And they were more likely than older generations to use their outdoor space for meals and to decorate as they would their living and dining rooms.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.50 MBS) lost -17 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly higher for the week.

Overview:  MBS dropped for the third straight week which has caused fixed mortgage rates to slowly rise during that period.  GDP and Trade Talk were the main focus of the markets, with the European Central Bank also receiving some attention.

Gross Domestic Product: The 1st QTR GDP had its final revision and it moved up from 2.0% to 2.2%. We got our first look ( we will see this number revised several times) the 2nd QTR GDP, and it basically matched expectations with a 4.1% reading, which is very strong. The surprise came in the Price Index which jumped 3.2% vs estimates of 2.3%. Consumer Spending “popped” with a huge surge of 4.0% vs est of 2.9%.

Consumer Sentiment:
 The final July University of Michigan reading came in at 97.9 vs est of 97.1

Durable Goods: The very volatile report showed that the June data increased and had major upward revisions to May’s data. The Headline reading showed a 1.0% MOM gain vs est of 3.%. But the reason for the miss was the large revision from -0.6% to -0.3% in May. When you strip out the transportation sector, orders rose by 0.4% which was close to expectations of 0.5%. May was revised upward from -0.3% all the way up to +0.3%. So actually that ex-transport number was a beat.

Central Bankpaloza: The European Central Bank and its President Mario Draghi kept their rates unchanged and basically used the exact same policy statement as their last one. They continued to pledge that their QE bond buying program would end this year (unless they needed it to go longer) and that they would keep rates as-is until next Summer. In his live comments, Draghi said that there is still uncertainty over trade issues but that the direct effects of implemented tariffs is limited.

Trade Wars: On the other trade front, President Trump met with Jean-Claud Junker, the EU Commission President face-to-face to talk trade. During their joint press conference Junker said that the only reason that he traveled to the White House was to make a trade deal.  Here are some of the highlights:

  • Europeans agreed to work on more U.S. LNG exports
  • Europeans agree on lowering industrial tariffs
  • EU agrees to align regulator standards on medical products
  • EU agrees to import more U.S. soybeans

China announced a fiscal stimulus plan that is designed to front-run an excepted economic slowdown due to the trade war with the U.S. The fiscal package contains measures that included giving an additional tax cut of 65 billion yuan ($9.6 billion) to companies with R&D expenditure, expediting non-budgeted special bond sales to assist local government infrastructure financing and easing restrictions on banks’ issuance of financial bonds for small firms.

In what seems like a direct response to China’s stimulus plan, the White House announced a $12 billion “short-term” stimulus plan to help US farmers hurt by China’s retaliatory tariffs. The package will consist of direct payments, food purchases and trade development – under a program already authorized under the Commodity Credit Corp act, which means Congressional approval is not required. Further details on the program will come by Labor Day.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

millennial homebuyers

Top Concerns for Millennial Buyers

According to a recent survey, the top concern among first-time millennial homebuyers was having enough money for a down payment, with 50 percent citing that response, followed by affording a home in their preferred location (45%) and rising home prices (41%).
top concerns for millenials Redfin commissioned a survey of 2,000 U.S. residents who planned to buy or sell a primary residence in the next 12 months. The purpose of the survey was to better understand the objectives, perspectives and concerns of those about to enter the real estate market.Aside from the 69 percent who saved directly from paychecks, millennials used several tactics and sources to accumulate the money needed for a down payment on their first home. Thirty-six percent used earnings from a second job, 13 percent pulled money out of retirement funds early and 10 percent sold cryptocurrency. Some were lucky enough to have received a cash gift from their family (24%) or an inheritance (12%).

When broken down by household income levels, there were some notable differences in how millennials achieved a down payment. Millennials in households earning more than $100,000 per year were less likely than those earning less to have saved directly from paychecks, with 60 percent of high-earners having done so, compared with 75 percent of those who earn less than $100,000. Millennial households earning more than $100,000 were more than three times more likely than their less-well-off peers to have sold cryptocurrency investments and twice as likely to have sold stock investments. They were also more likely to have received an inheritance or cash gift from family or to have dipped into their retirement savings.

To afford a mortgage, 65 percent of millennials who intend to buy their first home this year plan to take some action, aside from just paying from their regular paychecks:

32% plan to pursue additional employment
19% intend to rent out a room to someone they know
15% say they will drive for a ride-sharing service
14% plan to split ownership of the home with friends or roommates

Source: RedFin

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.50 MBS) gained just +7 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move sideways for the week.

Overview:  We had a net change of just 7 basis points.  Generally, it takes around a 21 basis point movement for rates to be impacted.  We had a big week for economic data with high inflation (PCE) and strong manufacturing data as well as very positive readings on the consumer.  Usually, that type of economic data is very negative for mortgage rates.  However, last week’s data took a back seat to the swirling changes in trade talks and escalating tariffs which more than offset the downward pressure from the economic data.

Inflation Nation: The Fed’s “official” measure of inflation, PCE (personal consumption expenditures) was hotter than expected with the headline YOY number hitting 2.3% vs est of 2.2%. It was at 2.0% when the Fed’s raised rates at their last meeting. The Core YOY number hit 2.0% for the first time since 2012! Personal Income matched market expectations with a 0.4% MOM change and Personal Spending improved by 0.2% but that short of the estimates of 0.4%.

Manufacturing: The Bell-Weather Chicago PMI posted a block-buster reading of 64.1 vs est of 60.1. This is the second highest reading this year and one of the highest readings on record. Some internals show problems filling vacant job openings, rising costs and increased new orders and backlogs. Just about everything that points to growth in the manufacturing sector.

Consumer Sentiment Index: The final reading for June was 98.2 vs May’s reading of 98.0, so MOM it did improve. Inflation Expectations for the next 12 months moved up to 3.00%. Consumer Confidence: The June data was below expectations (126.4 vs est of 128) but ANY reading above 120 is an extremely high level and points to strong consumer spending.

GDP: We got the final and third look at the 1st QTR GDP. The final revision dropped to 2.0% which is down from the last revision of 2.2%. The surprise came in the form of the Price Index which jumped up to 2.2% from the last revision of 1.9%.

What to Watch Out For This Week:


The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.